Student Loans Archives

Apr

2025

What Student Loan Repayment Plan Should You Choose? Take the Quiz

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

Federal student loans offer a specific selection of repayment plans that borrowers can choose from. Federal student loan borrowers may be assigned a repayment plan when they begin loan repayment, but they can change their repayment plan at any time without fees.

Choosing the right repayment plan may feel overwhelming, but understanding the repayment plans available to federal student loan borrowers can help.

Key Points

• The Standard Repayment Plan is the default plan for federal student loans, featuring fixed monthly payments over 10 years.

• Graduated Repayment Plan payments start lower and increase every two years, with the loan paid off in 10 years.

• Income-driven repayment plans adjust monthly payments based on income and family size, potentially lowering payments.

• The Extended Repayment Plan is available to borrowers with more than $30,000 in federal student loans; this plan extends repayment up to 25 years.

• Private student loans don’t qualify for federal repayment plans. Borrowers should contact their lenders to explore available options, such as alternative payment plans or refinancing.

Student Loan Repayment Options

The student loan repayment options for federal loans covered in this article are:

• Standard Repayment Plan

• Extended Repayment Plan

• Graduated Repayment Plan

• Income-Driven Repayment Plans

The Standard Repayment Plan is 10 years (10 to 30 years for those with consolidation loans) and usually has the highest monthly payments, but it allows borrowers to repay their loans in the shortest period of time. That may help a borrower pay less in accrued interest over the life of the loan.

The Extended Repayment Plan stretches out the repayment period so that you’re putting money toward student loans for up to 25 years. Payments can be fixed or they may increase gradually over time. This repayment plan may be worth considering for borrowers who have more than $30,000 in federal Direct Loans and cannot meet the monthly payments on the Standard Repayment Plan.

On the Graduated Repayment Plan, the repayment period is typically 10 years (10 to 30 years for those with consolidation loans). The monthly payments start out low and then increase every two years. This plan may be worth considering for borrowers who have a relatively low income now, but anticipate that their salary may increase substantially over time.

Income-driven repayment plans tie a borrower’s income to their monthly payments. These options may be worth considering for borrowers who are struggling to make payments under the other payment plans or who are pursuing Public Service Loan Forgiveness.

Choosing a repayment plan is one of the basics of student loans. For help determining which plan may be a good choice for your situation, you can take this quiz. Or, you can go directly to the overviews of the different repayment plans below to get a better understanding of them.

Quiz: What Student Loan Repayment Plan is Right for You?

Student Loan Repayment Plan Options for Federal Student Loans

Standard Repayment Plan

The Standard Repayment Plan is essentially the default repayment plan for federal student loans. This plan extends repayment up to 10 years (10 to 30 years for those with consolidation loans) and monthly payments are set at a fixed amount. The interest on the loan remains the same as when it was originally disbursed.

One of the benefits of the Standard Repayment Plan is that it may save you money in interest over the life of your loan because, generally, you’ll pay back your loan in the shortest amount of time (10 years) compared to the other federal repayment plans (20 to 30 years).

A common challenge associated with the Standard Repayment Plan is that payments can be too high for some borrowers to manage. Remember that this is the default option when it comes time to set up a repayment plan, so if you would prefer another option, you’ll need to choose one when the time comes to start repaying your loans.

Student Loans Eligible for the Standard Repayment Plan

The following federal loans are eligible for the Standard Repayment Plan:

• Direct Subsidized Loans

• Direct Unsubsidized Loans

• Direct PLUS Loans

• Direct Consolidation Loans

• Subsidized Federal Stafford Loans

• Unsubsidized Federal Stafford Loans

• FFEL PLUS Loans

• FFEL Consolidation Loans

Extended Repayment Plan

If you have over $30,000 in Direct Loan debt and the payments are too high for you to manage on the Standard (10-year) Repayment Plan, you can choose the Extended Repayment Plan for your federal loans. Under this plan, the term is up to 25 years and payments are generally lower than with the Standard and Graduated Repayment Plans. You can also choose between fixed or graduated payments.

If you’re eligible, an Extended Repayment Plan can provide significant relief if you’re struggling to pay your monthly loan payments by lengthening your term and potentially lowering your monthly payments.

This can help keep you out of default (which is important!). But it is critical to be aware that lengthening your loan term usually means you will be paying significantly more interest over the life of the loan — because it will take you longer to pay off your loan — and it may not give you the lowest monthly payments, depending on your circumstances.

