Jul
03
2025
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Using In-School Deferment as a Student

By | Student Loans, student_loan | No Comments

Undergraduate and graduate students in school at least half-time can put off making federal student loan payments, and possibly private student loan payments, with in-school deferment. The catch? Interest may accrue on certain types of loans.

While some students choose to start paying off their loans while they’re still in college, many take advantage of in-school deferment. Keep reading to learn more on in-school deferment and whether or not it’s the right choice for you.

Key Points

•   In-school deferment allows students to postpone federal and some private student loan payments while enrolled at least half-time, although interest typically accrues during this period.

•   Federal student loans automatically enter in-school deferment, while students must initiate deferment requests for private loans through their loan servicer.

•   Accrued interest on Federal Direct Unsubsidized Loans during deferment will be capitalized, increasing the principal balance and future monthly payments.

•   Alternatives to in-school deferment include economic hardship, graduate fellowship, military service, and unemployment deferments, each with specific eligibility criteria.

•   Exploring options like income-based repayment or refinancing can help manage student debt, but refinancing federal loans eliminates access to federal benefits like deferment and forgiveness.

What Is In-School Deferment?

In-school deferment allows an undergraduate or graduate student, or parent borrower, to postpone making payments on:

•   Direct Loans, which include PLUS Loans for graduate and professional students, or parents of dependent undergrads; subsidized and unsubsidized loans; and consolidation loans

•   Perkins Loans

•   Federal Family Education Loan (FFEL) Program Loans

Parents with PLUS Loans may qualify for deferment if their student is enrolled at least half-time at an eligible college or career school.

What about private student loans? Many lenders allow students to defer payments while they’re in school and for six months after graduation. Sallie Mae lets you defer payments for up to 48 months as long as you are enrolled at least half-time.

Each private lender has its own rules, though, so always check with your specific lender.

Recommended: How Does Student Loan Deferment in Grad School Work?

How In-School Deferment Works

Federal student loan borrowers in school at least half-time are automatically placed into in-school deferment. You should receive a notice from your loan servicer.

If your loans don’t go into automatic in-school deferment or you don’t receive a notice, get in touch with the financial aid office at your school. You may need to fill out an In-School Deferment Request, which is available at studentaid.gov.

If you have private student loans, it’s a good idea to reach out to your loan servicer to request in-school deferment. If you’re seeking a new private student loan, you can review the lender’s school deferment rules.

Most federal student loans also have a six-month grace period after a student graduates, drops below half-time enrollment, or leaves school before payments must begin. This applies to graduate students with PLUS Loans as well.

Parent borrowers who took out a PLUS Loan can request a six-month deferment after their student graduates, leaves school, or drops below half-time enrollment.

Requirements for In-School Deferment

Students with federal student loans must be enrolled at least half-time in an eligible school, defined by the Federal Student Aid office as one that has been approved by the Department of Education to participate in federal student aid programs, even if the school does not participate in those programs.

That includes most accredited American colleges and universities and some institutions outside the United States.

In-school deferment is primarily for students with existing loans or those who are returning to school after time away.

The definition of “half-time” can be tricky. Make sure you understand the definition your school uses for school deferment, as not all schools define half-time status the same way. It’s usually based on a certain number of hours and/or credits.

Do I Need to Pay Interest During In-School Deferment?

For most federal student loans, no.

However, if you have a Federal Direct Unsubsidized Loan, interest will accrue during the deferment and be added to the principal loan balance.

If you have a Direct Subsidized Loan or a Perkins Loan, the government pays the interest while you’re in school and during grace periods. That’s also true of the subsidized portion of a Direct Consolidation Loan.

Interest will almost always accrue on deferred private student loans.

Although postponement of payments takes the pressure off, the interest that you’re responsible for that accrues on any loan is currently capitalized, or added to your balance, after deferments and grace periods. (This capitalization will no longer occur in certain situations as of July 2023, thanks to new regulations from the Department of Education that are set to take effect.) You’ll then be charged interest on the increased principal balance. Capitalization of the unpaid interest may also increase your monthly payment, depending on your repayment plan.

