The average credit card debt for Millennials, who are primarily in their 30s, is almost $7,000 as of 2025, according to Experian®. That, however, only tells part of the story about what America owes on their plastic.
Credit card debt in America is a significant issue, with combined balances topping $1.21 trillion in the second quarter of 2025, per the Federal Reserve Bank of New York. You probably are aware that credit card debt is high-interest debt and can be hard to pay off.
If you are wondering how your balance compares to those of other people your age, to see how you stack up, read on for a decade-by-decade review of what Americans owe.
Key Points
• The average credit card debt for Millennials, who are primarily in their 30s, is almost $7,000.
• High credit card balances can hurt your credit utilization ratio, potentially lowering your credit score.
• Popular repayment strategies include the debt snowball (smallest balance first) and debt avalanche (highest interest rate first) methods.
• Consolidating credit card debt with a personal loan can reduce interest and simplify repayment.
Credit Card Debt for Millennials
Welcome to your 30s, which can be a time that many people are establishing their adult lives. What does that mean? Possibly home ownership (or outfitting your rental home), having a family and paying for the kids’ expenses, traveling, dinners out with friends, and maybe new clothes because, congrats, you snagged a new job.
Some of these changes will impact your overall debt by age, but consider just your debt related to using your plastic. Your evolving lifestyle can cost you.
The average credit card debt for Millennials (those born between 1981 and 1996) is currently $6,961, significantly more than the $3,493 owed by Gen Z, those who were born between 1997 and 2012. You should consider not only how this figure can impact your overall financial life, but also how it can affect your credit rating. You’ll want to take note of your credit utilization ratio, or how much of your credit limit your balance represents, as you work to keep your profile in good shape. Financial experts suggest this number stay at or below 30%.
Gen X, or those Americans born between 1965 and 1980, have on average, $9,600 in credit card debt, which is the highest for the age groups reviewed here. Many Generation X-ers have bought houses, cars, and started families. They are increasingly consuming and, as life gets busier, growing financial demands can encourage the growth of credit card debt.
As consumers are more and more stabilized in their lifestyle and careers, they tend to grow more comfortable spending money they can’t immediately repay. Additionally, at this age, people may be focused on financing children’s education, which can make paying off their credit card balances a lesser priority.
What’s more, saving for retirement is likely to be a primary focus at this age. For those trying to fatten up their nest egg, paying off credit card debt may move to the back burner.
Credit Card Debt for Baby Boomers
This age group owes an average of $6,795 in credit card debt, a bit less than Millennials. Many people in this age range are over the crest of their expenses as a parent or as a homeowner.
However, as time passes, medical expenses can grow, and those can be put on their credit card and grow their debt.
As you plan to pay off your credit cards, it’s important not to underestimate the challenges of your mid-to-late 30s. With growing responsibilities and increasingly complicated finances, it can be easy to fall into debt.
It’s important to organize your budget in a way that allows you to make monthly payments to reduce and eventually eliminate debt while still accumulating savings.
Also, knowing when credit card payments are due and paying them promptly is an important facet of maintaining your financial wellness.
• One strategy that may be worth trying is the debt snowball method, where you prioritize repayment on your debts from the debt with the smallest amount to the debt with the largest amount, regardless of their interest rates. (While still making minimum payments on all other debts, of course.)
When you pay off the debt with the smallest amount, focus the money you were spending on those payments into the debt with the next lowest balance. This method builds in small rewards, helping to give you momentum to continue making payments. This method is all about giving yourself a mental boost in order to pay off your debt faster.
The idea is that the feeling of knocking out a debt balance — however small — will propel you toward paying down the next smallest balance. The con, however, is that you could end up paying more interest with the snowball method, because you’re tackling your smallest loan balance as opposed to your highest interest debt.
• The other popular payoff method, the debt avalanche method, encourages the borrower to pay off the loan with their highest interest rate first. While you don’t get that psychological boost that comes with knocking out small debts quickly, paying off your highest interest loans first is the more cost-effective solution of the two.
• Another option to consider is to apply for a personal loan. Personal loans are loans that can be used for almost any purpose, whether that’s home improvement, covering unexpected medical expenses, or paying off credit card debt.
Personal loans can be a way to get ahead of debt, since interest rates are typically competitive, especially when compared to high-interest credit cards. A personal loan allows you to consolidate debt — simplifying multiple monthly payments with different credit card companies into one monthly payment.
• Another strategy to pay off credit card debt is, of course, to cut down on expenses and tighten your budget. When it comes to paying off debt, organization is key.
Pick one of the different budgeting methods that suits you best. Make sure you are tracking both your income and your expenses. Take a look at your monthly purchases and try categorizing them into different areas. With some strategic planning, small changes can add up to make a big difference.
💡 Quick Tip: Wherever you stand on the proposed Trump credit card interest cap, one of the best strategies to pay down high-interest credit card debt is to secure a lower interest rate. A SoFi personal loan for credit card debt can provide a cheaper, faster, and predictable way to pay off debt.
