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If you’ve dropped out of college but are still carrying student loan debt, you have a number of repayment options, depending on your income and credit profile. Some private lenders may allow you to refinance your federal student loan, but others definitely will not.

College dropout rates indicate that up to 32.9% of undergraduates do not complete their degree program, according to EducationData.org. If anyone hopes that not graduating gets them off the hook for paying back a student loan, the answer is a resounding no. The U.S. Department of Education’s Federal Student Aid (FSA) department spells it out on its website for those repaying federal student loans:

“Your federal student loans can’t be canceled or forgiven because you didn’t get the education or job you expected or you didn’t complete your education (unless you couldn’t complete your education because your school closed).”

Why is that? Lenders believe that not having a degree can pose difficulties in getting a high-earning job. College dropouts make an average of 32.6% less income than bachelor’s degree holders. And some data show that college dropouts are four times as likely to default on their loans compared to graduating counterparts.

Can You Refinance Student Loans Without a Degree?

Student loan refinancing allows you to pay off federal student loans with a private one carrying different terms. For some borrowers, this new loan might come with a lower interest rate or lower monthly payment than their existing debt, particularly if they have a strong credit and employment history.

However, many private lenders won’t allow you to refinance your student loans if you haven’t graduated. SoFi and some other lenders require that you have at least an associate degree from a Title IV accredited school in order to be eligible for refinancing.

Title IV schools are eligible to process federal student aid under the Higher Education Act. You can verify whether the institution you attended is a Title IV school on the federal student aid website.

Even though some of the most popular lenders require you to have a degree, that doesn’t mean you can’t refinance student loans if you did not graduate. There are some financial institutions that may offer refinancing to borrowers who dropped out.

💡 Quick Tip: Some student loan refinance lenders offer no fees, saving borrowers money.

Federal Student Loan Consolidation Without a Degree

There are other solutions to easing your burden. If you have more than one federal student loan, not having a degree doesn’t stop you from being able to combine them through a Direct Consolidation Loan. Doing so can be beneficial because it allows you to make just one payment every month instead of many, potentially with multiple loan servicers. That can make things simpler for you and make it more likely that you’ll remember to pay your loans on time.

Another reason to consolidate is that you could qualify for a lower monthly payment by extending the term of the loan (though you’d pay more interest over the life of the loan). Also, by consolidating, loans that wouldn’t otherwise qualify might become eligible for income-driven repayment plans or the Public Service Loan Forgiveness program.

Should I Consolidate Student Loans

Consolidation isn’t for everyone, however. As we mentioned above, extending the term of the loan means interest will have more time to stack up. Plus, if you’ve already been making payments under an income-driven repayment plan or toward Public Service Loan Forgiveness, you could lose credit for those payments and have to start over.

You can apply for a Direct Consolidation Loan as soon as you leave school or are enrolled less than half-time. You’d submit an application through StudentLoans.gov. If your loans are still in the grace period, you can ask for the consolidation to be delayed so that it’s closer to the end of that period. If you receive the loan, you’ll need to start repaying it 60 days after it’s paid out.


💡 Quick Tip: Federal parent PLUS loans might be a good candidate for refinancing to a lower rate.

Repayment Options for Federal Student Loans

Federal student loan repayment was put on pause in March 2020 due to Covid-19 hardships. The pause ended in October 2023. If you are focused on dealing with your federal student loans, it’s vital to know that the Department of Education has focused on strengthening its income-driven repayment options.

Any Direct Loan borrowers can apply to the Saving on a Valuable Education (SAVE) Plan, introduced in 2023. (SAVE replaces the REPAYE program.) Your monthly payments will be 10% of discretionary income, possibly lowering to 5% in 2024 when SAVE has been fully implemented. You can learn more about SAVE, and apply through its portal, on the FSA site.

For those really struggling to make any payments, the “On-Ramp Program” is in effect through Sept. 30, 2024. This prevents the worst consequences of missed, late, or partial payments, including negative credit reporting for delinquent payments for 12 months. However, payments are still due, and interest will continue to accrue.

You can also apply for forbearance or deferment, temporarily pausing your payments and providing more predictability when you must resume repaying. Keep in mind that forbearance and deferment have financial pros and cons.

Refinancing Your Student Loans

Now or in the future, you may be able to apply for student loan refinancing. You can check your rates with several lenders (using a soft credit check, if possible) to compare rates and terms and see what you might prequalify for.

If you decide to complete a full application, the lender may ask for information like your Social Security Number, outstanding loans and repayment history, income, and employment history. They typically complete a credit check to find out your FICO® Score and look for any red flags, like a history of missed payments, student loan default, eviction, or bankruptcy.

Those who don’t initially qualify for refinancing, or get a favorable rate, can try reapplying with a cosigner — someone who guarantees to repay the loan if the primary borrower can’t.