If you’re able to pay the interest before it capitalizes, that can help keep your total loan cost down.

Alternatives to In-School Deferment

There are different types of deferment aside from in-school deferment.

•   Economic Hardship Deferment. You may receive an economic hardship deferment for up to three years if you receive a means-tested benefit, such as welfare, you are serving in the Peace Corps, or you work full-time but your earnings are below 150% of the poverty guideline for your state and family size.

•   Graduate Fellowship Deferment. If you are in an approved graduate fellowship program, you could be eligible for this deferment.

•   Military Service and Post-Active Duty Student Deferment. You could qualify for this deferment if you are on active duty military service in connection with a military operation, war, or a national emergency, or you have completed active duty service and any applicable grace period. The deferment will end once you are enrolled in school at least half-time, or 13 months after completion of active duty service and any grace period, whichever comes first.

•   Rehabilitation Training Deferment. This deferment is for students who are in an approved program that offers drug or alcohol, vocational, or mental health rehabilitation.

•   Unemployment Deferment. You can receive unemployment deferment for up to three years if you receive unemployment benefits or you’re unable to find full-time employment.

For most deferments, you’ll need to provide your student loan servicer with documentation to show that you’re eligible.

Student Loan Forbearance

Another option is federal student loan forbearance, which temporarily suspends or reduces your principal monthly payments, but interest always continues to accrue.

Some private student loan lenders offer forbearance as well.

If your federal student loan type does not charge interest during deferment, that’s probably the way to go. If you’ve reached the maximum time for a deferment or your situation doesn’t fit the eligibility criteria, applying for forbearance is an option.

Income-Based Repayment

If your ability to afford your federal student loan payments is unlikely to change any time soon, you may want to consider an income-based repayment plan. Income-based repayment plans are available for federal student loans only, not private student loans.

Student Loan Refinancing

Students can also explore student loan refinancing. The goal of refinancing with a private lender is to change your rate or term. If you qualify, all loans can be refinanced into one new private loan.

Playing with the numbers can be helpful when you’re considering refinancing. Using a student loan refinance calculator can help you figure out how much you might save.

Should you refinance your student loans? If it could save you money, refinancing may be worth it for you. Just know that if you refinance federal student loans, they will no longer be eligible for federal deferment or forbearance, loan forgiveness programs, or income-driven repayment. Make sure you won’t need access to these programs.

The Takeaway

In-school deferment allows undergraduates and graduate students to buy time before student loan payments begin, but interest may accrue on certain types of loans and is added to the balance.

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


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

FAQ

What is student deferment?

Student deferment is a temporary pause on loan payments, allowing borrowers to postpone repayment due to specific circumstances like unemployment, economic hardship, or returning to school. Interest may still accrue on some loans.

Does putting student loans in deferment hurt your credit?

No, deferment itself does not hurt your credit. However, if you miss payments before or after deferment, it can negatively impact your credit score.

What are the disadvantages of deferment?

Disadvantages of student loan deferment include accrued interest on unsubsidized loans, which can increase the total amount owed. It may also delay progress on paying off your loans, potentially extending the repayment period. Additionally, deferment eligibility is limited and may not be available for all types of loans or situations.

About the author

Kylie Ora Lobell

Kylie Ora Lobell

Kylie Ora Lobell is a personal finance writer who covers topics such as credit cards, loans, investing, and budgeting. She has worked for major brands such as Mastercard and Visa, and her work has been featured by MoneyGeek, Slickdeals, TaxAct, and LegalZoom. Read full bio.


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 FORFEIT YOUR ELIGIBILITY 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).

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


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

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 Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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

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Jul
03
2025
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Tips on How to Pay for MBA School

By | Budgeting & Goals, Building Your Career, Fresh Out of School, Life & Career, Student Loans, student_loan | No Comments

Getting a Master of Business Administration is an investment. Tuition costs vary widely depending on the school, but the average cost of an MBA is $60,410 for a program in the U.S.

If you’re committed to pursuing an MBA, the reality is that a higher income is probably still a few years away. However, you’re responsible for the cost of schooling now. It can be daunting, but there are options for making business school more affordable. Here are a few tips to consider as you craft a plan to pay for your MBA program.