The Takeaway
Credit card debt is a serious financial issue for many Americans, and Millennials, who are primarily in their 30s, tend to carry the highest amount of this kind of debt. Ways to deal with this kind of debt include budgeting wisely, trying debt payoff methods, and debt consolidation loans. If you decide that a debt consolidation personal loan is your best option, shop around, and see what kinds of offers you qualify for from different lenders.
Credit cards have an average APR of 20%–25%, and your balance can sit for years with almost no principal reduction. Personal loan interest rates average 12%, with a guaranteed payoff date in 2 to 7 years. If you’re carrying a balance of $5,000 or more on a high-interest credit card, consider a SoFi Personal Loan instead. See your rate in minutes.
SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.
FAQ
How much credit card debt do most people in their 30s carry?
According to data from Experian, Millennials, who are primarily in their 30s, carry almost $7,000 in credit card debt per person.
Which generation has the most credit card debt per person?
Members of Gen X, with an average of $9,600 in credit card debt per person, has the highest level of credit card debt.
What are ways to get out of credit card debt?
Options to pay off credit card debt include trying different budgeting methods and apps to curtail spending; utilizing such techniques as the snowball or avalanche approaches to paying down debt, and taking out a personal loan for debt consolidation.
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Revolving credit and non-revolving lines of credit are two financial instruments that allow you to access a specific amount of money upfront.
With revolving credit, a borrower can continually access funds up to their credit limit and then, once they repay those funds, their available credit will get replenished. The line of credit remains open for use until either the borrower or lender closes it. On the other hand, a line of credit that’s non-revolving is a one-time arrangement — after the borrower spends the set credit limit and pays off the amount in full, their account will be closed.
Key Points
• Revolving credit offers repeated access to funds, while non-revolving does not.
• Non-revolving lines of credit typically have lower interest rates and higher limits.
• Revolving credit may include annual fees and can harm credit if not managed responsibly.
• Credit history, income, and other factors can influence credit line determinations.
• One example of revolving credit is a credit card, which tends to have higher interest rates, while a personal loan, which typically has lower rates, is a type of non-revolving credit.
Understanding Revolving Credit and How It Works
Revolving credit offers the ability to use a particular sum of money over and over again. You’re usually given a credit limit, and you can spend up to that limit. As you make payments to your account, your available credit increases once again.
One example of revolving credit is a credit card. You have an initial credit limit and can continue to make charges to your card as long as your total balance stays below your credit limit. As you make payments, you can continue to use your credit card each month.
The biggest upside of revolving credit is that you can use the money over and over again, as long as you continually pay down your balances. This setup can be helpful if you have short-term expenses to cover, as you’ll have a pool of money you can dip into and then quickly repay. Plus, you’ll only accrue interest charges and make payments on the amount you actually use. You can usually keep your interest at zero if you repay the full amount you borrowed every month.
There are a few cons to revolving credit though. For one, they may have higher interest rates compared to some other types of loans, such as traditional installment loans. High-interest credit cards have an average APR of about 20%–25%. In fact, in light of today’s high rates, a temporary 10% credit card interest cap was recently proposed, though the future of credit card caps is unclear. Non-revolving credit options typically have lower interest rates, however. Personal loans, for example, have an average APR of about 10-12%, as well as fixed rates.
In addition, your revolving credit may come with annual fees. There’s also the potential to negatively impact your credit if you don’t use revolving credit responsibly, as you could drive up your credit utilization rate by using too much of your available credit limit.
Understanding a Line of Credit and How It Works
A line of credit, such as a personal line of credit, can be either revolving or non-revolving. If it’s a non-revolving line of credit, you have access to the initial sum of money, but once you spend it, you won’t be able to access it any more. Otherwise, non-revolving lines of credit function similarly to revolving credit lines.
How Is a Credit Line Determined?
The credit line that you receive through a line of credit or a credit card is determined by the issuer. This determination is based on their evaluation of a number of different factors. Specifically, a lender may review your credit history as tracked by your credit report, employment and income, and any previous credit you’ve had with them. They may also use proprietary algorithms to determine how much credit to extend.
What Credit Score Is Needed for a Credit Line?
Generally speaking, the higher your credit score, the better the chance that you’ll be approved for a credit line. You will also often get a lower interest rate the higher your credit score. This is another reason why it’s a good financial practice to work toward maintaining and/or building your credit score.
Calculating Interest on a Credit Line
Most credit lines and forms of revolving credit (such as different types of credit cards) charge interest for any amount that remains outstanding after the statement due date.
The interest rate you’re charged is determined by the card issuer and the terms of your credit line. If you pay off your credit line in full by the statement due date, you may not owe any interest at all. But if you have an outstanding balance, you’ll likely be charged interest on the total balance that remains. Those interest rates can typically be quite high.
💡 Quick Tip: Credit card interest rates average 20%-25%, versus 12% for a personal loan. And with loan repayment terms of 2 to 7 years, you’ll pay down your debt faster. With a SoFi personal loan for credit card debt, who needs credit card rate caps?
