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It didn’t take long after President Biden announced his student loan forgiveness program in August 2022 for the scammers to get up and running. The Better Business Bureau (BBB) and federal agencies have unearthed hundreds of ads, text messages, phone calls, and emails targeting student loan borrowers. Their purpose? To get consumers to divulge private financial information or to pay for unnecessary services. In response, the U.S. Department of Education issued warnings about the student loan forgiveness scams and advice on how to avoid them.

The ongoing student loan payment pause hasn’t slowed the scammers down. Keep reading to learn how student loan forgiveness program scams try to fool you, and how you can avoid getting duped.

Status of Biden’s Student Loan Forgiveness Plan

The student loan forgiveness plan would cancel up to $10,000 in federal student loan debt for single borrowers with an adjusted gross income of less than $125,000 a year, or less than $250,000 for married couples. Pell Grant recipients could have as much as $20,000 in student debt canceled. To refresh your memory, check out this story on the student debt relief plan.

The DOE officially began to accept applications for forgiveness on Oct. 17, 2022, but had to stop in November due to legal challenges to Biden’s program.

Meanwhile, the pause on federal student loan payments for all borrowers has been extended several times. Repayment could potentially resume as late as 60 days after June 30, 2023, when the U.S. Supreme Court is expected to release its decision on the challenges to President Biden’s student debt cancellation program.

While borrowers wait for updates, scammers are actively using phony government websites, false promises, and other criminal schemes to lure unsuspecting consumers. Here’s what you need to know to avoid student loan forgiveness scams.

Recommended: What Biden’s Student Loan Forgiveness Means for Your Taxes

Types of Student Loan Forgiveness Scams

Watchdogs have identified a variety of scams related to student loan forgiveness. Some are aimed at borrowers searching out information on the internet, and others directly target people who hold student loans. Fortunately, certain patterns are coming into focus. Here’s a rundown of what officials have seen so far.

Recommended: How Do Student Loans Work? Guide to Student Loans

False Deadline Warnings

These scams include texts, calls, and emails sent to borrowers conveying a false sense of urgency that they must take action before a certain date or miss out on forgiveness. In reality, the messages are designed to scare you into disclosing personal financial information, which criminals may then use for identity theft and other financial fraud. Be very wary of any “student loan forgiveness center” calls.

On Oct. 17, the DOE opened the official forgiveness application portal . The deadline for applications is the end of 2023, but you’ll want to apply a lot sooner if your payments will be resuming in January.

What’s more, for many borrowers who already have income information on file with the DOE, forgiveness will be automatic. No application — and no deadline — is necessary.

Fake Email Alerts

Especially while borrowers were waiting on an email from the DOE informing them that the forgiveness application was open, scammers are sending fraudulent emails that look as if they might be from the government in an effort to collect personal financial information. This and other fraudulent strategies are expected to continue.

To make sure you’re responding to a legitimate email, always check the address of the sender. The full address isn’t always obvious on a phone or other mobile device: That interface often shows only the name of the sender. Always click on the sender’s name to see the actual address.

The address is likely to be the real thing if it has a .gov ending, something not easy for fraudsters to imitate.

You can sign up for student loan forgiveness notifications and updates from this DOE webpage .

Help With the Student Loan Forgiveness Application

There are lots of offers on the internet and elsewhere to help borrowers claim their loan forgiveness — for a fee. While not all of the companies offering these services are illegitimate, the DOE has warned that it won’t be necessary to pay for help. They promise the application will be simple and quick to complete.

Predatory companies love to use webinars and videos explaining the details of the loan forgiveness program. The ending is always the same: a plea to sign up for their paid service, with the promise they’ll get you your debt relief. They may claim they can get you additional benefits, get your benefits faster, or get you to state tax breaks if you pay them upfront. In some cases, the outlaws charge hundreds of dollars for unnecessary service.

A real government agency will never ask for an advance processing fee. And legitimate student loan servicers will never charge a fee for providing information about your loans. You can check if a company works with the DOE at the Federal Student Aid site on avoiding scams .

Recommended: 9 Smart Ways to Pay Off Student Loans

What You Can Do to Avoid Scammers

To protect yourself from student loan forgiveness program scams, familiarize yourself with the following tips. They can help you avoid the threat of costly identity theft or financial fraud that can result from these schemes.

Never give out your FSA ID, student aid account information, or password. The DOE and the company that services your federal student loans will never call or email asking you for this information. Along the same lines, never give your personal or financial information — including your Social Security number and bank account information — over the phone or email. (That said, the beta version of the forgiveness application asks for your Social Security number but not your FSA ID.)

Avoid upfront fees. Think twice before paying anyone for help filling out the application. It is highly likely you won’t need help because the government is promising a free and easy-to-use application. Paying a fee before the application is even available is totally unnecessary.

Stay up-to-date. Having the most accurate and current student loan forgiveness information is the best defense against fraud. As mentioned above, sign up with the DOE for notifications and updates. And keep an eye on the Better Business Bureau and Federal Student Aid websites for the latest official information.