If you feel you need a cosigner, one with strong credit history and a solid income and employment history (among other financial factors) could help you qualify. If you do use a cosigner, remember that if you default, any missed payments on your end may damage their credit.

It’s important to bear in mind with refinancing that, if approved, you would lose out on several options. These include:

•   Access to temporary loan payment relief through approved periods (deferment or forbearance) when you do not have to make payments because of financial hardship, continuing your education, or military service.

•   No interest accumulation on subsidized student loans during periods when payments are deferred.

•   Access to repayment plans based on your income that provide loan forgiveness once you have been in repayment for 20 or 25 years.

Recommended: Refinancing Student Debt With a Cosigner

Taking Control of Your Student Loans

Not completing your college degree or stopping and starting over an extended period is far from uncommon. However, It can be frustrating to carry a student loan balance for a degree you don’t have.

Unfortunately, SoFi does not offer student loan refinancing to borrowers who don’t have at least an associate degree, but some lenders do. Plus there are other options, such as applying for income-driven repayment and exploring other federal programs to help with 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.

FAQ

Can I get a loan without a degree?

Yes, it’s possible to get student loans without a degree — if you are currently enrolled in school. The federal student loan program offers student loans to qualifying borrowers who are attending eligible institutions. Students may also look into private student loans.

Can you refinance student loans without a job?

Refinancing student loans without a job may be more challenging than if you are able to show a record of stable employment. However, lenders evaluate a variety of factors when making lending decisions including employment history, income, credit score, among other factors. The lender is trying to evaluate whether you are able to repay the loan. If you are able to show other sources of income — outside of a traditional job — it may be possible to refinance your student loans.

Do you need to graduate to refinance student loans?

In many cases, yes, you do need to graduate before you can refinance student loans. Many private lenders won’t allow you to refinance your student loans if you haven’t graduated. Though, there are some lenders that are willing to refinance student loans for borrowers who did not graduate.

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

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

Typically, student loan borrowers cannot refinance their debt until they graduate or withdraw from school. At that point, federal student loans and the majority of private student loans have a grace period, so it can make sense to refinance right before the grace period ends.

Depending on your financial situation, the goal of refinancing may be to snag a lower interest rate and/or have lower monthly payments. Doing so can alleviate some of the stress you may feel when repaying your debt. In this guide, you’ll learn when you can refinance and what options are available, plus the potential benefits and downsides of each.

What Do Your Current Loans Look Like?

Before deciding whether or not to refinance your student loans, you need to know where your loans currently stand. Look at the loan servicers, loan amounts, interest rates, and terms for all loans before making a decision.

Contact Info for Most Federal Student Loans

The government assigns your loan to a loan servicer after it is paid out. To find your loan servicer, visit your account dashboard on studentaid.gov, find the “My Aid” section, and choose “View loan servicer details.” You can also call the Federal Student Aid Information Center at 800-433-3243.

Loans Not Owned by the Department of Education

Here’s how to get in touch:

•   If you have Federal Family Education Loan Program loans that are not held by the government, contact your servicer for details. Look for the most recent communication from the entity sending you bills.

•   If you have a Federal Perkins Loan that is not owned by the Education Department, contact the school where you received the loan for details. Your school may be the servicer for your loan.

•   If you have Health Education Assistance Loan Program loans and need to find your loan servicer, look for the most recent communication from the entity sending you bills.

Private Student Loans

Private student loans are not given by the government, but rather banks, credit unions, and online lenders. You’ll need to find your specific lender or servicer in order to find out your loan information.

Can You Refinance Student Loans While Still in School?

You may be able to refinance your student loans while still in school with certain lenders, but doing so may not make the most sense for your situation.

If you’re worried about interest accruing on your unsubsidized federal loans and/or private student loans while in school, you can most certainly make interest-only payments on them in order to keep the interest from capitalizing.

One important note: With federal student loans, any payments you make while still in school or during the grace period will not count as a qualifying payment toward loan forgiveness, if you plan on using that.


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

Which Loans Can Be Refinanced While Enrolled?

You can refinance any type of student loan while enrolled in school, assuming that the lender allows it. If you’re still in school and want to refinance, a lender will want to make sure you have a job or job offer on the table, are possibly in your last year of school, and have a solid credit profile. You could also consider refinancing your student loans with a cosigner if you do not meet the lender’s requirements on your own.

A couple of important points if you are considering refinancing federal student loans with a private lender:

•   Doing so means you will forfeit federal benefits and protections, such as forbearance and forgiveness, among others.

•   If you refinance for an extended term, you may have a lower monthly payment but pay more interest over the life of the loan. This may or may not suit your financial needs and goals, so consider your options carefully.

Which Loans Can’t Be Refinanced While Enrolled?

If you find a lender willing to refinance your student loans while still in school, they most likely won’t exclude a certain type of loan. However, it is best not to refinance federal student loans while enrolled. Federal Subsidized Loans, for example, do not start earning interest until after the grace period is over. Since you aren’t paying anything in interest, it doesn’t make sense to refinance and have to start paying interest on your loans immediately.