Student Loans Eligible for the Extended Repayment Plan

The following federal loans are eligible for the Extended Repayment Plan:

• Direct Subsidized Loans

• Direct Unsubsidized Loans

• Direct PLUS Loans

• Direct Consolidation Loans

• Subsidized Federal Stafford Loans

• Unsubsidized Federal Stafford Loans

• FFEL PLUS Loans

• FFEL Consolidation Loans

Graduated Repayment Plan

With this plan, you would pay your federal student loans back over a 10-year period (10 to 30 years for consolidation loans), with lower payments at the beginning of the term that gradually increase every two years.

The idea behind the Graduated Repayment Plan is that a borrower’s income will likely increase over time, but may not be much at the start of their career.

Of course, the income boost may not happen. With this plan, because interest keeps accruing on the outstanding principal balance over a longer period of time, even though you’re making payments, the longer you take to repay your loan(s), the more interest you’ll wind up paying in the end. (Remember, more payments with interest = more interest paid total.)

Student Loans Eligible for the Graduated Repayment Plan

The following federal loans are eligible for the Graduated Repayment Plan:

• Direct Subsidized Loans

• Direct Unsubsidized Loans

• Direct PLUS Loans

• Direct Consolidation Loans

• Subsidized Federal Stafford Loans

• Unsubsidized Federal Stafford Loans

• FFEL PLUS Loans

• FFEL Consolidation Loans

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

Income-Driven Repayment Plans

Each of the three plans listed above (Standard, Extended, and Graduated) are considered traditional repayment plans. Income-Driven Repayment Plans, though, are different because the student loan payment amount is based upon the borrower’s income and family size.

To be eligible for an income-driven repayment plan, you’ll need to go through a recertification process each year, and your monthly payment could change (increase or decrease) annually based upon your current income and family size.

Maximum payments are set at 10% or 15% of what’s considered your discretionary income (the difference between 150% of the poverty guideline and your adjusted gross income), depending on the loan and the plan.

A significant advantage of using income-driven repayment plans is that your payment can be adjusted to accommodate a lower income. And in some cases, if you choose one of these plans, any remaining balance after 20 or 25 years may be forgiven if repayment has been satisfactorily made.

Note that in March 2025, the DOE instructed student loan servicers to stop accepting and processing all student loan forgiveness applications for three months while the administration reviews the program.

Another Option to Consider: Student Loan Refinancing

Refinancing student loans with a private lender allows borrowers to consolidate (that is, combine) their student loans. This could help make repayment convenient because there will be just one monthly payment.

One of the other possible advantages of refinancing student loans is that borrowers who qualify for a lower interest rate may be able to reduce the amount of money they spend in interest over the life of the loan.

You typically need a certain credit score to qualify for student loan refinancing, along with other fairly standard lending qualifications (like income and employment verification, among other factors).

And know this: Once federal student loans are refinanced with a private lender, they will become ineligible for federal repayment plans, programs like Public Service Loan Forgiveness, and other borrower protections like deferment or forbearance.

💡 Quick Tip: When rates are low, refinancing student loans could make a lot of sense. How much could you save? Find out using our student loan refi calculator.

Repayment Plans for Private Student Loans

The repayment plans for private student loans are set by the lender. If you have private student loans, you can review the loan terms or contact the lender directly to review the payment options available to you. This private student loans guide may also help you learn more about how these loans work.

The Takeaway

Borrowers repaying federal student loans have three traditional repayment plans to choose from (Standard, Extended, and Graduated) and income-driven repayment plans. When selecting a repayment plan, consider factors like your current income and expenses, potential future income, and career goals. For example, borrowers pursuing Public Service Loan Forgiveness will need to be in an income-driven repayment plan.

Those who choose a longer term to lower their payments should keep in mind that this may mean paying more in interest over the life of the loan. If the goal is to pay off debt more quickly and pay less back in interest overall, potential borrowers may pick a shorter term.

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 the Standard Repayment Plan, and who should consider it?

The Standard Repayment Plan involves fixed monthly payments over 10 years, leading to less interest paid over time. It’s ideal for borrowers who can afford consistent payments and aim to pay off their loans quickly. This plan is also suitable for those pursuing Public Service Loan Forgiveness (PSLF), as it qualifies for the program.

What is the Graduated Repayment Plan, and when is it appropriate?

