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According to the Education Data Initiative, the current cost of a bachelor’s degree averages $38,270 per year, or $153,080 for four years. However, this expense can vary widely, depending on whether a student attends a public or private school and other factors. Learn more about how much a bachelor’s degree costs here, as well as ways to make your education as affordable as possible.

Average Cost of a Bachelor’s Degree in the US

As noted above, the current cost of a college degree in the U.S. is approximately $153,080 over four years. This figure includes books and supplies, plus daily living expenses. However, this average doesn’t tell the full story. Consider these data points from the Education Data Initiative:

•   The typical student attending a public, four-year school and paying in-state tuition will spend $27,146 per year, or $108,584 for their four-year degree. This includes on-campus housing.

•   If a student attends a private, nonprofit university, they are likely to spend $58,628 per year if living on campus, which equals $234,512 over four years.

It’s worth noting that college costs have risen sharply in recent years, doubling since the start of the 21st century.

Tuition Differences by School Type and Residency

When thinking solely about the cost of tuition, you’ll find that it currently averages $9,750 per year for in-state students, and $28,386 for out-of-state students at a public university. At a private university, the annual tuition rises to $38,421 per year.

Here’s how this information looks in chart form:

Type of College	Tuition per Year	Tuition for 4 Years
Public, in-state	$9,750	$39,000
Public, out-of-state	$28,386	$113,544
Private	$38,421	$153,684

Common Costs of a Bachelor’s Degree

If you want to get a handle on the total cost of a bachelor’s degree, it’s wise to consider all of the various costs associated with this phase of your life. You’ll want to budget for more than tuition and room and board. Consider the following categories that need to be accounted for.

Tuition, Living Expenses, and Hidden Costs

When developing a list of expenses for your time spent earning a bachelor’s degree, you’ll want to account for the basics:

•   Tuition and various fees

•   Books and supplies

•   Room and board

But plenty of other costs can crop up. Think about the following:

•   Will you need to buy a laptop or new mobile device? Will you need to pay for a cell service plan?

•   How will you pay for incidentals such as transportation around your college town, a large iced coffee to get you going in the mornings, cool clothes you find at the local vintage store, haircuts, and laundry expenses?

•   When the holidays roll around, will you need airfare and other costs covered to get home to your family?

•   Will you be keeping a car on campus?

These “hidden costs” can add up quickly and make a significant difference in your college budget.

Cost Differences by Major and Program Length

Not all college courses of study are equally expensive. Some programs can lead to steep costs (lab fees, perhaps, or studio art supplies), and the time it takes to get certain degrees can vary, impacting the price you pay.

High Cost vs Lower Cost Degree Paths

As hinted at above, certain majors can be pricier than others. For instance, STEM (science, technology, engineering, and mathematics) and fine arts degrees can be costlier than, say, a liberal arts degree, such as majoring in English or History. The reason you may pay more for a STEM, preprofessional (think medicine and nursing) or fine arts degree is that they can involve specialized equipment and lab sessions.

If you’re a budding electrical engineer or bio major, you will likely be doing considerable hands-on work with pricey materials. (You may snag one of the highest-paying jobs in the U.S. after graduation as well.) Someone who is training to be a fine artist may also pay more for materials; they are going to need to afford plenty of paints, canvases, photographic supplies, and/or clay.

Don’t overlook the fact that certain degrees can be five in the making. For instance, a B.Arch degree, for aspiring architects, is typically a five-year course of study. That can significantly increase your costs compared to those of your friend who’s a Sociology major and will graduate after four years.

And of course, some educational institutions are simply more expensive than others. Some schools are relatively low-cost, and then there are the most expensive colleges in the country.

Recommended: Undergraduate vs Graduate Student Loans

Ways to Reduce the Cost of a Bachelor’s Degree

All this talk about how much a bachelor’s degree can cost may make you curious about ways to reduce the cost of your education. Take a closer look at these tactics.

Financial Aid

The majority of college students currently receive some financial aid — about 85% of first-year, full-time undergrads. This aid can include scholarships, grants, work-study, and federal and private student loans. Federal student loans typically charge lower interest rates than private loans and offer certain borrower protections, such as forbearance and deferment.

Colleges, universities, and state agencies use the FAFSA, or Free Application for Federal Student Aid, to assess a student’s financial aid eligibility. The FAFSA can be completed online. It’s recommended that you submit your completed FAFSA as soon as possible after it becomes available (typically October 1 of the year prior to the academic year). That’s because state aid is often given out on a first come, first served basis.

Transferring Colleges

Some students strategically pursue their education at multiple colleges to save money. Here’s how this can work: You start your degree at a lower-priced community college and check off required classes for your major. Then you transfer to a four-year college or university to finish your degree. If you live at home while at community college, you can save even more.

An important point about this tactic is to make sure in advance that your community college credits will be transferable to your next educational institution. Otherwise, you might wind up paying twice for, say, Intro to Psych and Statistics 101.