If you plan on using federal benefits, such as income-driven repayment plans or student loan forgiveness, refinancing student loans could be a bad idea. Refinancing gives you a new loan with a new private lender, thereby forfeiting your eligibility to federal benefits and protections, as noted above.

Is It Worth Refinancing Only Some of Your Loans?

Yes, it can be worth refinancing only some of your loans. The student loans you may want to focus on refinancing may include ones that have a variable rate (and you prefer a fixed rate), ones with a relatively high interest rate, or ones where you’ve had a less-than-ideal relationship with the servicer and are looking for a new experience.

When you might want to think twice about refinancing:

•   If you have federal loans and plan on using an income-based repayment plan, for example, it makes sense not to include those loans in the refinance.

•   If you have a low, fixed interest rate currently, you should probably keep those loans as is. The main reason to refinance is to secure a lower interest rate or a lower payment. Keep in mind, though, that by lowering your payment, you typically are extending your term. This can mean that you end up paying more in interest over the life of the loan.

Examples of Refinancing Before Earning a Degree

As stated above, there are some lenders that may allow you to refinance before you graduate or withdraw from school. These lenders may currently include Citizens Bank, Discover, RISLA, and Earnest.

Graduate students are also eligible to refinance their undergraduate student loans, assuming they meet the lender’s requirements or use a cosigner. Parents with Parent PLUS Loans are also typically allowed to refinance their loans prior to their child graduating. Rules will vary by lender, so make sure to do your research and choose a lender that will work with your unique situation.


💡 Quick Tip: Federal parent PLUS loans might be a good candidate for refinancing to a lower rate.

Alternatives to Refinancing

If refinancing your student loans isn’t the right option for you, there are alternatives to refinancing you can explore.

•   The main alternative is student loan consolidation, which combines your federal student loans into one loan with one monthly payment. The main difference between consolidation and refinancing is the interest rate on a federal loan consolidation is the weighted average of the rates of the loans you are consolidating, rounded up to the nearest one-eighth of a percentage.

•   You typically won’t save on interest, but you can lower your monthly payment by extending the loan term. Doing this, however, means you’ll probably pay more in interest over the life of the loan.

•   Student loan refinancing refers to paying off current loans with a new loan from a private lender, preferably with a lower rate. This rate is not the weighted average of the loans, but rather is based on current market rates, your credit profile, and your debt-to-income ratio.

•   Other alternatives to refinancing include making interest-only payments while still enrolled in school or requesting a student loan forbearance if you’re struggling to make your payments. Forbearance means you can reduce or pause payments for a designated period of time.

You’ll want to know all your student loan repayment options — and the pros and cons of consolidating or refinancing your loans, prior to making a decision.

A calculator tool for student loan refinancing can come in handy when estimating savings, both monthly and over the life of your loan.

Weighing Perks and Interest Rates

Before deciding whether refinancing is right for you, it’s important to again highlight this important point: If you refinance your federal student loans with a private lender, those loans will no longer be eligible for programs like income-driven repayment plans, federal forbearance, and Public Service Loan Forgiveness.

But if you can get a lower interest rate, refinancing may be a good fit. Most refinancing lenders offer loan terms of five to 20 years. Shortening or elongating your loan term can affect your monthly payment and the total cost over the life of your loan.

For some borrowers, lengthening the term and lowering the monthly payment will be a valuable option, even though it can mean paying more interest over the life of the loan. Only you can decide if this kind of refinancing makes sense for your personal finances.

The Takeaway

When can you refinance student loans? As soon as you establish a financial foundation or bring a solid cosigner aboard. Can you refinance your student loans while in school? Yes, however, not all lenders offer this and it may not make sense for your situation. It’s also important to understand the implications of refinancing federal student loans with a private lender. If you do not plan on using federal benefits and protections and are comfortable with the possibility of paying more interest over the loan’s term, it might be a move worth considering.

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

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

Applying for federal aid is a crucial step most high school students take while transitioning to college life. Parents going through the college admissions process for the first time, though, may not realize that they also play a huge role in helping their children apply for grants and scholarships through the Free Application for Federal Student Aid or FAFSA®.

Applications for the 2023-2024 round of FAFSA opened on Oct. 1 and will remain open until June 30, 2024. If you’re looking for facts about FAFSA that will help your child apply for college aid during the 2023-2024 academic year, we’ve compiled some of the most important information on how you can help your child during the FAFSA process.

Recommended: FAFSA Guide

FAFSA Facts and Tips

Filling out FAFSA for the first time? These facts and FAFSA tips can help you prepare for the application process and offer suggestions for getting the most aid.

1. FAFSA Is Required to Receive Government Student Loans

For those who may be new to the financial aid process, FAFSA is the form students fill out to apply for federal financial aid. Just over 18 million students fill out the FAFSA each year. Your child won’t be eligible for government-funded college aid, such as federal loans or grants if they don’t apply.