The Graduated Repayment Plan starts with lower payments that increase every two years, with the loan paid off in 10 years. It’s suitable for borrowers who expect their income to rise steadily over time. However, this plan may result in paying more interest compared to the Standard Plan.

What should I consider if I have private student loans?

Private student loans don’t qualify for federal programs like income-driven repayment or Public Service Loan Forgiveness. If you’re struggling with private loans, contact your lender to explore options such as extended repayment terms or temporary payment reductions. Refinancing may also be an option if you have a good credit score, but be aware that refinancing federal loans into private ones forfeits federal protections.

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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.

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Apr

2025

Types of Federal Student Loans

By Maureen Shelly | Student Loans, student_loan | No Comments

For most students, attending college is impossible without borrowing money. In fall 2024, more than 19 million students were enrolled in colleges and universities. By the time they graduate, about 70% of them will have taken out student loans, and nearly 93% of those loans are federal student loans.

Below, we’ll explain the different types of federal student loans, their requirements, and their benefits. We’ll also look at alternative options in case federal loans don’t cover the full cost of your education.

Key Points

• Types of federal student loans include subsidized loans and unsubsidized loans.

• Subsidized loans are need-based loans available to undergraduate students. The U.S. Department of Education pays the interest while you’re enrolled at least half-time, during the six-month grace period after graduation, and during periods of deferment.

• Unsubsidized loans are available to both undergraduate and graduate students, and these loans are not based on financial need.

• Direct PLUS Loans are designed for graduate or professional students and parents of dependent undergraduates; they require a credit check and are not based on financial need.

• In addition to federal student loans, students can rely on private student loans once all federal options have been exhausted.

What Types of Federal Student Loans Are Available?

The two major categories of federal loans are subsidized student loans and unsubsidized student loans.

Subsidized Federal Student Loans

Subsidized loans are awarded on the basis of financial need. They are called “subsidized” because the government subsidizes, or absorbs the cost of, some interest payments on the loan. This makes subsidized loans a better deal for student borrowers.

For example, interest on subsidized loans is paid by the government while the student is enrolled (half-time or more). Student borrowers also don’t pay interest during the six-month grace period after graduation or during periods of deferment.

Unsubsidized Federal Student Loans

Unsubsidized loans aren’t given out based on need, and borrowers don’t get a break on interest. Some borrowers will make interest-only payments during school, even though they’re not required to, to “keep up” with the interest.

If a borrower chooses not to make interest payments, the interest that accrues can be capitalized. This means that the interest is added to the balance of the loan. This new value is then used to calculate the amount of interest you owe. In effect, borrowers are paying interest on their interest.

Currently, there is only one type of subsidized federal loan offered, and several types of unsubsidized loans. Next, we’ll discuss the different subcategories of federal loans and who typically qualifies for each.

The Direct Loan Program

The Department of Education’s federal student loan program is called the Direct Loan Program. The DOE is the lender, but it works with a few different student loan servicers who manage the loan.

Direct Subsidized Loan

Direct Subsidized Loans are for undergraduate students who have financial need. The maximum amount offered per year is between $3,500 and $5,500 for dependent students, based on your academic year. Because of these limits, some students may not be able to cover their entire tuition with Direct Subsidized Loans.

There is also a loan fee of just over 1% for all Direct Subsidized Loans that is deducted from each loan sum the borrower receives.

Direct Unsubsidized Loan

Direct Unsubsidized Loans are offered to undergraduate, graduate, and professional degree students, and financial need is not required. These are the most common types of federal student loans.

Undergraduate dependent students can take out between $5,500 and $7,500 per year in unsubsidized and subsidized loans combined. That means if a freshman student receives the maximum $3,500 in subsidized loans, they may accept no more than $2,000 in unsubsidized loans.

The interest rate for Direct Subsidized and Unsubsidized Loans for the 2024-25 academic year is 6.53%, up from 5.50% for the 2023-24 academic year.

The interest rate is higher for loans made to graduates and professional degree students, and the maximum amount offered is higher, too. Grad students can take up to $20,500 in unsubsidized federal student loans each school year.

The interest rates for the 2024-25 school year for unsubsidized loans offered to graduate or professional students is 8.08%, up from 7.05% during the 2023-24 school year.

Direct PLUS Loan

Direct PLUS Loans are offered to parents paying for their dependent child’s undergraduate education and to graduate or professional degree students. Financial need is not a requirement to receive a Direct PLUS Loan.