Key Points

•   Earning an MBA degree is expensive. One way to help cover the cost is to save up if you’re currently employed to reduce the amount you may need to borrow in student loans.

•   Take advantage of “free money”: Apply for need- or merit-based scholarships, grants, and fellowships from schools you’re considering attending.

•   Find out if your company will pay for part or all of your MBA. In return, they may require that you commit to working at the company for a certain amount of time.

•   Apply for federal loans student loans by filling out the Free Application for Federal Student Aid (FAFSA®); graduate students may qualify for Direct Unsubsidized and PLUS Loans.

•   Research and compare private student loans if federal loans don’t cover the full costs of your degree.

Saving Up in Advance

If you’re already employed, and especially if you earn a high salary, it may make sense for you to stay in your gig for a few more years and put money away toward your degree. The more you save now, the less you may have to take out in loans later. If you’re interested in accelerating your savings, consider cutting your expenses to prepare for the lifestyle change of becoming a student again.

Taking Advantage of Free Money

There are a plethora of scholarships, grants, and fellowships available for business students. If you manage to land one, they can help reduce your costs slightly or significantly, depending on the size of the award.

When hunting for scholarships, consider starting with the schools you’re thinking of attending. Many institutions offer their own need- or merit-based scholarships and fellowships, some of which may even fund the entire cost of MBA tuition. Many of these are geared toward specific groups of students.

Awards may be based on academic excellence, entrepreneurship, and for those committed to careers in business or finance. Contact your school’s admissions or financial aid departments to learn about the opportunities you qualify for.

Getting Sponsored by a Company

Some employers offer to pay for all or part of an MBA degree. In exchange, they may require that you work there for a certain time period beforehand and commit to maintaining your employment for some time after you graduate.

Some companies may offer relatively modest grants, while others might offer to cover the bulk of tuition costs. Some companies that offer tuition reimbursement for employees pursuing MBAs include Deloitte, Google, Apple, Intel, AT&T, and Expedia Group.

If you can land a job at a company that offers this benefit, it can be a major help in paying for school and reducing your debt burden. Just be sure that you’re willing to meet the commitments, which in most cases means staying with your employer for a while.

Taking Out Student Loans

If you can’t cover the full cost of tuition and living expenses through savings, scholarships, or sponsorships, borrowing student loans is another option. You might first consider borrowing from the federal government, as federal loans offer certain borrower protections and flexible student loan repayment options.

Federal Student Loans

To apply for federal student loans, first fill out the Free Application for Federal Student Aid (FAFSA®). The school you attend will determine the maximum you’re able to take out in loans each year, but you don’t have to take out the full amount. You might choose to only borrow as much as you need, since you’ll have to pay this money back later—with interest, of course.

Graduate students are generally eligible for Direct Unsubsidized Loans (up to $20,500 each year) or Direct PLUS Loans. Neither of these loans is awarded based on financial need.

Both of them accrue interest while the student is enrolled in school. Unless you pay the interest while you’re in school, it will get capitalized (or added to the principal of the loan), which can increase the amount you owe over the life of the loan.

Direct Unsubsidized Loans have a six-month grace period after graduation in which you won’t have to make principal payments (remember, interest still accrues). Direct PLUS Loans do not have a grace period but grad students automatically get a six-month deferment after they graduate. No principal payments are due during this time.

Private Student Loans

If you aren’t able to borrow as much as you need in federal loans, you can also apply for MBA student loans with private lenders, including banks and online financial institutions.

Private student loans have their own interest rates, terms, and possible benefits. Make sure to research the different lenders out there and see which is the best fit for your financial situation.

Paying Student Loans Back

Taking out a big loan can be daunting, but there are options for making repayment affordable, especially with federal loans. The government currently offers three income-based repayment plans that tie your monthly payment to your discretionary income and family size.

If you run into economic hardship, you can apply for a deferment or forbearance, which may allow eligible applicants to reduce or stop payments temporarily.

If you put your degree to use at a government agency or nonprofit organization, you may also qualify for Public Service Loan Forgiveness. If you meet the (extremely stringent) criteria, this program will forgive your loan balance after you make 120 qualifying monthly payments (10 years) under an eligible IDR plan.