Recommended: 12 Steps to Filling Out the FAFSA Form for School Year 2023-2024

2. Your Child Could Qualify for Grants by Filling Out FAFSA

While you can get subsidized or unsubsidized loans through FAFSA, your child may also be eligible for grants. One common federal grant is the Pell grant, which is awarded to first-time undergraduate students who show exceptional financial need, such as coming from a low-income family.

Recommended: Types of Federal Student Loans

3. It Determines Work-Study Eligibility

Federal work-study is a way for students to earn income at a part-time job while in college. These jobs can be on or off-campus and vary by school, although not all schools participate in the program. You have to fill out FAFSA to determine if you’re eligible for work-study programs.

4. Some Schools Use FAFSA to Determine What Aid They Offer

If the schools your child applies to offer their own aid, such as need-based scholarships, they may use FAFSA to determine eligibility. You may want to check with the schools your child is applying to and ask if they have a separate application for internal scholarships and grants.

5. Most Applicants Under Age 22 Are Considered Dependents

Most students under the age of 22 who are neither married nor parents themselves won’t be able to apply as an independent student . As a result, for most incoming freshmen, their parents’ income is counted in the determination of financial need.

Recommended: Independent vs Dependent Student: Which One Are You?

6. Your Child Needs Your Information to Apply

If your child is filing as a dependent, then they’ll need some basic information about your finances, such as your income and paid taxes. You may also elect to apply for a Parent PLUS loan, which can help cover your child’s educational expenses if they don’t receive enough in loans and grants to cover costs. Note that you may need additional information to apply for a Parent Plus loan.

7. High-Income Families May Want to Still Apply

If your family is middle- or upper-class, you may wonder if your child will receive any FAFSA aid. However, applying is free, and family income is just one of many factors considered during the application process. Additionally, your child’s school still may require FAFSA to be eligible for institutional aid, so it may be worth applying for even if you don’t think your child will need or receive aid.

8. Grades Don’t Affect FAFSA Eligibility

FAFSA does not have a GPA requirement to apply. However, your child may want to keep in mind that they could lose any aid given to them through FAFSA if they have poor grades for multiple semesters after they receive the aid.

9. Deadlines May Differ by State and School

While the FAFSA doesn’t close until June 30, 2024 for the 2023-24 academic year, FAFSA application deadlines may vary by state and school. State and school deadlines may close prior to the federal deadlines. If you’re not sure what deadlines apply to your student, consider checking with the financial aid office of each school your child applies to and ask what their FAFSA deadlines are.

10. Having Multiple Kids in College No Longer Affects Financial Aid Awards

Since 2021, the number of children in a family who are in college or applying to college no longer affects aid eligibility. Before, families with multiple children in college may have qualified to receive more aid. This is one of many changes throughout the FAFSA Simplification Act, which aims to simplify the FAFSA form and therefore hopefully encourage more families to fill out FAFSA.

11. Expected Family Contribution Is Also Changing

Expected family contribution (EFC) is an estimate of how much FAFSA believes families can contribute to the cost of a student’s education. However, as part of the FAFSA Simplification Act, EFC will be replaced with the Student Aid Index, or SAI, starting on July 1, 2024 (for the 2024-2025 academic year). While that may sound far off, a freshman during the 2023-2024 academic year will be a sophomore when SAI is put into effect.

12. FAFSA Is Changing the Process for Children of Divorce

Before the new simplified FAFSA, in the case when a child’s parents are separated, the custodial parent’s information was included on the form. However, with the new changes, the parent who provides the most financial support to the student is responsible for filling out the FAFSA.

Recommended: How much FAFSA Money Can I Expect?

13. Your Child Will Need Their Social Security or Alien Registration Number

As your child prepares to fill out the FAFSA, they’ll need their Social Security or Alien Registration number.

14. Have Nontaxable Income at the Ready

One question that may trip up parents is what FAFSA considers nontaxable income. For FAFSA, that generally includes (but is not limited to):

•   Workers compensation

•   Disability benefits

•   Welfare benefits

•   Social Security income

•   Veteran’s benefits

•   Military or clergy allowances (if applicable)

•   Foreign income not taxed by any government

15. Your Child May Need to Report Grants and Scholarships

Most first-time college students won’t need to report any grants or scholarships they received. However, they may if they had to report them on their taxes, such as:

•   AmeriCorps benefits, such as living allowances or awards

•   Taxable work-studies, assistantships or fellowships

•   Combat pay, special combat pay, or cooperative education program earnings

•   Other grants or scholarships reported to the IRS

If you have any doubts about what types of grants may be taxable, consider consulting a tax professional.

16. Have Bank Statements Available

To fill out FAFSA, you’ll need bank statements for both you and your child. This information helps determine how much aid your child will be eligible for.