Online Programs

While not for everyone, online courses and programs can help students save money and enjoy learn-from-anywhere convenience. Tuition for a year of online college can save you $6,765 compared to on-campus classes, according to the Education Data Initiative. That’s $27,000 over four years.

The same organization cites that the average cost per credit hour for an online bachelor’s degree program is $509 for the 2025-26 school year, considerably less than the $791 per hour charged by a standard four-year educational institution.

While the financial savings and ease of online education can be enticing, keep in mind that these classes can have their downsides, too. Some students may have trouble engaging or staying focused. Others may feel as if they aren’t getting as many networking and social opportunities in a virtual classroom.

Is a Bachelor’s Degree Worth the Cost?

In recent years, many people have questioned whether a bachelor’s degree is worth it. We’ve all seen stories of entrepreneurs who have skipped college and done well. Some have done even better than their peers who pursued a degree and then needed to pay off their student debt in the form of federal and/or private student loans.

Here are some facts to think over as you weigh the pros and cons of going to college.

Earnings, Debt, and Employment Outcomes

Just like owning a home, earning a college degree is part of the American dream, and for good reason. According to a November 2025 report by the Brookings Institution (a nonprofit public policy organization), the average degree-holder earns $8,000 more per year than his non-degreed peers.

And that’s after the cost of student debt is accounted for. If you work for 40-some years after graduation, that $8,000 a year becomes a significant advantage, helping you realize your financial goals. The Association of Public & Land Grant Universities (APLU) puts the figure higher still, saying degree-holders typically earn an 86% higher salary than those without a diploma. This can translate into earnings $1.2 million higher over a lifetime.

That said, the amount typically borrowed in pursuit of a bachelor’s degree averages $30,000, which can be a considerable amount of student debt. (Student loan interest rates and terms are important variables when comparing loans and hunting for the best option.) This debt can trigger financial strain and budgeting challenges, which are considerations to be aware of when deciding whether or not to pursue a bachelor’s degree.

Worth noting: By using a student loan calculator as you consider your options, you can gain a clear picture of what kind of debt payments you would owe and for how long.

One other angle to contemplate is career opportunity. Traditionally, college grads are half as likely as non-degree holders to be unemployed, per the APLU. However, that finding may be in flux. A recent analysis of U.S. Current Population Survey data by the Financial Times found that Gen Z men with a college degree had comparable unemployment rates to those of the same age who didn’t get a bachelor’s degree.

While no one can predict how these numbers will play out as the years pass, these facts point to the importance of thinking carefully about whether investing in a bachelor’s degree makes sense for your particular situation and aspirations.

Recommended: Undergraduate Student Loans

The Takeaway

If you’re wondering how much a bachelor’s degree costs, the answer is currently just over $150,000 on average. That’s a significant sum of money for most people, but a degree can lead to enhanced employment opportunities and lifetime earning power. Whether a student attends college as an in-state, out-of-state, or private university student can impact their total costs. Strategies to make a degree more affordable include financial aid, transferring from community college, and pursuing an online degree.

Some students may be interested in private student loans after federal loan options are exhausted, though these won’t offer the same protections as federal funding.

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.

SoFi private student loans offer competitive interest rates for qualifying borrowers, flexible repayment plans, and no origination fees.

FAQ

How much does the average bachelor’s degree cost in the U.S.?

As of early 2026, the average cost of a four-year bachelor’s degree is $153,080. However, this number can vary depending on whether you are an in-state or out-of-state student, and study at a public or private university. Your field of study can also impact the cost, due to specialized lab or material fees.

What is the cheapest way to earn a bachelor’s degree?

Some ways to economize on the cost of a bachelor’s degree include choosing your major with an eye on price, taking classes for credit at an affordable community college, and seeking financial aid.

Can financial aid cover the full cost of a bachelor’s degree?

While financial aid typically doesn’t cover the full cost of a bachelor’s degree, in some situations it can. To cover the entire expense of a degree, a student may need to combine grants, scholarships, state programs, and other funding sources.

How much student loan debt does the average bachelor’s graduate have?

Estimates say that the average graduate with a bachelor’s degree has taken out about $30,000 in loans in pursuit of their diploma.

Is it cheaper to get a bachelor’s degree online or in person?

It can often be cheaper to get a bachelor’s degree online. Estimates say you might save about $21,000 over four years. Just keep in mind that, like most things in life, online studies have pros and cons and may not be right for everyone.

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Photo credit: iStock/Drazen Zigic

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

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

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

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

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

SOISL-Q126-017

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Deciding whether to go to college is a major life choice with long-lasting consequences — financially, socially, and personally. For decades, a college degree has been seen as a clear pathway to better jobs and higher earnings. But rising costs, record levels of student debt, and changing workforce demands have made this choice more complex.

Below we break down the advantages and disadvantages of going to college, examine how earning potential varies by major, and explore alternative options. Understanding both sides of the equation can help you and your family make a more informed and intentional decision.

On the Fence About Going to College?

If you’re unsure whether college is worth it, you’re not alone. Surveys of college graduates show growing skepticism about the return on investment (ROI) of a four-year degree, particularly among younger workers.