Refinancing Student Loans

If you’re still paying off student debt from college or another graduate degree as you enter your MBA program, you could consider looking into student loan refinancing.

This involves applying for a new loan with a private lender and, if you qualify, using it to pay off your existing loans. Particularly if you have a solid credit and employment history, you might be able to snag a lower interest rate or reduced monthly payment.

While there are many advantages of refinancing student loans, there are also disadvantages, as well. If you refinance federal student loans, you lose access to federal forgiveness programs and income-based repayment plans. Make sure you do not plan on taking advantage of these programs before deciding to refinance your student loans.

The Takeaway

MBA programs can offer a valuable opportunity to advance your career and increase your income, but they can also come with a hefty price tag. Options to pay for your MBA degree can include using savings, getting a scholarship, grant, or fellowship, or borrowing student loans. Everyone’s plan for financing their education may be different and can include a combination of multiple resources.

Making existing loans manageable while you’re in school can go a long way to making your MBA affordable. Down the line, you can consider refinancing the loans you take out to get you through your MBA program. You can get quotes online in just a few minutes to help figure out whether refinancing can get you a better deal.

If you do decide to refinance your student loans, consider SoFi. SoFi offers flexible terms and no origination or prepayment fees.

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

FAQ

How do I fund my MBA program?

Ways to fund an MBA program include looking for scholarships, grants, and fellowships for business students (contact your school to see what’s available), checking to see whether your employer will pay some or all of the cost of your degree (ask your company’s benefits coordinator), or taking out federal and/or private student loans.

How can I get an MBA cheaper?

To reduce the cost of an MBA, look for scholarships that will pay some or all of the expense for earning your degree. Ask the schools you’re considering to see what they may offer — many institutions offer need- or merit-based scholarships for MBA students. In addition, if you are currently employed, check with your employer to find out if they will cover some of the costs of your degree. Some companies offer this as an employee benefit.

How much should I pay for an MBA?

The average cost of an MBA is $60,410 for two years. However, depending what school you attend, the cost may be well over $100,000. For example, the cost of earning an MBA at Harvard is approximately $161,304.

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 FORFEIT YOUR ELIGIBILITY 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).

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

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., Puerto Rico, U.S. Virgin Islands, or American Samoa, 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 4/22/2025 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.

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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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

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Jul
03
2025

5 Easy Ways Doctors Can Save on Taxes

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

Doctors tend to make a good amount of money. For instance, primary care physicians report earning about $281,000 a year while specialists make approximately $398,000 annually, according to a 2025 survey from Medscape.

But compared to other high-earners, doctors also have high amounts of student debt. Med school graduates owe an average of $243,483 in student debt, reports EducationData.org. In addition, physicians spend extra years in school, rather than building equity in their future, such as having a 401(k) or an IRA.

That’s why it makes sense to know how to save money on taxes as a doctor and learn about physician tax deductions.

Here are five easy ways doctors can save on taxes, plus tax deductions for doctors.

Key Points

•   Doctors can reduce their tax burden by contributing to various tax-advantaged retirement accounts.

•   Establishing a 529 plan for children’s education expenses can provide tax savings.

•   Self-employed doctors should deduct all business-related expenses to minimize taxes.

•   Doctors should evaluate the tax implications of long-term versus short-term capital gains.

•   Donating appreciated investments to charity can offer significant tax benefits.

1. Contribute to multiple tax-advantaged retirement accounts.

One way to save? Instead of only paying into one company-sponsored 401(k) or 403(b) plan, spread your retirement savings across as many tax-advantaged accounts as you can. By having multiple accounts like this, you can substantially increase your savings each year.

2. Consider a 529 plan account to save for children’s college funds.

A 529 account grows tax-free when used for qualifying educational expenses. You might even get a tax deduction on your state taxes the year you fund it. Check your local tax laws to find out more.

3. If you own a practice or you moonlight, consider deducting all business-related expenses.

For physicians, owning a practice comes with a perk: tax deductions for doctors. Think advertising, licensing fees, board exam fees, website fees, subscriptions to professional publications, dues and memberships to medical associations, and traveling to conferences. The general strategy is to deduct as much on Schedule C or your personal tax return as allowable.