17. You Don’t Have to Have a Social Security Number to Sign the Form

If you’re filing for FAFSA online, you can create a federal student aid (FSA) ID . This is simply your login and password. Your child can create one here . But if you don’t have a Social Security number, you can print out the signature page of the form, sign it, and mail it in.

18. You Don’t Need to File Taxes Before Submitting FAFSA

If you filed for an extension for your tax return, you can use your W-2 or 1099 statements. But you will need to update FAFSA once you file. This is because which tax bracket you’re in can impact how much aid your child is eligible for.

Recommended: What Tax Bracket Am I In?

19. You’ll Need to Have a List of Assets Ready

FAFSA uses parental assets to help determine aid eligibility. You’ll need to know how much in assets you have, which include (but are not limited to):

•   Money in cash, savings, and checking accounts

•   Non-retirement investments (such as stocks and mutual funds)

•   Businesses that have more than 100 full-time equivalent employees and you and your family have minority stakes in

•   Investment farms (in other words, you don’t live on and operate the farm)

•   Other investments, such as real estate and stock options

20. 529 Plans Are Also Considered Assets

When filling out information about assets, you’ll also need to provide the value of all 529 College Savings Plans you own — including the accounts for siblings. Also, if your child owns a 529 plan (often called an UGMA or UTMA 529 plan), you will need to report it as a parental asset – and not as the student’s asset. (Please note, however, that if your child owns a UGMA or UTMA account that is not a 529 plan, you don’t list it as an asset — your child does as their asset.)

21. Your Primary Home Doesn’t Need to Be Listed as an Asset

One common FAFSA mistake is listing your primary home as an asset. However, FAFSA does not require you to do so. In fact, listing it as an asset can decrease the amount of aid your child receives.

22. You Don’t Need Your Retirement or Insurance Information

FAFSA also doesn’t count retirement or insurance accounts as assets. Again, including them can inflate the number of assets you have and therefore may decrease the amount of aid your child is offered.

23. You’ll Need to Include Each School Your Child Is Applying To

When you and your child fill out the FAFSA, you’ll want to have a list of all the schools your child may be interested in applying to. You’ll need each school’s federal school code to add them to the list of schools you want your FAFSA information sent to, although you can also search for this information on the form itself if you can’t find it on the school’s website. It may be wise to include schools your child isn’t sure they want to apply to yet since it’s easier to simply add the school to the list now than having to send the school your FAFSA information later.

24. Schools, Not the Government, Will Give You Financial Aid Updates

Part of the reason you’ll need to send your FAFSA to schools your child is considering applying to is because schools, not the government, send out financial aid packages. As such, each school your child applies to may offer a different financial aid package.

25. Skipping Information Can Be Costly

Before hitting submit, you might want to double check that every section of the FAFSA is filled out (and accurate). Skipping FAFSA sections may result in delays in your application being processed, errors that prevent you from submitting, or even a decrease in the amount of aid offered.

26. Your Child Will Need to Take Student Loan Exit Counseling

While filing FAFSA or talking to your school’s financial aid office, you may hear about something called student loan exit counseling. This is mandatory for anyone who gets federal student loan aid. Counseling is simply an online module that will help your child navigate how the student loan repayment process works. A reminder will be sent to your child’s email in their last year of school about when this exit counseling is due. However, you and your child may want to consider reviewing student loan exit repayment options before the counseling is due to ensure they pick the best option based on their financial situation.

27. File Early to Get the Most Aid

While it may seem like you have a ton of time to fill out the FAFSA, it may be best to complete it sooner rather than later. Delaying can mean financial aid for your state or school dries up before your child can even be considered for it. Additionally, knowing how much aid each school is offering your child may help them when deciding on which school to attend.

28. You Could Be Selected for FAFSA Verification

After your child receives their student aid report, they may get a message saying they were selected for verification. FAFSA verification is used by some schools to simply verify that students’ FAFSA information is accurate. Some schools randomly select people to be verified, some verify all students, and some may elect not to verify any students.

Recommended: 14 Must-Know College Financial Aid Terms for Parents

29. You Can Appeal Your Aid Package

Once your child has their financial aid packages, they may find that they were offered less than they expected or hoped for. If your child’s dream college didn’t offer enough aid (or perhaps even didn’t offer them any aid), they may be able to appeal for more financial aid. This process may be especially important if your financial situation has changed since you and your child first applied for FAFSA. While schools may deny the request, it doesn’t cost you or your child anything but time to ask for more aid.

30. You Can List Unusual Circumstances That Affect Your Finances

Another way to try and increase your financial aid package is by listing unusual financial circumstances both on your FAFSA and in an appeal letter to schools you’re applying to. Some common unusual circumstances include (but are not limited to):

•   Having tuition expenses in elementary and/or secondary schools

•   Experiencing unusual medical or dental expenses not covered by insurance

•   Having a family member become unemployed recently

•   Experiencing changes in income and/or assets that could affect aid eligibility

31. You’ll Have to Reapply Every Year

Once you’ve filed your FAFSA, you may want to keep your login information in a safe place. You’ll need that information to file for FAFSA every year your child is in school, and losing your FSA login information may delay your ability to apply next year. You may also want to set a reminder on your phone or calendar to apply next year, although FAFSA will send you an email reminder when next year’s FAFSA is open.