In a March 2025 Harris/Indeed poll of graduates who were working or looking for work, roughly half of Gen Z respondents said they were skeptical about the value of their degree. Similarly, an August 2025 Gallup poll found that just 35% of American adults viewed college as very important, down from 70% in 2013.

Many students today weigh concerns about debt, job prospects, and the time commitment against potential long-term benefits such as higher income, career flexibility, and personal growth.

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

Pros of Going to College

Going to college offers numerous benefits, from personal development to expanded career opportunities. Here’s a look at some key advantages.

Higher Earning Potential

Higher education does not guarantee wealth, but statistically, it increases access to higher-paying roles and long-term earning growth, particularly in professional and technical fields.

Data from the Bureau of Labor Statistics (BLS) show that, on average, workers with bachelor’s degrees earn 66% more per week than those with only a high school diploma. Additional education can widen this gap further: Individuals with professional degrees make, on average, 53% more than those with bachelor’s degrees.

Access to More Jobs

Many occupations list a bachelor’s degree as a minimum requirement, even when the daily tasks may not strictly require one. Holding a degree allows you to qualify for a broader range of roles and provides greater flexibility when choosing where you want to work.

According to a Georgetown University report, by 2031, 72% of all U.S. jobs are expected to require some form of postsecondary education or training. Roughly 42% of jobs will require at least a bachelor’s degree, while about 28% will be available to workers with a high school diploma or less.

Value of Learning

College provides more than job-specific training. Students develop transferable skills such as critical thinking, analytical reasoning, written and verbal communication, collaboration, and adaptability. These skills are valuable across industries and remain relevant even for those entering technical fields.

In an economy shaped by automation and rapid technological change, the ability to learn, analyze, and adapt may be just as important as specialized knowledge.

Networking

Going to college offers built-in networking environments that are difficult to replicate elsewhere. Students interact with professors, advisors, classmates, alumni, and visiting professionals. Internships, research projects, student organizations, and career fairs provide early exposure to industries and employers.

The connections you form in college can play a significant role in securing your first job after graduation and advancing throughout your career, especially in competitive fields where referrals and recommendations matter.

Lower Unemployment

BLS data consistently show that unemployment rates decline as education levels rise. For workers aged 25 and over, those with less than a high school diploma typically face the highest unemployment rates, while those with advanced degrees experience the lowest.

While no credential guarantees job security, higher education can provide insulation during economic downturns and improve reemployment prospects.

Lower Poverty

Educational attainment is strongly correlated with lower poverty levels. According to the U.S. Census, roughly 4% of Americans with a bachelor’s degree or higher were living below the poverty line in 2025, compared with approximately 23% of those without a high school diploma.

Higher earnings, steadier employment, and access to employer-provided benefits all contribute to this outcome.

Recommended: Colleges With Free Tuition

Healthier

Numerous studies show that people with higher education levels report better overall health. College graduates are more likely to have employer-sponsored health insurance, engage in preventative care, and maintain healthier lifestyles.

Education is also associated with improved mental health outcomes, partially due to increased financial stability and access to resources.

Better Educated Children

Parents with college degrees are generally more likely to emphasize academic achievement and educational attainment for their children. This can create long-term benefits across generations, including higher graduation rates and greater economic mobility.

More Likely to Save for Retirement

College graduates are more likely to work in jobs that offer retirement plans such as 401(k)s. Higher earnings also make it easier to contribute consistently to long-term savings, which can help improve financial security later in life. An April 2025 Gallup poll found that 81% of college graduates had retirement savings, compared with 39% of adults without any college education

Increased Job Stability and Benefits

Beyond wages, college degree holders are more likely to receive benefits such as paid leave, health insurance, disability coverage, and employer retirement contributions. These benefits can significantly influence quality of life and long-term financial security, even when base salaries appear similar.

Cons of Going to College

Despite its advantages, college also involves real costs and risks. Here’s a look at some of the drawbacks of going to college.

Cost of College

The rising price of higher education is one of the most substantial barriers for students today.

Cost of Tuition

According to the College Board’s 2025-26 “Trends in College Pricing” report, the average published tuition and fees for full-time students are $11,950 at public four-year in-state institutions and $45,000 at private nonprofit four-year universities. When housing, food, books, and other expenses are included, the total annual cost of attendance averages $30,990 for in-state students at public schools and $65,470 for private colleges.

Opportunity Cost of Time Spent Not Working

College requires a substantial time commitment. Full-time students typically delay full-time employment for four years or more. During that period, noncollege peers may be earning income, gaining work experience, and advancing in their careers.

For individuals confident in alternative career paths, this opportunity cost can be substantial.

High-Paying No-Degree Jobs

Not all high-paying careers require a bachelor’s degree. Skilled trades, certain technology roles, and some health care positions often rely on certifications, apprenticeships, or associate degrees instead.