Pros and Cons of Line of Credit
One pro of a line of credit is that you may be able to have multiple lines of credit. These may be with different banks or through different products that are issued by the same bank. Another upside is that non-revolving lines of credit tend to have lower interest rates, and they’re often for higher amounts compared to revolving credit.
However, a downside of a non-revolving line of credit is that you’re only able to access your credit line once. Even if you make payments toward your balance, you won’t be able to access your money again, like you would with revolving credit. If for whatever reason you decide you’d like to borrow additional funds, you’ll have to go through the hassle of another application and approval process.
Similarities Between Revolving Credit and Lines of Credit
It’s important to note that a line of credit may either be revolving debt or non-revolving. So it’s possible that a particular line of credit will also be revolving credit and share all of its similarities.
Another similarity between revolving credit and a line of credit is that they both allow you to access a specific amount of money (your credit limit) upfront.
Differences Between Revolving Credit and Lines of Credit
The biggest difference between revolving credit and a non-revolving line of credit lies in how often you can access it. With revolving credit, you can access the money in your credit line as often as you need, as long as your total balance remains below your available credit limit. With a non-revolving line of credit, however, you can only access your available credit one time.
Lines of credit differ from traditional loans in a few key areas, and it’s important to understand the differences.
With a line of credit, you have control over when and how you access your money — you don’t have to take it all at once. If your line of credit is a revolving line, you can even access your money repeatedly, as long as your total balance is below your credit limit.
Meanwhile, with a traditional installment loan, you get all of your money in one lump sum, usually at or near the date of closing. You’ll then pay a fixed amount each month until your loan is completely paid off. Mortgages and many personal loans are often considered traditional loans.
The Takeaway
Both revolving credit and non-revolving lines of credit offer access to funds, though there are key differences between revolving credit and a line of credit. With a non-revolving line of credit, you can only access the total amount of money once. In contrast, revolving credit allows you to access the money multiple times, as long as the outstanding amount is less than your total available credit amount. A credit card is considered one form of revolving credit.
Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.
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FAQ
What’s the difference between an installment loan and a revolving line of credit?
A revolving line of credit and an installment loan are different ways to access money. With an installment loan, you get all your money upfront and then make fixed monthly payments for the term of the loan. With a revolving line of credit, you’re given a credit limit and can then choose to access however much of that limit you need, only paying interest on your outstanding balance.
Can mismanagement of my revolving credit damage my credit score?
Yes, it is possible to damage your credit if you don’t manage your revolving credit responsibly. For example, missing payments or keeping a high balance on a revolving line of credit can both have negative effects.
What is the duration of a revolving line of credit?
Your revolving line of credit typically will remain open until either you or the lender decides to close it. There are several reasons a lender may close a revolving line of credit without a borrower’s permission, including a prolonged period of inactivity, a history of late or missed payments, breached terms of the agreement, or repeated spending over the credit limit.
How does interest work for revolving credit?
Typically, borrowers will only pay interest on the amount they’ve accessed from their line of credit. Interest charges generally only apply to any balance that remains after the statement due date.
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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.
This content is provided for informational and educational purposes only and should not be construed as financial advice.
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 .
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Students who graduate with a master’s degree carry an average debt of $69,140, according to the Education Data Initiative. Fortunately, there are many ways to pay for grad school, including options that don’t require borrowing.
Keep reading to learn more on how to pay for grad school in 2025, including how to take out graduate student loans, how to qualify for scholarships and grants, and other ways to reduce your total tuition.
Key Points
• When it comes to financing grad school, filling out the Free Application for Federal Student Aid (FAFSA) is required to determine eligibility for federal financial assistance, including grants and loans.
• Investigate grants, scholarships, and fellowships offered by your chosen university’s financial aid office, as these can significantly reduce tuition costs.
• Some employers provide tuition reimbursement programs to support employees pursuing further education. Review your company’s policies to see if this benefit is available.
• Seek out scholarships and grants from private organizations, nonprofits, and government agencies, which can provide additional funding without the need for repayment.
• After exhausting grants and scholarships, explore federal student loans, which often have favorable terms. If additional funding is needed, private student loans are also an option, though they may come with higher interest rates.
Ways to Pay for Grad School Without Taking on Debt
You can pay for grad school without taking on debt by filling out the FAFSA, applying for scholarships and grants, or working for an employer who offers tuition reimbursement. Continue reading for even more strategies to pay for grad school without taking on debt.
Your FAFSA will determine your eligibility for federal student loans, federal work-study, and federal grants. In addition, your college may use your FAFSA to determine your eligibility for aid from the school itself. Here’s a closer look at federal grants and federal work-study programs.
Federal Grants
Unlike student loans, federal grants do not need to be repaid. Grants for college for grad students include TEACH Grants and Fulbright Grants.
The TEACH Grant, or Teacher Education Assistance for College and Higher Education Grant, has relatively stringent requirements and is available for students pursuing a teaching career who are willing to fulfill a service obligation after graduating.
The Fulbright Grant offers funding for international educational exchanges. Sponsored by the U.S. government, it supports students, scholars, teachers, and professionals to study, research, or teach abroad.