The Takeaway

Filing for FAFSA is an important first step in helping your child pay for college. Knowing how FAFSA works and how to optimize the amount of aid your child receives can help increase the amount of federal aid they’re offered.

However, if their financial aid package isn’t enough to cover college costs, they may want to consider private student loans. Private student loans aren’t required to offer the same borrower protections as federal student loans, and are, therefore, generally considered as an option only after all other sources of funding have been exhausted.

If you’re considering private loans to pay for college, you may want to review the differences between private and federal student loans to ensure that you and your child choose the best options for them to pay for college. SoFi offers private student loans that have no hidden fees and allow borrowers to choose between four repayment options.

Photo credit: iStock/wagnerokasaki

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

SoFi Private Student Loans
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The average student loan borrower with federal loans graduates with $37,338 in debt. If you were to pay that amount on the Standard Repayment Plan at a rate of 5.50%, you’d have to shell out $405 per month for the next 10 years.

But depending on where life takes you after graduation, you may not be able to afford it. There are plenty of circumstances that may make repayment difficult, including going back to school, going into active military duty, and losing a job.

As such, it’s important to know how to pause student loan payments when you can’t afford them. Depending on who your lender is, though, the options can vary.

Repayment of federal student loans was effectively paused from spring 2020 until fall of 2023, but the Debt Ceiling bill required payments to restart in October 2023. However, there are still options available to borrowers who need to pause payment on their student loans.

Two Ways You Can Pause Student Loan Payments

Depending on your situation, you may be able to pause student loan payments through student loan deferment or forbearance. Each of these options has different requirements and outcomes, so it’s essential to understand how they work.

1. Student Loan Deferment

Student loan deferment allows you to reduce or pause your payments for a set period of time. In the meantime, however, the deferred loan will continue to accrue interest, in most cases. For example, if you have an unsubsidized loan or a PLUS loan, you’ll need to make interest-only payments during the deferment, otherwise the interest will capitalize (be added to the loan balance) at the end of the deferment period.

This means that you’ll have a new, higher balance that includes the principal amount at the beginning of the deferment period plus the unpaid interest that accrued during deferment.

The exception is if you have subsidized federal loans or Perkins Loans, in which case you won’t be responsible for paying accrued interest.

2. Student Loan Forbearance

Another option is putting loans in forbearance. Like deferment, forbearance allows qualified applicants to delay payments for a set period of time.

The primary difference is that you’re responsible for paying any interest that accrues during the forbearance period, regardless of which type of loan you have.

Again, it is possible to make interest-only payments during the forbearance period. Under new rules introduced in 2023, though, unpaid interest that accrues during forbearance will not capitalize at the end of the forbearance period.

While these general definitions apply to both federal and private student loans, some details differ between the two.


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Federal Student Loans

The U.S. Department of Education offers both deferment and forbearance on all of its student loans. With the exception of the pandemic-era federal forbearance period that came to an end in fall 2023, neither comes automatically. Both deferment and forbearance need to be applied for through your student loan servicer. Here’s what you need to know about both options.

Qualifying for Federal Loan Deferment

If you have federal loans, you may be able to defer your student loan payments for up to three years. Here’s how to know if you may be eligible:

•   You have any federal student loan, subsidized or unsubsidized.

•   You’re enrolled at least half-time at an eligible school, and you received a Direct PLUS Loan or FFEL PLUS Loan as a graduate or professional student. In this case, your loans will be deferred while you’re in school at least half-time plus six months after you leave.

•   You’re a parent who took out a Direct PLUS Loan or FFEL PLUS Loan on behalf of your child student, and they’re enrolled at least half-time at an eligible school. In this case, your loans will be deferred while your child remains in school plus six months after they leave.

•   You’re enrolled in an approved graduate fellowship program.

•   You’re enrolled in an approved rehabilitation training program for the disabled.

•   You’re unemployed and unable to find employment.

•   You’re experiencing economic hardship.

•   You’re serving in the Peace Corps.

•   You’re on active duty military service in connection with a war, military operation or national emergency. In this case, your loans will be deferred while you’re on active duty plus 13 months afterward.

You can read more about deferment eligibility here .

Qualifying for Federal Loan Forbearance

The federal government has two types of forbearance: general and mandatory. Both can last for up to 12 months at a time. But if you still qualify once that period is up, you can request a renewal.

General forbearance is also sometimes called discretionary forbearance because your loan servicer gets to choose whether or not to approve your request.