Examples of relatively high-paying jobs that may not require a college degree include:

•   Wind turbine technician

•   Electrician

•   Flight attendant

•   Hearing aid specialist

•   Plumber

•   Licensed practical nurse

•   Medical records technician

•   Construction worker

These paths often involve lower training costs and faster entry into the workforce.

Underemployed College Graduates

Some graduates struggle to find work that fully utilizes their degree, leading to underemployment. Underemployment refers to recent graduates working in roles that don’t typically require a bachelor’s degree.

Research suggests that as many as 52% of college graduates are underemployed when they first enter the labor market. This can reduce the financial return on a college investment and contribute to dissatisfaction, particularly among those carrying student debt.

Recommended: Student Loan Payment Calculator

Dropping Out

Not all students complete their degrees. National data shows that a substantial share of students who start college do not finish within eight years. For these individuals, the financial and time investment may not deliver the expected return, while student debt often remains.

Student Loan Debt and Long-Term Financial Impact

Student loan debt remains a major concern for many borrowers. According to the Education Data Initiative, the average student borrows more than $30,000 to earn a bachelor’s degree. Professional degrees can raise debt levels considerably: Average law school debt is around $140,000, while average medical school debt approaches $200,000.

While debt is manageable for some graduates, for others, it can become a long-term financial burden that affects major life decisions.

💡 Quick Tip: Would-be borrowers will want to understand the different types of student loans that are available: private student loans, federal Direct Subsidized and Unsubsidized loans, Direct PLUS loans, and more.

Earning Potential of Different Majors for College Graduates

The financial value of a degree is not uniform — outcomes vary widely depending on the chosen field of study.

STEM vs Humanities and Liberal Arts

An October 2025 Georgetown University report found that while a bachelor’s degree generally increases income, your major plays a critical role in determining earning potential. STEM graduates earned the highest median salaries at approximately $98,000, while graduates in arts and humanities majors earned a median salary of about $69,000.

ROI by Field of Study

Return on investment depends on both post-graduate earnings and the cost of education. A September 2024 Bankrate analysis of U.S. Census data found that degrees in engineering, nursing, and technology tend to deliver the strongest financial returns, while bachelor’s degrees in the arts and humanities often take longer to break even due to lower average pay and high tuition costs.

Understanding expected earnings by major is important when evaluating whether college makes financial sense.

Is College Right for You?

If you’re debating whether college is worth it, the following considerations can help guide your decision.

Factors to Consider Based on Career Goals and Finances

Key questions to ask include:

•   Does your intended career require a degree?

•   What is the total cost of attendance, not just tuition?

•   How much debt would you need to take on?

•   What is the expected salary in your chosen field?

Aligning your education decisions with realistic financial projections can help prevent a costly mismatch.

The Role of Passion and Personal Interests

For some students, college is closely tied to intellectual curiosity and personal fulfillment. For others, hands-on work, entrepreneurship, or technical training may be more motivating. While passion alone shouldn’t dictate the decision, it can play a key role in persistence and long-term satisfaction.

Alternatives to College

College is not the only path to success. Several alternatives can offer practical, lower-cost routes into stable careers.

Trade School

Trade schools focus on specific skills such as electrical work, welding, HVAC, and automotive repair. Programs are typically shorter and more affordable than four-year degrees and often lead directly to in-demand jobs.

Community College

Community colleges offer associate degrees and certificates at significantly lower cost than four-year institutions. Many students use them as stepping stones to bachelor’s programs or as direct pathways into technical and health care roles.

They tend to offer flexible schedules, making it easier for students to work or care for family members. About 40% of all undergraduate students in the U.S. are enrolled in community colleges, according to a December 2025 report from Columbia University’s Community College Research Center.

Industry-Specific Education Programs

Bootcamps and short-term training programs in fields like IT, cybersecurity, data analytics, and digital marketing can provide job-ready skills in three to six months rather than years.

Learning on the Job

Some careers prioritize experience over formal credentials. Entry-level roles, internships, and freelance work allow individuals to build skills while earning income, particularly in creative and technical fields. This approach can provide a debt-free alternative to college.

Apprenticeships and Certifications

Apprenticeships combine paid work with structured on-the-job training and classroom instruction. These programs often lead to industry-recognized certifications that validate specific skills and expertise.

Apprenticeships are available in a variety of fields, including manufacturing, construction, IT, health care, energy, transportation, and logistics.

The Takeaway

Going to college can be a powerful investment — but only when it aligns with clear goals, realistic finances, and thoughtful planning. For many careers, higher education opens doors to stability, higher earnings, and long-term benefits. For others, alternative paths may offer faster and more affordable routes to success.

Ultimately, the most important question is not whether college is worth it in general, but whether it’s worth it for you.

When it comes to paying for college, students may rely on a combination of cash savings, scholarships, grants, and 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

What are the biggest reasons for not going to college?

The biggest reasons for not going to college often center on the high cost, which can lead to significant student loan debt and long-term financial burden. Other factors include the opportunity cost of time spent not working, the risk of dropping out without a degree, and the possibility of underemployment (working in a job that doesn’t require a degree). Some individuals find that career-focused alternatives, like trade schools or apprenticeships, offer a faster, more affordable path to a stable, well-paying job.