Federal Work-Study Program
Federal work-study for grad students provides part-time jobs to help cover educational expenses. These positions are often related to a student’s field of study or serve the community. Eligibility is based on financial need, and earnings are exempt from being counted as income on the FAFSA, maximizing financial aid opportunities.
2. Figure Out What Your University Can Offer You
After narrowing down your federal options, make sure to consider what university-specific funding might be available. Many schools offer their own grants, scholarships, and fellowships. Your school’s financial aid office likely has a specific program or contact person for graduate students who are applying for institutional assistance.
Many schools will use the FAFSA to determine what, if anything, the school can offer you, but some schools use their own applications.
Although another deadline is the last thing you need, seeking out and applying for school-specific aid can be one of the most successful ways to pay for grad school. Awards can range from a small grant to full tuition remission.
3. Employer Tuition Reimbursement
It might sound too good to be true, but some employers are happy to reimburse employees for a portion of their grad school costs. Employers that have tuition reimbursement plans set their own requirements and application processes.
Make sure to consider any constraints your employer puts on their tuition reimbursement program, including things like staying at the company for a certain number of years after graduation or only funding certain types of degree programs.
4. Become an In-State Resident
If you’re applying for graduate school after taking a few years off to work, you might be surprised to find how costs have changed since your undergraduate days. Graduate students interested in a public university can save tens of thousands of dollars by considering a university in the state they already live in.
Each state has different requirements for determining residency. If you are planning on relocating to attend grad school, be sure to look into the requirements for the state of the school you are planning to attend.
Certain states require only one year of full-time residency before you can qualify for in-state tuition, while others require three years. During that time, you could work as much as possible to save money for graduate school. More savings could mean fewer loans.
Serious savings. Save thousands of dollars
thanks to flexible terms and low fixed or variable rates.
5. Become a Resident Advisor (RA)
Resident Advisors (RAs) help you get settled into your dorm room, show you how to get to the nearest dining hall, and yell at you for breaking quiet hours.
RAs may be underappreciated, but they’re often compensated handsomely for their duties. Students are typically compensated for a portion or all of their room and board, and some schools may even include a meal plan, reduced tuition, or a stipend. The compensation you receive will depend on the school you are attending, so check with your residential life office to see what the current RA salary is at your school.
Serious savings. Save thousands of dollars
thanks to flexible terms and low fixed or variable rates.
6. Find a Teaching Assistant Position
If you’re a graduate student, you can often find a position as a Teaching Assistant (TA) or Research Assistant (RA) for a professor. The position will be related to your undergrad or graduate studies and often requires grading papers, conducting research, organizing labs, or prepping for class.
TAs can be paid with a stipend or through reduced tuition, depending on which school you attend. Not only can the job help you to potentially avoid student loans, but it also gives you networking experience with people in your field.
The professor you work with can recommend you for a job, bring you to conferences, and serve as a reference. Being a TA may help boost your resume, especially if you apply for a Ph.D. program or want to be a professor someday. According to ZipRecruiter, the average TA earns $15.66 an hour, as of November 2025.
Applying for grants and graduate scholarships is a smart way to fund graduate school without accumulating debt. Start by researching opportunities specific to your field, school, or demographics. Many scholarships focus on academic achievements, leadership, or community involvement, while grants often emphasize financial need.
An easy way to search for scholarships is through one of the many websites that gather and tag scholarships by criteria. Keeping all your grad school and FAFSA materials handy means that you’ll have easy access to the information you’ll need for scholarship applications.
8. Utilize Military Education Benefits (If Eligible)
Military education benefits can significantly reduce or even eliminate the cost of graduate school for qualifying service members, veterans, and sometimes their families. Programs like the GI Bill® and the Yellow Ribbon Program can cover tuition, fees, and even housing costs at many institutions. Additionally, some branches offer tuition assistance while on active duty, enabling students to pursue advanced degrees with little to no out-of-pocket expenses.
How to Pay for Grad School With Student Loans
Grad students may rely on a combination of financing to pay for their education. Student loans are often a part of this plan. Like undergraduate loans, graduate students have both federal and private student loan options available to them.
Federal Loans for Graduate School
There are different types of federal student loans, and each type has varying eligibility requirements and maximum borrowing amounts. Graduate students may be eligible for the following types of federal student loans:
• Direct Unsubsidized Loans. Eligibility for this loan type is not based on financial need.
• Direct PLUS Loans. Eligibility for this loan type is not based on financial need; however, a credit check is required to qualify for this type of loan. As of July 1, 2026, Grad PLUS Loans will no longer be available (Parent PLUS Loans will still be available, however).
• Direct Consolidation Loans. This is a type of loan that allows you to combine your existing federal loans into a single federal loan.
Federal Student Loan Forgiveness Programs
Federal student loan forgiveness programs either assist with monthly loan payments or can discharge a remaining federal student loan balance after a certain number of qualifying payments.
One such program is the Public Service Loan Forgiveness (or PSLF) program. The PSLF program allows qualifying federal student loan borrowers who work in certain public interest fields to discharge their loans after 120 monthly, on-time, qualifying payments.