You can request general forbearance if you’re unable to make your monthly payments due to:

•   Financial difficulties

•   Medical expenses

•   Change in employment

•   Other reasons your loan servicer will accept

Mandatory forbearance is not at the discretion of your loan servicer, and can be granted if you meet any of the following requirements:

•   You’re serving in a medical or dental internship or residency program and meet specific requirements.

•   The total amount you owe on all of your loans is 20% or more of your gross monthly income.

•   You’re serving in an AmeriCorps position for which you’ve received a national service award.

•   You’re a teacher and qualify for teacher loan forgiveness.

•   You qualify for partial payments on your loans through the U.S. Department of Defense Student Loan Repayment Program.

•   You’re a member of the National Guard and have been activated by a governor, but don’t qualify for the military deferment.

You can read more details about eligibility requirements for forbearance here .

A Note on the Temporary On-Ramp Period

If you’re currently struggling to manage federal student loan payments, you may be able to take advantage of a temporary repayment on-ramp period without having to rely on deferment or forbearance. This period, which takes place from Oct. 1, 2023 to Sept. 30, 2024, protects financially vulnerable borrowers from the consequences of missing payments. Those who miss payments will not have them reported to the credit bureaus or collections agencies, and loans will not be considered delinquent or in default. However, once this on-ramp period is over, any missed payments will be due.

Private Student Loans

While the options and requirements for these programs are clear on federal student loans, they can be a little trickier with private loans.

That’s because there are so many different private student lenders, and each has its own policy and criteria for determining eligibility.

Unfortunately, there’s no mandatory forbearance option like there is with federal loans. Instead, it’s typically at the lender’s discretion to determine whether you qualify.

Also, the deferment and forbearance periods can vary by lender. For example, you may need to apply every few months, and you may be limited on how often you can apply.

Since there’s no real consistency among private student lenders, if you borrowed a private loan it’s important to check with your lender directly to find out what their policy is.

How Deferment and Forbearance Can Affect You

When you request a deferment or forbearance on your federal loans, it will be noted on your credit report. However, neither option will have a negative impact on your credit score.

That said, if you miss a payment while you’re waiting for your deferment or forbearance request to get approved, it may hurt your credit. At 90 days overdue, your lender can report the missed payment(s) to the credit bureaus.

Because of this, it may be wise to continue making payments as usual until you receive the official approval for your deferment or forbearance with an effective date.

Also, since interest accrued during a deferment can capitalize at the end of the period, you could end up with a higher balance and monthly payment than when you started.

If you originally wanted to pause student loan payments because you couldn’t afford them, a higher payment could make things more difficult. Take interest into account while considering these options.

What If You Don’t Qualify to Pause Student Loan Payments?

Depending on your lender and situation, you may not be eligible for deferment or forbearance. If this happens, there are a couple of options to consider.

Income-Driven Repayment Plans

If you have federal student loans, it may be possible to reduce your monthly payment by enrolling an income-driven repayment plan, such as the newest SAVE plan.

If you qualify, you can decrease your monthly payment to a percentage of your discretionary income. It won’t stop your loan payments altogether, but it can help make them more affordable.

Refinancing Your Student Loans

Whether you have federal or private loans, you can opt to refinance your student loans. Refinancing could help you save money by reducing your monthly payment, either by securing a lower interest rate or lengthening the repayment term. Note that you may pay more interest over the life of the loan if you refinance with an extended term.

You may also be able to switch to a different lender that offers hardship programs or other support if you’re having trouble making payments.

Keep in mind that refinancing federal loans with a private lender will cause you to lose certain benefits, including income-driven repayment options and access to federal loan forgiveness programs.

Determine If Pausing Student Loan Payments Is Right for You

As you’re considering your options and seeing whether you qualify, take a step back and think about whether deferment or forbearance are right for you in the long run.

And if you find that your current lender’s options aren’t enough, consider refinancing your student loans with a lender that provides what you need.

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

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

If you are motivated, you may decide to pursue a PhD program in your given field of study. However, you are probably aware that doing so not only requires time and energy but can also be an expensive proposition. According the Education Data Initiative, the average cost of a doctorate degree (which typically takes four to eight years) is $150,835. The average student loan debt for this kind of degree is $112,080.

That can be a daunting sum, but a fully funded PhD program can offset part or all of these costs. In addition to financing tuition and fees, these programs usually provide a stipend to help cover living expenses. Some may also pay for any research and travel necessary for students to complete their graduate degrees.

Since this can make a huge difference in a prospective student’s financial outlook, here’s a closer look at fully funded PhD programs, how they work, and how they can help lower the cost of a degree.

What is a PhD Program?

PhD programs, also known as doctoral programs, are often a next step after a master’s degree. They give students the opportunity to do graduate-level research in the field of their choice and earn the highest degree possible (sometimes referred to as a terminal degree). They span a variety of subjects, such as engineering, English, public health, and computer science.

The application process for a PhD program can be competitive, and the programs themselves can be very time-consuming, taking (as mentioned above) on average between four and eight years. Working while pursuing these specialized degrees can be challenging, which is why it can be so helpful when a program offers an annual stipend.