What are the most important reasons to attend college?

The most important reasons to go to college include:

•   Higher earning potential: College graduates statistically earn significantly more than those with only a high school diploma.

•   Access to more jobs: A degree is often a minimum requirement for professional and technical occupations, offering greater career flexibility.

•   Skill development: College helps develop valuable transferable skills like critical thinking, communication, and adaptability.

•   Lower unemployment: Degree holders consistently have lower rates of unemployment and poverty.

•   Networking: College provides connections with alumni, professors, and professionals that can be important for career advancement.

How does college compare to trade school as far as cost and benefit go?

College typically involves significantly higher costs and takes longer (four years or more), often leading to more student debt. However, a bachelor’s degree statistically offers the highest lifetime earning potential and the greatest flexibility in career path.

Trade schools are generally less expensive, require less time (often six months to two years), and provide faster entry into high-demand, skilled trades. While trade school pay may be lower than a top college degree, the lower cost and time commitment may result in a faster return on investment.

Can you succeed financially without going to college?

Yes, absolutely. Financial success does not strictly require a four-year college degree. Many paths lead to high earnings and stability without traditional college, including trade schools, apprenticeships, industry-specific certifications (like those in IT or tech), and entrepreneurial ventures. These alternatives often involve lower debt and faster entry into the workforce.

What are good alternatives to a traditional four-year degree?

Top alternatives to a traditional four-year degree include:

•   Trade school: Focuses on specific skills and offers faster, more affordable training for in-demand jobs like plumbing, electrical work, and automotive technology.

•   Community college: Provides lower-cost associate degrees and certificates, often serving as a stepping stone to a bachelor’s or a direct path to technical roles.

•   Apprenticeships/certifications: Combines paid work with structured training, leading to industry-recognized credentials in fields like IT, health care, and construction.

•   Industry-specific education programs: Short-term bootcamps in tech fields (such as coding or data analytics) for rapid skill acquisition.

•   Learning on the job: Building experience and skills through entry-level roles or internships.

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Photo credit: iStock/FG Trade

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

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

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

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

SOISL-Q126-003

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Student loans can be confusing, especially when it comes to how and when the money is actually released. Many borrowers expect funds to arrive all at once or directly in their bank account, only to discover the process works differently than anticipated.

Generally speaking, both federal and private student loans are disbursed directly to the school to pay for things like tuition, fees, and room and board. Keep reading to learn more on the disbursement timeline, who receives the funds first, and what happens to any remaining money after school charges are paid.

The Lowdown on Student Loans

Student loans are designed to help college students absorb the many costs of postsecondary education.

The average price of tuition for the 2025-26 school year is $11,950 for an in-state undergraduate student at a public college and $45,000 for a private college student, according to the College Board.

Because of this cost, many students rely on student loans to help pay for college. Student loans typically cover up to the cost of attendance, which may include:

•   Tuition and fees

•   Housing

•   Meals

•   Transportation

•   Books and supplies

•   Computers

A rule of thumb suggests that only required materials and needs can be paid for with a loan. When in doubt about whether an item can be purchased with student loan funding or not, it’s best to speak directly to the loan provider or college financial aid department.

And remember, student loan money is borrowed money and will have to be repaid, with interest.

Recommended: Are Student Loans Secured or Unsecured?

Types of Student Loans: Federal and Private

The two main types of student loans are federal student loans and private student loans. Federal loans are provided by the U.S. government, while private loans are issued by financial institutions. Federal student loans include Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans.

Direct Subsidized Federal Loan

A Direct Subsidized Loan is a federal student loan available to undergraduate students who demonstrate financial need. The U.S. Department of Education pays the interest while you’re enrolled at least half-time, during the grace period, and during approved deferment periods, helping keep overall borrowing costs lower.

Direct Unsubsidized Federal Loan

A Direct Unsubsidized Loan is a federal student loan available to undergraduate, graduate, and professional students, regardless of financial need. Interest begins accruing as soon as the loan is disbursed, including while you’re in school, during the grace period, and during deferment or forbearance.

Direct PLUS Loan

A Direct PLUS Loan is a federal student loan available to graduate or professional students and to parents of dependent undergraduate students. It requires a credit check, has higher interest rates than other federal loans, and interest begins accruing as soon as the loan is disbursed.

Under Trump’s One Big Beautiful Bill, no new Federal Direct PLUS Loans for graduate students will originate after July 1, 2026. Current borrowers who received a Grad PLUS loan before June 30, 2026 can continue borrowing under current terms through the 2028-29 academic year.

Direct Consolidated Loan

A Direct Consolidation Loan is a federal loan that combines multiple eligible federal student loans into a single loan with one monthly payment. It can simplify repayment and may extend the repayment term, but it does not lower the interest rate, which is a weighted average of the consolidated loans.