Additionally, some employers offer loan repayment assistance to help with high monthly payments. While loan forgiveness programs don’t help with the upfront cost of paying for grad school, they may offer a meaningful solution for federal student loan repayment. (Unfortunately, private student loans don’t qualify for these federal programs.)
Private Loans for Graduate School
If you’re not eligible for scholarships or grants, or you’ve maxed out how much you can borrow using federal student loans, you can apply for a private graduate student loan to help cover the cost of grad school.
Private loan interest rates and terms will vary by lender, and some private loans have variable interest rates, which means they can fluctuate over time. Doing your research with any private lender you’re considering is worth it to ensure you know exactly what a loan with them would look like.
Also, keep in mind that private student loans do not offer the same benefits and protections as federal student loans. It’s best to use all federal funding first before relying on private funding.
Comparing Federal vs. Private Loan Options
Understanding the differences between federal vs private student loans is important when considering grad school loans. Each option offers unique benefits, eligibility rules, and repayment features that can impact long-term costs.
• Federal loans: These loans are funded by the government and typically offer more borrower protections, such as fixed interest rates, income-driven repayment plans, and potential for deferment, forbearance, or loan forgiveness programs. They usually don’t require a cosigner and are often based on financial need.
• Private loans: Offered by banks, credit unions, and other private lenders, these loans often have variable interest rates that can be higher than federal loans. They usually require a strong credit history or a cosigner, and their repayment terms and borrower benefits are generally less flexible than federal options.
Before applying to graduate school, it’s important to consider the earning potential offered by the degree in comparison to the cost. At the end of the day, only you can decide if pursuing a specific graduate degree is worth it. Here are a few steps to take before applying to grad school.
1. Research Potential Earnings by Degree
Perhaps you are already committed to one degree path, like getting your JD to become a lawyer. In that case, you should have a good idea of what the earning potential could be post-graduation.
If you’re considering a few different graduate degrees, weigh the cost of the degree in contrast to the earning potential for that career path. This could help you weigh which program offers the best return.
2. Complete the FAFSA
Regardless of the educational path you choose, filling out the FAFSA is a smart move. It’s completely free to fill out and you may qualify for aid including grants, work-study, or federal student loans. Federal loans have benefits and protections not offered to private loans, so they are generally prioritized first.
3. Estimate Your Cost of Attendance
Estimating your cost of attendance will help you understand the full financial commitment beyond just tuition. This estimate should include fees, textbooks, housing, transportation, and personal expenses, as well as potential increases in tuition over time. By creating a detailed budget upfront, you can compare programs more accurately, anticipate funding needs, and avoid surprises once you enroll.
4. Explore Financing Options
As mentioned, you may need to rely on a combination of financing options to pay for grad school. When scholarships, grants, and federal student loans aren’t enough, private loans can help you fill in the gaps.
When comparing private lenders, be sure to review the loan terms closely — including factors like the interest rate, whether the loan is fixed or variable, and any other fees. Review a lender’s customer service reputation and any other benefits they may offer, too.
The Takeaway
Grad school is a big investment in your education, but the good news is there are grants and scholarships that you won’t have to pay back. Some employers may also offer tuition reimbursement benefits, or you could find work as a Resident Advisor to supplement your tuition costs. If you need more funding to finance grad school, there are federal and private student loans.
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
Does FAFSA give money for grad school?
FAFSA provides access to federal financial aid for graduate school, including Direct Unsubsidized Loans and Grad PLUS Loans (through July 1, 2026). Graduate students may not qualify for federal grants but can explore assistantships, scholarships, and work-study opportunities through FAFSA to help cover their educational expenses.
Does Pell Grant cover a master’s degree?
No, the Pell Grant does not cover master’s degree programs. It is a federal grant specifically designed for undergraduate students with financial need. Graduate students must explore other funding options like scholarships, assistantships, and federal loans to finance their education.
Is it worth paying for grad school?
Paying for grad school can be worth it if the degree significantly boosts your career prospects, earning potential, or personal goals. Consider the return on investment, including salary increases and opportunities. Research funding options and weigh potential debt against long-term benefits to determine if grad school aligns with your financial future.
What are the best student loans for graduate school?
The best student loans for graduate school often start with federal options, like Direct Unsubsidized Loans, because they offer fixed rates, borrower protections, and forgiveness eligibility. Private student loans can be a good alternative for borrowers with strong credit who may qualify for lower interest rates and flexible terms.
Can I get scholarships for graduate school?
Yes, you can get scholarships for graduate school. Many universities, private organizations, professional associations, and foundations offer merit-based, need-based, and field-specific awards. You can apply before or during your program, and using scholarship databases or your school’s financial aid office can help you find opportunities that match your background and goals.
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).
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Student loans give many college students the opportunity to finance their education. Being well-informed on the nuts and bolts of student loans can make it easier to fund your education, while still keeping your eye on long-term goals like starting a career and saving for the future.
Key Points
• Federal student loans are obtained by completing the FAFSA, which also determines eligibility for grants, work-study, and need-based aid like subsidized loans.