4. For investments, consider the tax benefits of long versus short term gains.

Owning an investment for more than one year means any profit will qualify as a long-term gain. That makes sense. What’s important to consider is that long-term capital gains are typically taxed at lower rates than short-term capital gains (which are taxed at your ordinary income rate). For those with portfolios to manage, this is one factor worth keeping in mind.

5. For charitable donations, don’t forget you can donate investments.

Most people know that donating cash or used items qualifies as a tax deduction. But for physician tax deductions, it’s good to remember you can donate appreciated stocks and funds. In this case, you can gain a double tax benefit by getting a tax deduction for the gift—and avoiding the capital gain on the sale.

Another way to possibly save money is with student loan refinancing. When you refinance, you replace your existing student loans with a new loan, ideally with a lower interest rate and better terms.

Should you refinance your student loans? One very important thing to keep in mind is that refinancing federal student loans makes them ineligible for federal protections and programs, like income-driven repayment plans. If you think you may need these federal benefits, refinancing may not be right for you.

This student loan refinancing guide may be helpful as you weigh your options.

If you decide to explore refinancing, this student loan refinance calculator can help you figure out what you might save. For instance, a lower interest rate or a longer loan term may help lower your monthly payment. However, a longer loan term means you may end up paying more interest over the life of the loan.

This student loan refinancing guide may be helpful as you weigh your options.
If you decide to move forward with refinancing your student loans, SoFi offers flexible terms and no origination or prepayment fees.

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

FAQ

How can doctors reduce their taxes?

Doctors can reduce their taxes by taking such steps as contributing to multiple tax-advantaged retirement accounts, deducting business expenses if they own their own practice, opening a 529 plan to save for their children’s education, exploring long-term vs. short-term capital gains when it comes to investments, and donating investments.

What can you write off as a doctor?

Tax deductions you can write off as a doctor include board exam fees, memberships and dues to medical associations, traveling to conferences, licensing fees, and fees for professional publications.

Why do doctors get taxed so much?

Doctors may pay more in taxes because they typically earn high salaries. For example, primary care physicians make about $281,000 a year, while specialists make around $398,000. Tax-saving strategies such as contributing to tax-advantaged retirement accounts, taking work-related tax deductions, and making charitable contributions may help lower a doctor’s tax bill.

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 FORFEIT YOUR ELIGIBILITY 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).

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.

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

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

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

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

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Jul
02
2025
4 Student Loan Repayment Options—and How to Choose the Right One for You

4 Student Loan Repayment Options — and How to Choose the Right One for You

By | Debt Payoff, Financial Independence, Fresh Out of School, Student Loans, student_loan | No Comments

It’s never too early to think about student loan repayment. Whether you’re still in college, or you recently graduated and are in the grace period before repayment begins, strategizing now can help you weigh the options.

If you’ve graduated and are already working and making payments, it can be a good idea to re-evaluate your repayment plan over time. As your financial circumstances change, the way you’d like to manage your student loans may also shift.

Before considering your options, take inventory of all your student loans. Be sure to list the principal, the interest rate, the repayment period, and the servicer for each loan.

All federal student loans issued in recent years have fixed interest rates, but private student loans or older federal student loans may have variable rates. If the rate is variable, be sure to note that as well.

Key Points

•   The Standard Repayment Plan is the default option for federal student loans, offering fixed payments over 10 years, but it may not be the most cost-effective for everyone.

•   Income-Driven Repayment Plans adjust payments based on discretionary income and can lead to loan forgiveness after 20-25 years, though they may increase total interest paid.

•   Student Loan Forgiveness Programs are available for certain borrowers, such as those in public service or teaching, but require meeting eligibility criteria like 120 qualifying payments.

•   Student Loan Consolidation allows federal borrowers to combine multiple loans into one with a single payment, but it does not lower interest rates.

•   Student Loan Refinancing can reduce interest rates and lower payments, but refinancing federal loans with a private lender eliminates federal protections and repayment options.