Recommended: Consolidate vs. Refinance Student Loans

Private Student Loan

Private student loans are education loans offered by banks, credit unions, and online lenders rather than the federal government. They can be used to cover gaps in college costs after scholarships, grants, and federal aid are applied. Interest rates may be fixed or variable and are based on the borrower’s credit history, income, and overall financial profile, often requiring a creditworthy cosigner for students.

Unlike federal student loans, private student loans do not offer standardized repayment plans or borrower protections set by law. Terms vary by lender and may include fewer options for deferment, forbearance, or loan forgiveness. Because of these differences, borrowers should carefully compare rates, fees, repayment terms, and flexibility before choosing a private loan.

Recommended: Private Student Loans vs Federal Student Loans

How Long Does It Take to Get Student Loans Disbursed?

Disbursement is a term that describes when a loan is actually paid out. Disbursement timelines may vary depending on whether the loan is a federal or private student loan.

Federal Student Loan Disbursement

To get a federal student loan, interested students must fill out the Free Application for Federal Student Aid, otherwise known as the FAFSA®. Information provided on this form will be used to determine how much federal financial aid and what types a student will qualify for — including federal student loans.

Applications are typically reviewed within three days to three weeks of submission. Federal student loans are generally disbursed directly to the school at the start of each semester. Each school determines when they will pay out any leftover aid to use for additional living and educational expenses.

Private Student Loan Disbursement

The application for a private student loan will be conducted with the individual lender. Each lender will have its own policies for applications and approvals. Generally speaking, it may take between two and 10 weeks to process a private student loan.

Private student loans are also generally disbursed directly to your school. The disbursement date may be timed to the start of the school year, though, this may vary depending on when you apply for and are approved for a private student loan.

Recommended: A Complete Guide to Private Student Loans

How Are Student Loans Disbursed?

Whether a student chooses to accept multiple federal loans, a private loan, or a combination of the two, the money is often distributed the same way. As briefly mentioned, the loan amount is sent directly to the attending school, where it is held in the student’s account before being applied to covered costs, including tuition, fees, and room and board.

When there is leftover money in a student’s account, the excess is paid directly to the student to be used for additional expenses. These payouts tend to take place once per term and vary by school. If students receive leftover funding, they can use it as they see fit or even begin to pay back the loan early.

Keep in mind that all universities have their own policies on loans and disbursement. Questions about how a specific school handles student loans should be directed to the financial aid office.

Overage funds tend to be awarded to the holder of the loan. If a student’s parents hold a loan with overage, they’re more likely to receive the leftover money.

Also, disbursements may be held for 30 days after the first day of enrollment, especially if the student is a freshman and first-time borrower, according to the Federal Student Aid office.

What Happens if Your Disbursement Is Delayed?

If your student loan disbursement is delayed, it can affect your ability to pay tuition, fees, housing, or other education expenses on time. Schools may place temporary holds on your account or assess late fees until funds arrive. In the meantime, you may need to contact your financial aid office, request a short-term payment extension, or use alternative funds while the issue is resolved.

Common Student Loan Disbursement Issues

It’s possible for issues to crop up that could impact your disbursement. These include:

•   Missing application deadlines. Applying for a private student loan or filing the FAFSA too late could impact when your student loan is disbursed. To avoid any late disbursements, be sure to submit your FAFSA before state or school-specific deadlines.

•   Making mistakes on the application. If there are errors on the FAFSA or a private student loan application, this could impact your approval or potentially delay the disbursement date as you fix errors and resubmit the application.

•   Forgetting to complete entrance counseling for federal student loans. You must complete the entrance counseling required for federal student loans before they are disbursed. Be sure to read the terms of all loans closely and fill out all paperwork properly to ensure timely disbursement.

How to Track the Status of Your Student Loan Disbursement

You can track the status of your student loan disbursement by regularly checking your school’s student portal and your lender or loan servicer’s online account. These platforms typically show when funds are scheduled, processed, and applied to your balance. If information is unclear or delayed, contacting your financial aid office can help clarify timelines and resolve issues.

Final Tips

The world of student loans can be intimidating at first, but it’s not impossible to learn how to navigate the financial waters of postsecondary education. These final tips may help:

•   Compare all options. It’s better to have too many loan options and turn some down than face uncertainty about how to pay for everything.

•   Apply early. This ensures there’s time to make corrections if necessary. There are rules and requirements unique to all types of loans.

•   Avoid overborrowing. Try to calculate overall expenses and keep loan amounts as close as possible to the estimate. Being approved for a large loan doesn’t mean the total amount has to be accepted.

•   Get a part-time job. A part-time job may help to alleviate the stress that loan payments can add.

The Takeaway

Student loan disbursement is a critical step in the borrowing process, as it determines when and how your loan funds are delivered to cover education costs. Understanding the timing, method, and potential delays of disbursement can help you plan ahead, avoid surprises, and manage your finances more confidently throughout the school year.

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

Do student loans get deposited into your bank account?