• Federal loans offer protections (income-driven repayment, forgiveness, deferment), while private loans typically have higher rates, require credit checks, and fewer safeguards.
• The average cost of tuition in 2023–2024 ranged from $10,662 (in-state public) to $42,162 (private), with financial aid packages varying by school.
• Federal loans usually include a six-month grace period after graduation, and repayment can be tailored with standard or income-driven plans; private repayment varies by lender.
• Borrowers can repay loans early without penalties to save on interest, and those using private loans should compare lenders for rates, terms, and borrower support programs.
10 Student Loan Questions, Answered
There are many different types of student loans, with different loan amounts, costs, benefits, and repayment terms. In short, student loans are complicated. But don’t stress. We have answers to questions on everything from the difference between federal and private student loans to interest rates to when and how you’ll need to start repaying your loans. Let’s dive in.
💡 Quick Tip: You’ll make no payments on some private student loans for six months after graduation.
After you submit the FAFSA, you’ll receive a Student Aid Report (SAR) via email or regular mail. The report includes your responses to the FAFSA questions as well as your Student Aid Index (SAI), formerly called Expected Family Contribution (EFC). Your SAI is a number that is used to determine your eligibility for federal financial aid.
Schools that receive information from your FAFSA will be able to tell you if you qualify for federal student loans. Almost every American family qualifies for federal student loans. Direct Subsidized Loans (in which the government covers your interest while you are in school and for six months after you graduate) are awarded based on financial need. Direct Unsubsidized Loans (in which you are responsible for all interest that accrues on the loan) are not need-based.
2. How Do I Fill Out a FAFSA Form?
You can fill out the FAFSA online at StudentAid.gov . While the FAFSA is known for being a confusing and complex application to complete, the form was streamlined for the 2025-2026 award year. Applicants can now skip as many as 26 questions, and some applicants may be able to complete it in as little as ten minutes.
While the FAFSA is typically available starting on October 1 for the following academic year, the new 2025-2026 FAFSA will not be available until December 31, 2024.
The first step to filling out the FAFSA is to create an FSA ID through StudentAid.gov, which serves as an electronic signature. Both you and your parents will need to create your own unique FSA ID. You’ll then want to check what information you’ll need to fill out the FAFSA and gather it before you begin.
The online FAFSA is typically processed by the Department of Education within three to five days, and then the information is sent to the list of schools you provided (keep in mind that you can list schools that you have not yet applied to.) The colleges use your FAFSA information to determine financial aid eligibility.
3. What is the Difference Between Private Student Loans and Federal Ones?
Federal student loans are funded through the government and are strictly regulated. To qualify for them, students must fill out the FAFSA. Private student loans, by contrast, are funded by banks, credit unions, and other private lenders.
Federal student loans for undergraduates don’t require a credit check and rates are set by Congress each year. Federal student loans also come with guaranteed benefits and protections, including income-driven repayment plans, deferment and forbearance options, and forgiveness programs.
Private student loans do require a credit check and rates are set by individual lenders. Generally, borrowers (or their parent cosigners) who have strong credit qualify for the lowest rates. Loan limits vary by lender, but you can often get up to the total cost of attendance, which is more than you can borrow from the federal government.
Since private student loans generally have higher interest rates than federal student loans and lack the same protections, it’s generally recommended that you tap all forms of federal aid, including federal student loans, before applying for private student loans.
The average cost of tuition and fees for the 2023-2024 school year is $42,162 at private colleges, $23,630 for out-of-state students at public universities, and $10,662 for in-state residents at public schools, according to U.S. News.
The actual amount you will pay for college will depend on where you choose to go and how much financial aid, including need-based and merit-based aid, the school awards you.
If you submitted the FAFSA, each school that accepts you will also send you a financial aid award letter, also known as the student aid package or school offer. This letter will include the annual total cost of attendance and a list of financial aid options. Typically, your financial aid package will be a mix of gift aid, meaning financial aid that doesn’t have to be repaid, and federal student loans, which you have to repay with interest. The award letter is specific to that university or college, so you’ll receive a different letter from every school that accepts you as an incoming student.
5. Is College Worth the Cost? What Are the Benefits?
College represents an investment in yourself and your future, and only you can decide how much that’s worth. So, we’ll focus instead on the potential benefits of going to college. The most obvious benefit is that, if you want to pursue certain careers, you’ll likely need the appropriate college education and training.
Studies show that college graduates earn significantly more money, accumulated over a lifetime, than those who did not attend. Earning your degree of choice requires a solid plan and commitment, and these are excellent strategies and skills to develop before entering the working world. Plus, people often make lifelong friendships at college, and many universities have a strong alumni network, which can be helpful on many levels as you begin your career.
6. What Can Student Loans Be Used For?
Funds from federal and private student loans can be used for a variety of education-related expenses, including tuition, fees, textbooks, computers/software, transportation to and from school, housing (on or off campus), meal plans or groceries, and housing supplies (e.g., sheets, towels, etc.).
Basically, if the expense is essential to your educational success — meaning it supports your living arrangements, basic daily needs, or attendance at school — it’s likely a permissible use of student loan funds.