The maximum amount that the government awards in each school year is the total cost of attendance (which is determined by the school) minus all other financial aid that the student receives. The interest rates on PLUS Loans offered to parents and graduate/professional students is 9.08% for the 2024-25 school year, up from 8.05% for the 2023-24. Plus, there is a fee for all Direct PLUS Loans of 4.228% that is deducted from each loan sum the borrower receives.

As you can see, the federal loans that a parent can take out on behalf of a student have worse terms than a loan made directly to the student through the Direct Subsidized or Direct Unsubsidized Loan programs.

Depending on your family’s financial situation, you’ll likely want to take this into consideration when choosing loans.

Direct Consolidation Loan

A Direct Consolidation Loan is different from the previously mentioned loans. It allows the borrower to combine multiple federal loans into one loan, enabling you to make one payment toward one loan for easier management.

With a Direct Consolidation Loan, the weighted average of each individual loan is calculated to determine the new interest rate, rounded up to the nearest one-eighth of a percent.

There is never any cost to apply for a Direct Consolidation Loan. If you are contacted by a company offering to help you consolidate for a fee, beware. The service is offered for free by the DOE.

A Direct Consolidation Loan can only be used to consolidate federal student loans. Borrowers aren’t able to consolidate private loans, which are issued by private lenders rather than the government. (Refinancing is a different process that is able to consolidate both federal and private loans.)

What Federal Loans May I Qualify For?

Not all students may qualify for all types of federal loans. First, it’s helpful to understand that loans are considered either need-based or non-need-based. Here’s how these calculations are made:

Need-Based Loans

Direct Subsidized Loans are need-based federal student loans. To determine who qualifies, the DOE first determines a family’s Student Aid Index (SAI). The SAI takes into consideration a family’s assets and income, and spits out a number. That number is used to determine need-based aid.

To calculate financial need, a college will subtract the SAI from the cost of attendance (COA), which the school determines. COA – SAI = A student’s “financial need.”

For example, if the COA is $30,000 and the SAI is $25,000, then the student is eligible for no more than $5,000 in need-based aid, including Direct Subsidized Loans. (Need-based aid may also include federal grants and work-study programs, which is money that does not need to be repaid.)

If you do not qualify for need-based financial aid, or if need-based loans will not cover the full cost of attending college, you can access the next “tier” of student loan borrowing: non-need-based loans.

Non-Need-Based Loans

Direct Unsubsidized Loans and Federal PLUS Loans are non-need-based loans. To determine how much non-need-based loans a student qualifies for, their school has a separate formula. Take the cost of attendance and subtract the total financial aid awarded to the student so far, including scholarships and grants from the state or school.

For example, if the COA is $30,000 and a student has $20,000 in financial aid from other sources, then they are eligible for $10,000 in non-need-based financial aid, including Direct Unsubsidized and PLUS Loans.

Because there are annual limits to the amount of need-based and non-need-based federal loans for which a student qualifies, some students may not be able to cover the cost of their education via federal loans alone. What are students who find themselves without enough federal aid supposed to do?

Other Funding Options

The first alternative you’ll want to consider is “free money” available through additional scholarships and grants. Although the Free Application for Federal Student Aid (FAFSA) connects students with some free money, there are many other awards available through charities, private foundations, businesses, and even individuals. Online tools, like SoFi’s Scholarship Search, can connect you to scholarships you might qualify for.

Next, students can consider private student loans, which are loans offered through banks, credit unions, and online lenders. Generally, private student loans offer higher interest rates and less flexible repayment terms than federal student loans. (For example, they don’t necessarily offer things like income-driven repayment plans, and they aren’t eligible for federal forgiveness programs.)

The interest rates on private loans are generally tied to the borrower’s credit score and income, whether the borrower is the student, parent, or another family member.

If you think you may need to use private loans, make sure to shop around. Lender terms can vary widely, so get multiple quotes and ask the following questions:

• What is the interest rate?

• Is the interest rate fixed or variable?

• What are the repayment terms?

• What happens if you cannot make a payment?

Also, keep in mind that you may be eligible to refinance student loans — both federal and private — once you’ve graduated and have an established income and improved credit score. Refinancing is the process of paying off one loan with another loan with new terms and a new — and hopefully lower — interest rate.

Refinancing might not be the right option for those planning on using their federal loans’ unique benefits, such as forgiveness for work in public-service professions or an income-driven repayment plan. Access to federal benefits is forfeited when federal loans are refinanced.