Typically, student loans do not get deposited in your bank account. Instead, the loans are disbursed directly to the school, where they are applied to tuition payments and room and board. If there is any money leftover after paying for tuition, the money will then be distributed to the student. These payouts tend to take place once per term and vary by school.

How long do student loans take to deposit?

After applying through the FAFSA, it may take up to 10 days to find out what types of aid — including student loans — you are eligible for. If approved for a federal student loan, this money will be disbursed directly to the school. Typically, this will happen within the first 30 days of the start of term.

What does disbursement mean?

Disbursement is when the loan amount is paid out to the borrower. In the case of student loans, the loan is typically disbursed directly to the student borrower’s school.

Can you use a student loan to pay a tuition bill that is past due?

Yes, you can use a private student loan to pay off an outstanding tuition balance. Each lender determines how far in the past a loan can be used to pay an overdue balance, but many will allow loans to cover past-due balances that are six to 12 months outstanding.

Can I use leftover student loan money for personal expenses?

Yes, leftover student loan funds can be used for approved education-related expenses, such as housing, food, transportation, books, and supplies. However, they should not be used for nonessential or luxury purchases. Using excess funds responsibly can help cover living costs while minimizing unnecessary debt.

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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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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.

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

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.

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The Internal Revenue Service (IRS) generally requires that you report a forgiven or canceled debt as income for tax purposes. But tax on student loan forgiveness is a different matter.

The American Rescue Plan (ARP) Act specifies that student loan debt forgiven between 2021 and 2025, and incurred for postsecondary education expenses, will not be counted as income, and therefore does not incur a federal tax liability.

This includes federal Direct Loans, Family Federal Education Loans (FFEL), Perkins Loans, and federal consolidation loans. Additionally, nonfederal loans such as state education loans, institutional loans direct from colleges and universities, and even private student loans may also qualify.

However, some states have indicated that they still count canceled student loans as taxable income. Read on for more information about taxes on student loans, including which forgiven student debt is taxable and by whom.

Types of Student Loan Forgiveness Programs

Federal student debt can typically be canceled through an income-driven repayment plan (IDR) or forgiveness programs. However, as of February 2026, applications for some income-driven repayment plans are on hold due to legal challenges. You can find out more about this situation on the Federal Student Aid (FSA) website.

Here are some common federal forgiveness programs and how typically they work.

Public Service Loan Forgiveness (PSLF)

If you are employed full-time for the government or a nonprofit organization, you may be eligible for Public Service Loan Forgiveness for federal student loans like federal Direct Loans.

After you make 120 qualifying payments under an income-driven repayment plan for an eligible employer, the PSLF program forgives the remaining balance on your federal student loans.

However, because IDR plans are currently not accepting applications, and you must achieve forgiveness by repaying your loans under one of these plans, you will likely need to wait before you can start working toward PSLF. You can get more details about PSLF on the FSA website.

Income-Driven Repayment (IDR) Forgiveness

IDR options generally offer loan forgiveness after borrowers make consistent payments for a certain number of years. However, forgiveness on all but one of the IDR plans is paused as of February 2026.

On an IDR plan, how much you owe each month is based on your monthly discretionary income and family size. These are the types of IDR plans.

•   Income-Based Repayment: With IBR, payments are generally about 10% of a borrower’s discretionary income, and any remaining balance is forgiven after 20 or 25 years. On the IBR plan, forgiveness (after the repayment term has been met) is still proceeding as of February 2026, since this plan was separately enacted by Congress.

•   Pay As You Earn (PAYE): The monthly payment on PAYE is about 10% of a borrower’s discretionary income, and after 20 years of qualifying payments, the outstanding loan balance is forgiven. As of February 2026, forgiveness has been paused for borrowers who were already enrolled in this plan.

•   Income-Contingent Repayment (ICR): The monthly payment amount on ICR is either 20% of a borrower’s discretionary income divided by 12, or the amount they would pay on a repayment plan with a fixed payment over 12 years, whichever is less. After 25 years of repayment, the remaining loan balance is forgiven. As of February 2026, forgiveness has been paused for borrowers who were already enrolled in the plan.

Teacher Loan Forgiveness

With Teacher Loan Forgiveness (TLF), teachers who have been employed full-time for five consecutive years at an eligible school and meet certain other qualifications may be eligible to have up to $17,500 of their federal Direct Subsidized and Unsubsidized Loans and federal Stafford Loans forgiven.

Recommended: Do Student Loans Count as Income?

Which Student Loan Cancellations Are Not Federally Taxed?

When it comes to student loan forgiveness and taxes, under the provisions of the ARP Act, private or federal student debt for postsecondary education that was or is forgiven in the years of 2021 through 2025 will not be federally taxed. This means that these borrowers are not required to report their discharged loan amount as earned income, and the forgiven amount is not taxable.

Beyond the special five-year window of tax exemption provided by the ARP Act, participants in the Public Service Federal Loan program who receive forgiveness don’t have to pay taxes on their canceled loan amount. The PSLF program explicitly states that earned forgiveness through PSLF is not considered taxable income.