For most federal student loans, after you graduate, leave school, or drop below half-time enrollment, you have a six-month grace period before you must begin making payments. Grade periods for private student loans can vary by individual lender.
The student loan grace period is designed to give students a chance to find employment before their monthly loan payments kick in.
You are not required to make interest or principal payments during the grace period. However, if your loan isn’t subsidized by the government, interest will still accumulate during the grace period and be added to your balance, or capitalized, if you don’t pay it before your first loan payment is due. Making at least interest-only payments even when it’s not required can save you a significant amount of money over the life of your student loans.
8. How Do I Repay Student Loans?
Repayment on federal student loans generally begins after the six-month grace period. The standard repayment plan for federal student loans is 10 years, but borrowers are able to select one of the other repayment plans at any time without incurring any costs.
Federal student loans also offer income-driven repayment plans, which tie the borrower’s monthly payment to their income. While this may make the loan more expensive in the long-term, it can make the monthly payments more affordable. When deciding on a repayment plan, you want to consider factors like your income, estimated monthly payments on the student loan, and your overall budget. Over time, you may find it helpful to reevaluate the payment plan you’ve selected as your financial situation may change.
To determine the repayment options available with a private student loan, check directly with the individual lender.
If you have higher-interest Direct Unsubsidized Loans, graduate PLUS loans, and/or private loans, you may be able to refinance your student loans after you graduate at a lower interest rate. This could lower the total cost of your loans and make repayment easier.
9. Can I Repay Student Loans Early?
Yes, you can generally pay off student loans, including federal student loans and private student loans, early without incurring prepayment penalties. You may want to reach out to your lender first to make sure they will apply your extra payments to your principal, rather than towards your next payment.
There are many benefits to paying off your student debt early. You will save on student loan interest and get out of debt faster. However, you’ll want to make sure you have enough income to cover a higher monthly payment. Paying too much toward your student loan could cause you to fall short on essential bills like rent or a car loan. It might also delay saving for other goals.
If you decide to apply for a private student loan to help pay for college, it’s a good idea to shop around and compare lenders. Your school’s financial aid office may be able to provide you with a list of lenders that they work with. However, you’re not restricted to this list.
Before you choose a lender, it’s a good idea to review factors including interest rate, loan terms, any additional fees associated with the loan, and the repayment plans available at each lender. Many lenders will allow potential borrowers to get prequalified to find out how much they may qualify to borrow and at what rates.
Another thing that may be worth considering is if the lender has any sort of programs for borrowers who run into financial difficulties down the road and may have trouble making payments on their student loans. Some lenders offer unemployment protection that allows eligible borrowers to temporarily pause payments on their student loans should they lose their job through no fault of their own.
💡 Quick Tip: Need a private student loan to cover your school bills? Because approval for a private student loan is based on creditworthiness, a cosigner may help a student get loan approval and a lower rate.
The Takeaway
Student loans can be instrumental in helping you pay for college, but it’s important to understand how they work before borrowing. Broadly, there are both federal and private student loans. Federal student loans are backed by the federal government and come with unique benefits like income-driven repayment plans and forgiveness programs.
Private student loans are offered by private lenders and generally require potential borrowers to undergo a credit check during the application process. Since private student loans tend to have higher interest rates and lack federal protections, you generally want to consider federal loans first.
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.
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 Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
SoFi Private Student Loans 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).
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. 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.
One important way that some types of loans or financial products differ is in whether they’re revolving or non-revolving credit. Revolving credit refers to a line of credit that you can access over and over again, subject to a total credit limit. Credit cards are one type of revolving credit.
Non-revolving credit, however, allows you to access a specific amount of money upfront and then pay down your balance. Once it’s paid off, you can no longer access the money. Student loans, auto loans, and mortgages are all examples of non-revolving credit.
Understanding the differences in revolving vs. non-revolving credit can allow you to better choose which financial product is right for your situation and understand how each can impact your credit.
Key Points
• Revolving credit offers repeated access to funds up to a set limit, with interest charged only on the amount used.
• Non-revolving credit provides a one-time lump sum, with interest on the full amount and no additional access without reapplying.
• Revolving credit (like credit cards) typically has higher interest rates compared to non-revolving credit (like personal loans).
• Revolving credit affects credit scores through utilization ratio and payment history.
• Non-revolving credit impacts credit scores mainly through payment history.
Understanding Revolving Credit and How It Works
Revolving credit is a type of credit that you can access over an extended period of time. As mentioned, the way a credit card works is one example of revolving credit — you’re given a maximum credit limit, and as long as your outstanding balance remains below that limit, you can continue to use the card. As you pay down your balance, the amount of your revolving credit that you can use increases.
Another example is a personal line of credit. It works similarly to a credit card, with a maximum credit limit and a minimum payment required each month, but there is no physical card included. Instead, you can access the funds with a check, a transfer, or at an ATM. A popular line of credit option is a home equity line of credit (HELOC). In this case, the home serves as collateral, though not all lines of credit are secured.
How Does Revolving Credit Impact Your Credit Score?