Different Student Loan Repayment Options

Once you understand the details of your student loans, it’s time to think about your repayment options. The simple choice if you have federal student loans is the Standard Repayment Plan. It’s the “default” repayment plan, so unless you sign up for another option, this is the plan you’ll have. Under the Standard plan, you typically pay a fixed amount every month for up to 10 years.

There is no “standard repayment plan” for private student loans; the interest rate may vary based on market factors, and your repayment term might be shorter or longer.

The federal government also offers graduated and extended repayment plans for borrowers. With the Graduated Repayment Plan, payments start smaller and grow over time, while the Extended Repayment Plan stretches repayment over a period of up to 25 years and payments may be either fixed or graduated.

Opting for the Standard Repayment Plan may work for you, but for some borrowers, it’s not the most cost-effective choice. These borrowers may be eligible for special federal programs that can reduce the amount they owe monthly based on financial circumstances, and in some cases, forgive balances if they meet certain requirements.

Or some borrowers might be able to find a more competitive interest rate by refinancing their loans through private lenders.

💡 Quick Tip: Often, the main goal of refinancing is to lower the interest rate on your student loans — federal and/or private — by taking out one loan with a new rate to replace your existing loans. Refinancing may make sense if you qualify for a lower rate and you don’t plan to use federal repayment programs or protections, since refinancing federal loans makes them ineligible for federal benefits.

Here’s an overview of some student loan repayment options that may help if you are choosing a repayment plan:

1. Student Loan Consolidation

Federal student loan consolidation allows you to combine multiple federal student loans into a single new loan. You can’t consolidate private student loans using this federal program.

When you consolidate your federal student loans into a Direct Consolidation Loan, your new loan’s interest rate will be the weighted average of all your old student loans’ interest rates, rounded up to the nearest one-eighth of a percent. This means your interest rate won’t necessarily be lower than the rate you were paying before consolidation on some of your student loans — in fact, it could be slightly higher.

When you consolidate, you’ll also have the option to select a new repayment plan. The standard plan would still be available, but consolidation can also be a first step toward other plans of action, like student loan forgiveness or income-driven repayment.

2. Student Loan Forgiveness

Federal student loans are eligible for student loan forgiveness programs, and private student loans may qualify for some loan repayment assistance programs. For instance, some federal student loans and Direct Consolidation Loans are eligible for modified payment plans that forgive outstanding student loan balances.

Health care professionals, teachers, military service members, and those employed full-time by qualifying nonprofit or public service organizations may be eligible for certain federal student loan forgiveness programs. Some states and employers offer loan repayment assistance toward both federal and private loans for eligible workers.

Under the Public Service Loan Forgiveness (PSLF) program, those who have worked for qualified employers, such as the government or some nonprofit agencies, and have made 10 years of payments on a qualified income-driven repayment plan, can apply for forgiveness of all of their remaining federal student loan balances. That forgiveness is not considered taxable income.

The Federal Student Aid website has additional information on which federal student loans qualify for which types of forgiveness, cancellation, and/or discharge.

3. Income-Based Repayment

If the payments under the Standard Repayment Plan seem too high, federal student loans offer income-driven repayment plans, which tie the amount you pay to your discretionary income. The currently available options are Income-Based Repayment, Income-Contingent Repayment, and Pay As You Earn.

Income-driven repayment plans may help lower your monthly payments. In some cases, however, you might end up paying more over the life of the loan than you would have on the Standard Repayment Plan. That’s because with low monthly payments that stretch out over more years, you could be paying more in interest over time.

Additionally, with income-driven repayment plans, you may be eligible for student loan forgiveness if the remainder of your student loans aren’t paid off after 20 to 25 years of consistent, on-time payments.

4. Student Loan Refinancing

Refinancing student loans through a private lender offers the opportunity to consolidate multiple student loans into a single payment and potentially decrease your interest rate or lower your monthly payment.

Loan repayment terms vary based on the lender, and borrowers with better credit and earning potential (among other financial factors that vary by lender) may qualify for better terms and interest rates.