Which Student Loan Cancellations Are Federally Taxed?

Borrowers who receive loan cancellation after successfully completing an income-driven loan repayment plan can generally expect to pay taxes. However, those whose debt was or will be discharged in the years 2021 through 2025, will not need to pay federal taxes on their forgiven loans due to the ARP Act.

Forgiven amounts that are taxable are treated as earned income during the fiscal year it was received. Your lender might issue tax Form 1099-C to denote your debt cancellation.

💡Quick Tip: Enjoy no hidden fees and special member benefits when you refinance student loans with SoFi.

Which States Tax Forgiven Student Loans?

Typically, states follow the tax policy of the federal government. But some states have announced that their residents must include their forgiven or canceled student loan amount on their state tax returns.

As of February 2026, the eight states that say certain forgiven loans are taxable are:

•   Arkansas (except for loans forgiven through PSLF)

•   California (except for loans forgiven through PSLF)

•   Illinois (except for loans forgiven through PSLF)

•   Indiana (except for loans forgiven through PSLF, TLF, and certain other programs)

•   Minnesota (except for loans forgiven through PSLF)

•   Mississippi

•   North Carolina

•   Wisconsin (except for loans forgiven through PSLF and TLF).

Additional states tend to conform to federal tax laws, so it’s important to consult a qualified tax professional who is knowledgeable about forgiveness of student loans in your state to confirm the latest information of how much you owe.

How to Prepare for Taxes on Forgiven Student Loans

If you’re anticipating a tax liability after receiving loan forgiveness, there are a few steps you can take to get ready.

Step 1: Calculate Your Potential Tax Bill

The first step when preparing for a student loan forgiveness tax bill is calculating how much you might owe come tax season. This can be influenced by factors including the type of forgiveness you are receiving and the forgiven amount.

To avoid sticker shock, you can use a student loan forgiveness tax calculator, like the Loan Simulator on StudentAid.gov. It lets you see how much of your student loan debt might be forgiven, based on your projected earnings.

Step 2: Choose the Right Plan

Although IDR plans are not currently accepting applications, they are designed to help keep borrowers’ monthly payments to a manageable amount while they’re awaiting loan forgiveness. All of these repayment plans calculate a borrower’s monthly payment based on their discretionary income and family size.

Step 3: Prioritize Saving

If you’re expecting loan forgiveness after 2025, it might be beneficial to start allocating extra cash flow to a dedicated tax savings fund now. Incrementally setting money aside over multiple years can ease the burden of a sudden lump-sum tax bill down the line.

Another way to potentially save some money is to take the student loan interest deduction on your taxes each year, if you qualify. The deduction, which is up to $2,500 annually, can reduce your taxable income.

You’ll need your student loan tax form to make sure you are eligible for the deduction. The form should be sent to you by your loan servicer or lender. You’ll file the form with your taxes.

Recommended: Guide to Student Loan Tax Deductions

What If I Can’t Afford to Pay the Taxes?

If you can’t afford to cover an increased tax bill, contact the IRS to discuss your options. Inquire about payment plans that can help you pay smaller tax payments over a longer period of time. However, be aware that fees and interest may accrue on such plans.

The Takeaway

Thanks to a special law passed by Congress in 2021, post-secondary education loans forgiven from 2021 through 2025 will not count as earned income and will not be federally taxed. That said, state taxes may be due on forgiven loans, depending on where the borrower lives.

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

Is loan repayment considered taxable income?

If your employer offers loan repayment assistance benefits, they would typically be considered taxable income. However under the CARES Act, which was signed into law in 2020, employer assistance loan payments up to $5,250 made each year from 2021 through 2025 are tax-free.

Will refinancing my student loans help me avoid taxes?

Refinancing student loans does not involve taxes. However, the interest you pay on a refinanced student loan may qualify for the student loan interest deduction. If you’re eligible, you may be able to deduct up to $2,500, which could lower your taxable income.

Will student loan forgiveness be taxed after 2025?

The American Rescue Plan Act stipulates that forgiven student loans will not be taxed from 2021 through 2025. Currently, there are no plans to extend that tax relief beyond 2025.

Are state taxes different for forgiven student loans?

While states typically follow the federal tax policy, five states say that certain forgiven loans are taxable. Those five states are: Arkansas (except for loans forgiven through Public Service Loan Forgiveness), Indiana (except for loans forgiven through PSLF, Teacher Loan Forgivenesss, and certain other programs), Mississippi, North Carolina, and Wisconsin (except for loans forgiven through PSLF and TLF).

What steps should I take if I owe taxes on forgiven student loans?

If you owe taxes on forgiven student loans, calculate how much you’ll owe in taxes with the forgiven loan amount factored into your taxable income. Then, once you have the estimate of what you owe, you can start saving up to pay it. One way to do this is to put away the monthly amount you previously paid on your student loans to help offset the amount you owe. So if your student loan payment was $100 a month, deposit that amount monthly into a savings account, and use it to help pay what you owe in taxes.

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Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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

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

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

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

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

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

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