Many forms of revolving debt are reported to the major credit bureaus and will show up on your credit report. This means that how you use your revolving credit will impact your credit score.
If you reliably pay off your credit balances each and every month, that will generally have a positive impact on your credit score. However, if you miss payments or carry a high balance, your credit score may go down. When you have a high balance vs. your credit limit, that creates a high credit utilization ratio, which can negatively impact your credit score.
💡 Quick Tip: Everyone’s talking about capping credit card interest rates. But it’s easy to swap high-interest debt for a lower-interest personal loan. SoFi credit card consolidation loans are so popular because they’re cheaper, safer, and more transparent.
Advantages of a Revolving Line of Credit
The biggest advantage of a revolving line of credit is that you’re able to access the funds as you need them. Instead of taking out a large lump sum, you can borrow just the money you need right now. This may help you save money on interest charges if you pay off your balance each month, since you only pay interest on your outstanding balance. Leaving a balance on a credit card, however, could expose you to high interest charges that could quickly compound.
Whichever of the different types of credit cards you choose, it typically represents one of the most popular forms of revolving credit. With a credit card, you’re initially given a credit limit that represents the highest amount of money that you can borrow. As you make purchases, your amount of available credit decreases, but you can raise that amount by making payments to your account.
Non-revolving credit is another type of debt that you’ll want to be aware of. Some popular examples of non-revolving credit are auto loans, student loans, mortgages, and personal loans.
With non-revolving credit, you receive all of your money upfront. As you make payments, your balance decreases, but you are not able to access any additional funds.
How Does Non-Revolving Credit Work?
If you have a non-revolving credit account, you will receive all of the funds you apply for upfront. One example of a non-revolving credit account is an auto loan. If you take out an auto loan, you get the total amount to buy your car at the outset. Then, you’ll make regular monthly payments, which decreases your outstanding balance.
But with a non-revolving credit account like an auto loan, you won’t be able to access any additional money without reapplying and requalifying with your lender.
One benefit of a non-revolving credit account is that you may be able to qualify for a higher amount and/or lower interest rates. Banks may be more willing to extend you additional credit (meaning a higher sum) on a non-revolving credit line, specifically because you won’t be able to continue to revolve the debt amount over time.
To illustrate this point, consider the difference in the amount and interest rate between a typical mortgage (non-revolving) and credit card (revolving). According to Bankrate, in January 2025, the average fixed-rate interest on a 30-year conventional mortgage was 7.11% while the rate for a credit card was 20.15%.
Another benefit of non-revolving credit is that it doesn’t leave borrowers vulnerable to rate hikes, as credit cards might do. In fact, proposed credit card interest rate caps have been getting national attention, with the United States leading the world in outstanding credit card debt, at $1.23 trillion in total. When faced with crippling credit card debt, however, a personal loan may offer a cheaper, faster, and predictable way to pay off debt.
Here’s a quick look at some of the differences between revolving credit vs. non-revolving credit:
Revolving Credit
Non-Revolving Credit
Access to money
Can access money over and over, subject to the total credit limit
Just have access to the original amount borrowed
Interest charged
Only on the amount outstanding
On the full amount borrowed
Interest rate
Often comes with higher interest rates
Generally has lower interest rates
Purchasing power
Relatively lower credit limits
Can qualify for higher amounts
The Takeaway
Credit and debt accounts can be either revolving or non-revolving, and there’s an important difference between the two. With a non-revolving credit account, you receive all of the money at once, pay interest on the full amount borrowed, and you’re not able to access any additional funds without reapplying with your lender. With a revolving credit account (such as credit cards), you are only charged interest on the amount that you choose to borrow at any one time, and you can pay down your balance and access additional funds at any time.
Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.
Looking for a new credit card? Consider credit card options that can make your money work for you. See if you're prequalified for a SoFi Credit Card.
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FAQ
What is the major difference between revolving and non-revolving credit?
One of the biggest differences between revolving vs. non-revolving credit is how often you are able to access the money from your credit account. With a non-revolving credit account, you access the total amount upfront and then are not able to access any additional funds without reapplying. If you have a revolving credit account, you can continue to pay down your balance and access additional money, as long as your balance is below your maximum credit limit.
When should I use revolving credit?
A revolving credit account, such as a credit card, can be a great choice if you don’t have a fixed amount that you’re looking to borrow. If you have a revolving credit line, you’re able to borrow (and pay interest) only on what you need at any one time. And if you later find that you need to borrow additional funds, you can do so with a revolving line, as long as your outstanding balance remains below your total credit limit.
When does a revolving line of credit become mature?
Some revolving letters of credit come with a maturity date. Before the maturity date, you can access the line of credit, pay down the balance, and continue to access additional funds. This is often known as a “draw period.” After the maturity date when this draw period ends, the line of credit converts to non-revolving, and you are no longer able to access additional funds. Make sure to check the terms of your line of credit to understand how this may affect you.
Photo credit: iStock/staticnak1983
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.
This content is provided for informational and educational purposes only and should not be construed as financial advice.
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 .
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®
SoFi Credit Cards are issued by SoFi Bank, N.A. pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