One important thing to know about refinancing, however, is that once you refinance a federal student loan into a private loan, you can’t undo that transaction and later consolidate back into a federal Direct Consolidation Loan.

This can be relevant for professionals in health care or education where federal student loan forgiveness plans are offered, or for those considering long-term employment in the public sector.

In addition, refinancing federal student loans with a private lender renders them ineligible for important borrower benefits and protections, like income-driven repayment and deferment.

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

Can You Change Your Student Loan Repayment Plan?

If you have federal student loans, it is possible to change your repayment plan at any time, without any fees. You’ll have the option to choose from any of the federal repayment plan options, including income-driven repayment plans.

There is less flexibility to change the terms of a private student loan. Some private lenders may offer alternative payment plans for borrowers. Check with your lender directly to see what options may be available to you.

Recommended: Student Loan Calculator

SoFi Student Loan Refinancing

Refinancing is another avenue that can result in a new repayment plan. An important consideration, however, is that refinancing federal student loans will remove them from any federal programs or protections, so this won’t be the right choice for everyone.

The Takeaway

Federal student loan borrowers have the ability to change their repayment plan at any time, without being charged any fees. There are different plans to choose from, and you can look for one that suits your situation and needs.

Changing your repayment plan is a bit more challenging for private student loans, though some private lenders may offer alternative options for borrowers. Refinancing is another option that could allow some borrowers to adjust their repayment terms.

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


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

FAQ

What student loan repayment options are available to me?

Borrowers with federal student loans can choose from various federal repayment plans, including the standard 10-year repayment plan and income-driven repayment options. The SAVE plan, which was introduced by the Biden Administration at the end of June 2023, is no longer available. For private student loans, repayment options will be determined by the lender.

What is a standard repayment plan for student loans?

The Standard Repayment Plan for federal student loans involves fixed monthly payments over a period of 10 years. For consolidation loans, repayment may extend up to 30 years, depending on the loan amount.

How long is a typical student loan repayment?

The typical student loan repayment period may vary from individual to individual. The Standard Repayment Plan for federal loans is 10 years, but income-driven repayment plans or Direct Consolidation loans may have a term of up to 25 to 30 years. The repayment terms for private student loans vary by lender.

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 FORFEIT YOUR ELIGIBILITY 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).

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.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Jul
02
2025

The Pros and Cons of Graduated Repayment Plans

By | Debt Payoff, Fresh Out of School, Student Loans, student_loan | No Comments

Graduation from college or grad school is a time to celebrate a great achievement after years of hard work. But once the party is over, many graduates will be thinking of their next steps: new careers, new cities, and a life filled with new experiences and responsibilities.

For most recent grads, one of those responsibilities is a major one — managing and organizing the repayment of student loans. The average undergrad borrower leaves school with $35,530 in student loan debt, joining the growing population of Americans who, together, are repaying more than $1.7 trillion in student loans.

Key Points

•   Graduated repayment plans allow recent graduates to start with lower monthly payments that increase every two years, helping to accommodate entry-level salaries.

•   The repayment term for graduated plans is typically 10 years, allowing borrowers to pay off their loans relatively quickly while managing their cash flow.

•   Drawbacks include paying more interest over time due to lower initial payments and potential difficulty handling scheduled payment increases as salaries may not keep pace.

•   An extended graduated repayment plan offers lower monthly payments over a longer term of 25 years, but results in higher overall interest costs.

•   Refinancing student loans can provide a lower interest rate and streamlined repayment, but borrowers lose federal loan benefits such as forgiveness options and income-based repayment plans.

Student Loan Repayment Options

Managing the repayment of federal student loan debt requires strategy, organization, diligence, and a bit of know-how, especially when it comes to picking a repayment plan.

There are several federal repayment options: the standard plan, income-driven plans, and the graduated repayment plan, among others. New grads can also consider consolidating or refinancing their student loans into one new loan with a new rate and new terms. For a recent grad overwhelmed by new choices and decisions, parsing out the details of these loans can be a chore — one that frequently gets ignored.

The graduated repayment plan has been somewhat replaced by newer repayment options, like income-based and income-contingent plans. For some borrowers, though, this plan can be a useful way to begin repayment slowly but still pay off federal loans in 10 years (10-30 years for consolidation loans).