Recommended: FAFSA 101: How to Complete the FAFSA

The Takeaway

Federal loans can be either subsidized or unsubsidized. Subsidized student loans are based on financial need and do not accrue interest while the borrower is enrolled in school (half time or more). Unsubsidized loans do accrue interest while student borrowers are enrolled in school. Only undergraduate students are eligible for subsidized student loans. Unsubsidized options are available to undergraduate, graduate/professional students, and parents.

Families tend to prioritize financial aid this way: scholarships, grants, and subsidized federal loans first; unsubsidized federal loans second; and private student loans last.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

How do Direct Subsidized Loans and Direct Unsubsidized Loans differ?

Direct Subsidized Loans are offered to undergraduates with demonstrated financial need. The government covers interest payments while you’re in school at least half-time, during the six-month grace period, and during deferment. Direct Unsubsidized Loans are available to both undergraduates and graduate students, regardless of financial need. Interest accrues during all periods, including while you’re in school and during grace and deferment periods.

What is a Direct Consolidation Loan, and when may it be beneficial?

A Direct Consolidation Loan allows borrowers to combine multiple federal student loans into a single loan with a fixed interest rate, which is the weighted average of the interest rates on the loans being consolidated, rounded up to the nearest one-eighth percent. Benefits include simplified repayment, access to alternative repayment plans, and eligibility for loan forgiveness programs.

How does financial need affect eligibility for federal student loans?

Financial need is a determining factor for certain federal loans. Direct Subsidized Loans require demonstration of financial need, calculated by subtracting the Student Aid Index (SAI) from the school’s cost of attendance (COA). Direct Unsubsidized and PLUS Loans do not require proof of financial need, as eligibility is not based on income or financial status.

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 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).

SOISL-Q225-009

Apr

2025

Can You Get A Student Loan with Bad Credit?

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

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

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

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

Key Points

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

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

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

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

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

Getting a Federal Student Loan

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

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

Are you a Dependent Student?

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

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

Subsidized and Unsubsidized Student Loans

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

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

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

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

Getting Private Student Loans

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

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

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

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

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

Development of Credit Scores

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

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

How Credit Scores Are Used

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

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

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

Building Credit Scores

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

• Make monthly payments on-time.

• Prioritize paying off your credit card balance monthly.

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

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

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

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

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

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

Recommended: Student Loan Refinancing Guide

The Takeaway

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

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

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

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

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

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

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

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

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.

SOSLR-Q225-008

Apr

2025

What Is A Fellowship?

By Jamie Cattanach | Student Loans, student_loan | Comments Off

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

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

Key Points

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

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

• Fellowships are highly competitive and demand high academic performance.

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

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

What Exactly Is A Fellowship?

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

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

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

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

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

Recommended: How to Pay for Grad School

Types Of Fellowship Programs

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

1. Graduate Fellowships

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

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

2. Postdoctoral Fellowships

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

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

3. Medical Fellowships

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

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

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

What Is A Fellowship Like?

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

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

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

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

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

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

Recommended: Private Student Loans Guide

Is Applying For A Fellowship Worth It?

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

Pros:

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

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

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

Cons:

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

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

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

The Takeaway

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

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

FAQ

What does it mean when you get a fellowship?

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

Is a fellowship a paid job?

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

How hard is it to get a fellowship?

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

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®

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.

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.

SOSLR-Q225-014

Apr

2025

Pros & Cons of Joining Greek Life

By Julia Califano | Going to College, Student Loans, student_loan | Comments Off

Starting college comes with a lot of choices —- from what classes to take to how you’ll make new friends. One of the biggest decisions you might face is whether or not to join Greek life. Fraternities and sororities have a big presence on many campuses and you’ll probably hear plenty of opinions about them, both good and bad.

So how do you know if “going Greek” is right for you? Like most big decisions, it comes with pros and cons. Greek life can give you instant friendships, leadership opportunities, and even career connections, but it can also be expensive, time consuming, and involve negative aspects like hazing or excessive partying.

Before you rush or pledge, it’s worth weighing the pluses and minuses to see whether joining a fraternity or sorority fits into the kind of college experience you want to create.

Key Points

• Joining Greek life offers immediate friendship opportunities and a sense of community through shared activities and housing.

• Members benefit from networking opportunities that can aid in future job searches.