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What Does Fully Funded Mean?

In a fully funded PhD program, the student typically receives full tuition reimbursement and a stipend to help cover the cost of living while pursuing the degree. Programs have varying funding requirements.

In some cases, students may receive a “no-strings-attached” fellowship. This means they receive funding but don’t owe the university anything aside from their research.

In many cases, to receive funding, a student will need to work part-time for the university by providing teaching or administrative assistance. These experiences can give students an opportunity to build out their resume while helping them pay for graduate school.

More often than not, these graduate fellowship positions are the main way to receive full funding to attend a PhD program and are commonly offered in research-based degree programs. Some fellowships may be offered in the form of scholarships or stipends, which are not usually taxed as income by the IRS (Internal Revenue Service).

Schools may also offer assistantships, where students earn an income from the university. Generally, these positions are given to doctoral students who are doing research in order to complete their theses or dissertations. Assistantships can be taxed as income.

While all PhD programs have their own unique funding packages, many fully funded programs are designed to help students cover a variety of costs. Here are some common ones.

Tuition and Fees

Typically, fully funded PhD programs provide students with so-called “tuition waivers.” The waivers cover the cost of attending the university, including tuition and fees. In some cases, book stipends, reduced-fare transit passes, and other benefits are included to lessen the student’s financial burden.

Recommended: How to Pay for Grad School

Living Expenses

Whether through fellowship funding or a university job, students in a fully funded PhD program can receive a stipend to pay for food, rent, transportation, and other living expenses.

Depending on a student’s cost of living and lifestyle choices, these lump sums might not be enough to fully cover costs. This may be especially true during the summer, when stipends are less likely to be given out. If their program does not offer summer funding, students might choose to work part-time or take out loans to make ends meet.

Recommended: Using Student Loans for Living Expenses Off Campus

Health Insurance

While many doctoral programs include health insurance benefits, some do not. As you’re exploring graduate school programs, it’s a good idea to find out if it provides this important type of coverage.

Generally, student health insurance packages only cover care and services at on-campus facilities. Some programs automatically enroll their students in one type of healthcare plan, and others allow students to choose their plan during the annual open enrollment period.

If a student is married or has dependents, they may be able to add them to their student health insurance plan for an additional cost.

Research and Travel Funding

If necessary, some programs allow doctoral students to apply for funding to help them conduct their research or travel to conferences, archives, or summer programs. This is something students apply for on an as-needed basis and is not a guarantee.

In some cases, students will pay the costs up front and then be reimbursed. Grants and scholarships can also help cover research and travel expenses.

How to Find a Fully Funded PhD Program

There are sites that allow you to search for various PhD programs around the world. But one of the best ways to discover which programs are fully funded can be by conducting your own research.

•   Before submitting an application to a PhD program, learn more about the university’s resources, faculty members, and requirements for graduation. Look into the specifics of the funding options available at each university you plan to apply to, as PhD programs may address funding differently. Often, schools will include information about these opportunities on their website.

•   While some universities automatically give grants or fellowships to their admitted students, others make their students complete a separate funding application. These applications can require submitting letters of recommendation or personal statements and can have deadlines that are different from the application deadline for the doctoral program.

Examples of Fully Funded PhD Programs

It’s possible to find fully funded PhD programs across a variety of subjects at many different schools. From a PhD in biological sciences at Harvard to education at Stanford to nursing at Duke, fully funded PhD programs cover an array of study areas.


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Paying Down Student Loan Debt

If you have student loan debt from an undergraduate or master’s degree that you want to pay down before or during a PhD program, you might consider exploring student loan refinancing. Refinancing could help you save money in interest over the life of the loan and pay down your debt faster.

Student loan refinancing involves taking out a new loan at a new interest rate and/or a new term that can be more favorable than the current rate or terms you currently have. It is possible to refinance both federal and private student loans.

But there are two important caveats:

•   When you refinance federal student loans with private loans, you forfeit access to federal benefits and protection, such as forbearance, forgiveness, and income-driven repayment plans.

•   Also, if you refinance for an extended term, while your monthly payments may decrease, you can pay more in interest over the life of the loan.

Think carefully about these points when deciding if refinancing could be the right option for you.

The Takeaway

Pursuing the highest possible graduate degree can be expensive, but a fully funded PhD program can offset all or part of the costs. Programs vary from school to school, but they typically cover the cost of tuition and may include a stipend to help finance living expenses and more. In some cases, PhD candidates will be required to do research or teach as part of the agreement to receive funding. Students can also explore other ways to cover the cost of school, including scholarships or grants.

In addition, PhD candidates who are paying off student loans from an undergraduate or master’s degree may want to consider student loan refinancing. Doing so with federal loans via a private loan means forfeiting federal benefits and protections. Also, refinancing for an extended term could mean paying more interest over the life of the loan.

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

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

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