💡 Quick Tip: Often, the main goal of refinancing is to lower the interest rate on your student loans — federal and/or private — by taking out one loan with a new rate to replace your existing loans. Refinancing can make sense if you qualify for a lower rate and don’t plan to use federal repayment programs or protections, since refinancing federal loans makes them ineligible for federal benefits.

How Do Graduated Repayment and Extended Graduated Repayment Plans Work?

Graduated Repayment Plan

The graduated repayment plan is designed to help keep repayment costs low for recent graduates who may have lower starting salaries, but who expect to see their salaries increase substantially over the next 10 years.

Under the graduated repayment plan, the repayment term for federal loans will be 10 years (10-30 years for consolidated loans), which is the same length as the standard repayment plan. With the standard repayment plan, you will pay the same fixed amount each month for the length of the term.

On the graduated plan, your payments will be lower than what you would pay if you were to stay on the standard plan, but never too low that you aren’t paying the amount of interest that is accruing each month. Then, every two years, your payment amount will increase.

Extended Graduated Repayment Plan

The extended graduated repayment plan is similar to the graduated plan, however, the repayment term is over 25 years rather than 10. Typically, borrowers who select this plan will have lower monthly payments than they would under the standard or graduated plan. While their payments will increase over time, they’ll do so more gradually than they would under the extended plan due to the longer term.

With this plan, borrowers may have a much lighter bill to pay each month than they would on many other plans. However, they will end up paying more in interest over time.

What Are the Benefits of a Graduated Repayment Plan?

The main benefit of the graduated repayment plan is that your payments will be low for the first few years of repayment. This can be a big help to recent graduates on entry-level salaries who may not have additional cash flow and are just learning how to build a solid financial foundation while staying within their budget.

Payments will increase over time, but your repayment term (for unconsolidated loans) is 10 years. This means that if you make scheduled payments, you’ll be finished paying off your debt relatively quickly. For Direct Consolidation Loans, your repayment period will depend on the amount of debt you have and could be between 10 and 30 years.

What Are the Drawbacks of a Graduated Repayment Plan?

There are a number of drawbacks to the graduated repayment plan, which can make it a less attractive option than some of the other repayment options available. First, even though you’ll be paying off your loans in 10 years, you will end up paying more in interest using this plan as opposed to the standard plan.

Why? Because with the graduated plan, you’re making lower payments in the first few years. As a result, you’re not paying down as much of the principal as you would be on the standard plan, which means you’re paying more in interest over time.

Another potential drawback is that your payments are scheduled to increase every two years. Depending on the amount you owe, these increases can be staggering.

While the lower payments up front might fit your budget as you start your career, it’s hard to predict whether your salary will increase at just the same rate as your payments will. However, if you end up having a difficult time making the higher payments that eventually come with a graduated repayment plan, you can switch to an income-based plan or an extended plan.

Refinancing Student Debt vs Graduated Repayment Plans

Once you’ve gotten settled into a steady job, another option to consider is refinancing your student loans with a private lender. When you refinance, you are essentially using one new loan to pay off all your current student loans. Then, you just have the new loan to repay, which will have a new interest rate and new terms.

There are a number of benefits to refinancing, including getting a lower interest rate, a lower monthly payment, or a shorter or longer loan term. Additionally, replacing all your loans with one loan will help you streamline your repayment. Some lenders even allow you to refinance private and federal loans together. Note: You may pay more interest over the life of the loan if you refinance with an extended term.

Refinancing your loans with a private lender at a lower interest rate and shorter term can potentially save you thousands of dollars in interest over the life of your loan. However, when you refinance, you give up some of the benefits that come with keeping your federal loans, including student loan forgiveness and income-based repayment plans.

If you foresee a need to use any of these benefits that come with federal loans, it might not be in your best interest to refinance. But, if you have built a strong financial foundation and have a steady income coming in, refinancing could be the best strategy for paying your loans down quickly — and for saving money in the process.

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

Refinancing Student Loans with SoFi

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 FORFEIT YOUR ELIGIBILITY 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).

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.


Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

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

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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