• Leadership roles within Greek organizations can enhance valuable management and organizational skills.

• The financial cost of joining can be significant, including membership dues and expenses related to social events.

• Time commitments for Greek life events may interfere with academic responsibilities.

What Is Greek Life in College?

Greek life refers to communities of students who often live together, volunteer, network, and build close friendships. These communities consist of sororities for women and fraternities for men.

While each chapter is unique, the main goal of sororities and fraternities is to foster connections, encourage leadership, and give back to the community.

Students who are interested in becoming members must apply and then go through an initiation process. Once accepted, they may live with their sorority or fraternity, usually in a house on campus, and participate in activities like sports, dances, parties, and community service opportunities.

Sorority and fraternity names consist of two or three Greek letters, like Phi Kappa Theta, Sigma Pi, or Delta Zeta. This is a nod to the first U.S. Greek letter society, Phi Beta Kappa, founded in 1776 at the College of William and Mary as a literary, debating, and social club.

Many students only know about sororities and fraternities from pop culture references like “Revenge of the Nerds,” “Animal House,” “Legally Blonde,” and “Old School,” which depict a perennial party. While there is some truth to that stereotype — and fraternities have come under fire for their alcohol use and hazing rituals — Greek life can be much more meaningful and beneficial than these portrayals.

💡 Quick Tip: SoFi offers competitives fixed- or variable-interest rates. So you can get a private student loan that fits your budget.

Upsides of Greek Life

Joining a fraternity or sorority comes with a number of advantages. Here’s a look at some of the perks.

Friends

Starting college can be intimidating, especially if you don’t know many people. Greek life gives you instant community. You’ll be able to bond with members through events, activities, and shared living, and likely build friendships that last long after graduation.

Networking Opportunities

Your chapter isn’t just a social circle, it can also help you develop a professional network. When you’re searching for internships or jobs, these connections can prove to be highly valuable. Plus, if you list your sorority or fraternity on your resume and a recruiter is a Greek life alumnus, that could open up a conversation and help you stand out.

Recommended: Penn State Out-of-State Tuition

Possibly Cheaper Housing

Living in college dorms can be pricey. If you are sharing a house with many members of a sorority or fraternity, you could potentially save money.

You may also save money by having access to a full kitchen, where you can make meals instead of purchasing a meal plan or eating at restaurants all the time.

Development of Leadership Skills

Sororities and fraternities need leaders who will come up with ideas for activities, pilot volunteering efforts, and recruit members.

If you step up and get involved, you’ll have the chance to take on new responsibilities and develop crucial skills that will be valuable when you graduate from college and start to look for jobs.

Volunteering Opportunities

Fraternities and sororities are often focused on philanthropy. From fundraisers to volunteer events, you’ll have plenty of chances to contribute to causes you care about — and that commitment can look great on a resume.

Potential Downsides of Greek Life

Of course, Greek life isn’t all parties and friendships. Here are downsides to weigh:

Cost

You typically need to pay membership dues each year you are a member of a fraternity or sorority, which can range from several hundred to several thousand dollars a semester. Chapter or national fees may also apply. In addition, you may have to chip in for party supplies, buy tickets to formals, and purchase/rent clothing for special events.

Recommended: Ohio State University Cost

Reputation

Greek life’s reputation can be a double-edged sword. While some chapters focus on academics and service, others are known for heavy partying. Hazing and alcohol-related incidents have even led to tragedies on some campuses.

If you do join, it’s important to choose a chapter that aligns with your values and to prioritize your safety and academics.

Time Commitment

Because Greek life involves so many events, and members are expected to participate, joining a sorority or fraternity generally requires a large time commitment.

Spending too much time on Greek life activities and not enough on studying or working at internships could have a negative impact on your future.

Determining Whether or Not to Join Greek Life

Joining a fraternity or a sorority can be a great way to make friends, build leadership skills, and give back to the community. But it’s not for everyone.

If you thrive in a busy, social environment and are willing to commit your time (and money), you may find Greek life incredibly rewarding. On the other hand, if the costs feel overwhelming, or if you’re worried about distractions, you might prefer to find community in other ways — through clubs, sports, or student organizations.

And if finances are a major concern, remember there are a number of ways to pay for college, including grants, scholarships, subsidized and unsubsidized federal student loans, and private student loans.

💡 Quick Tip: It’s a good idea to understand the pros and cons of private student loans and federal student loans before committing to them.

The Takeaway

A sorority or fraternity can provide camaraderie and enduring connections, and enhance a call for service and leadership. It can also be time consuming, expensive, and potentially distract you from your studies.

Ultimately, whether you join comes down to your priorities. For some students, it’s one of the best choices they make in college. For others, it’s not the right fit. The key is figuring out where you want your college experience to take you.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

What are the pros and cons of Greek life?

Greek life offers community, networking, leadership opportunities, and a strong sense of belonging. Members often benefit from social events, academic support, and lifelong friendships. However, it also comes with downsides such as time commitments, financial costs, and the risk of negative stereotypes surrounding fraternities and sororities. In some cases, hazing and party culture can overshadow the positive aspects. Overall, it’s a highly personal decision.

What are the disadvantages of being a member of a fraternity?

Joining a fraternity can provide a powerful support system through friendships, mentoring, and networking. Many fraternities emphasize leadership, philanthropy, and academic achievement, helping members grow both personally and professionally. The social opportunities can create lasting bonds, while alumni networks often open doors to internships and careers. For students seeking connection and growth, fraternities can offer benefits that can extend well beyond college.

Does Greek life look good on a resume?

Yes, Greek life can be a strong addition to a resume if highlighted correctly. Employers often value the leadership, teamwork, event planning, and organizational skills students develop through fraternity or sorority involvement. Holding officer roles or participating in philanthropy demonstrates responsibility and initiative. However, it’s best to focus on measurable achievements rather than just membership.

About the author

Julia Califano

Julia Califano is an award-winning journalist who covers banking, small business, personal loans, student loans, and other money issues for SoFi. She has over 20 years of experience writing about personal finance and lifestyle topics. Read full bio.

SoFi Bank, N.A. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

SOISL-Q325-083

What Student Loan Repayment Plan Should You Choose? Take the Quiz

Student Loan Repayment Options

Quiz: What Student Loan Repayment Plan is Right for You?

Student Loan Repayment Plan Options for Federal Student Loans

Standard Repayment Plan

Student Loans Eligible for the Standard Repayment Plan

Extended Repayment Plan

Student Loans Eligible for the Extended Repayment Plan

Graduated Repayment Plan

Student Loans Eligible for the Graduated Repayment Plan

Income-Driven Repayment Plans

Another Option to Consider: Student Loan Refinancing

Repayment Plans for Private Student Loans

The Takeaway

FAQ

What is the Standard Repayment Plan, and who should consider it?

What is the Graduated Repayment Plan, and when is it appropriate?

What should I consider if I have private student loans?

Types of Federal Student Loans

What Types of Federal Student Loans Are Available?

Subsidized Federal Student Loans

Unsubsidized Federal Student Loans

The Direct Loan Program

Direct Subsidized Loan

Direct Unsubsidized Loan

Direct PLUS Loan

Direct Consolidation Loan

What Federal Loans May I Qualify For?

Need-Based Loans

Non-Need-Based Loans

Other Funding Options

The Takeaway

FAQ

How do Direct Subsidized Loans and Direct Unsubsidized Loans differ?

What is a Direct Consolidation Loan, and when may it be beneficial?

How does financial need affect eligibility for federal student loans?

Can You Get A Student Loan with Bad Credit?

Getting a Federal Student Loan

Are you a Dependent Student?

Subsidized and Unsubsidized Student Loans

Getting Private Student Loans

Development of Credit Scores

How Credit Scores Are Used

Building Credit Scores

The Takeaway

What Is A Fellowship?

What Exactly Is A Fellowship?

Types Of Fellowship Programs

1. Graduate Fellowships

2. Postdoctoral Fellowships

3. Medical Fellowships

What Is A Fellowship Like?

Is Applying For A Fellowship Worth It?

The Takeaway

FAQ

What does it mean when you get a fellowship?

Is a fellowship a paid job?

How hard is it to get a fellowship?

Pros & Cons of Joining Greek Life

What Is Greek Life in College?

Upsides of Greek Life

Friends

Networking Opportunities

Possibly Cheaper Housing

Development of Leadership Skills

Volunteering Opportunities

Potential Downsides of Greek Life

Cost

Reputation

Time Commitment

Determining Whether or Not to Join Greek Life

The Takeaway

FAQ

What are the pros and cons of Greek life?

What are the disadvantages of being a member of a fraternity?

Does Greek life look good on a resume?

JOIN THE COMMUNITY

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