Update your contact information. To receive official notices related to student debt relief, make sure the government and your loan servicer have your most current contact information. If your income information is already on file at the DOE, qualifying borrowers will automatically receive loan forgiveness without having to apply. All borrowers, whether or not they have to apply, will be notified by the DOE when the application goes live.

To make sure you get these notices and other updates, sign up with StudentAid.gov to receive text alerts. If you don’t have a StudentAid.gov account, create one now .

You’ll also want to make sure your student loan servicer has your most recent contact information. You can find your federal student loan servicer’s contact information at Studentaid.gov/manage-loans/repayment/servicers

The Takeaway

Understanding how student loan forgiveness scammers work is an important step toward protecting yourself. Staying up to date on the latest official news and announcements can also help you bypass the onslaught of scams out there. Another important defense: Actively manage your student loan accounts and make sure all of your information is accurate and up to date.

SoFi can help. If you have more federal student debt than the new debt relief plan will forgive, or you don’t qualify for loan forgiveness, or you have private student loans, you may want to consider refinancing your debt before rates rise further.

If you do qualify for forgiveness and you refinance your federal student loans, you will no longer qualify for the new program. If you still wish to refinance, leave up to $10,000 unrefinanced ($20,000 for Pell Grant recipients) to receive your federal benefit. Remember: Good information is your best weapon when it comes to managing all aspects of student debt.

FAQ

What are common types of student loan forgiveness scams?

Look out for false email alerts claiming to be from the government and phony government websites. These schemes attempt to get you to divulge personal financial information, which can then be used for identity theft and other financial fraud. Other scammers are offering unnecessary forgiveness application help for a costly upfront fee.

How can I avoid falling victim to a student loan forgiveness scam?

Information is your best defense. Sign up for government alerts and notifications, and keep an eye on advice from official outlets. Also, make sure your contact information is current with both the government and your loan servicer.

Does everyone eligible to receive student loan forgiveness need to fill out an application?

No. If your income information is already on file with the Department of Education, you will not need to apply for student loan forgiveness. You’ll receive it automatically.

Photo credit: iStock/Pekic

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

In dental school you’re taught the skills you need to become a successful dentist. What they don’t tell you is how to effectively handle your dental school debt. A typical dental school graduate enters the profession with a student loan burden topping $293,900, according to the Education Data Initiative.

That’s $90,000 more than the average medical school debt. Right when dentists are ready to hit the accelerator on their careers, the reality of repayment presents a sizable speed bump.

The good news is, you’ve picked the right profession when it comes to ROEd, or the “return on education” you should reap down the road. The average base salary for general dentists is $217,620, and more than $355,570 for specialists who provide implant services, per a 2021 survey by DentalPost and Endeavor Media.

Ways to Pay Off Dental School

At this stage of the game, it’s important to have a plan for paying down your debt as efficiently as possible. Getting your finances in order early is especially critical if you anticipate borrowing more money down the road to open your own practice or buy a home.

Below, we explain the various student loan payment options available and how to know which one makes the most sense for you.

Choose a Repayment Plan

Federal student loan borrowers have four repayment plans to consider. They all set your monthly loan payment at an amount deemed affordable based on your income and family size. You can change your plan anytime without incurring fees.

•   Standard Repayment Plan. Spreads payments evenly over 10 years. Under this plan, if you have a loan balance of $250,000 at 7.54%, your monthly payment will be about $2,900. This is the default plan if no other plan is chosen.

•   Graduated Repayment Plan. With this plan, payments start lower and then gradually increase over time, usually every two years. Repayment takes place over 10 years.

•   Extended Repayment Plan. Choose either fixed or graduated payments. Repayment takes place over 25 years.

•   Income-Driven Repayment Plans. There are four types of income-driven repayment plans that tie a borrower’s income to their loan payments. Repayment takes place over 20 or 25 years. At the end of the repayment period, the remaining balance is forgiven (though this amount may be taxable).

Thanks to their higher income, dental professionals often pay off their loans before the end of the repayment period, making the forgiveness benefit irrelevant. Also, you may not be eligible for forgiveness programs if your income is over a certain threshold. (Still, we’ll get into forgiveness programs a bit more in the next section.)

Keep in mind that the longer your repayment term, the more interest you pay over the life of that loan. The shorter your term, the less you’ll pay in interest, but the higher your monthly payment will be.

A student loan payoff calculator will give you an idea of your monthly payment for different repayment terms.

Recommended: How To Get Out of Student Loan Debt

Loan Forgiveness

The Public Service Loan Forgiveness (PSLF) program is an option if you start your career at an eligible nonprofit or public service agency. Work for a local, state, tribal, or federal government organization or for a nonprofit organization, and you may be eligible for federal Direct Loan forgiveness after 10 years in an income-based plan. Serving as a full-time AmeriCorps or Peace Corps volunteer also counts.

Examples of qualifying government employers are the U.S. military, public colleges, and public child and family service agencies, but not government contractors.

There are also a number of federal and state loan-repayment assistance programs that reward dentists for providing service to certain segments of the population. The Indian Health Service Loan Repayment Program, for example, offers dentists who serve American Indian communities up to $20,000 per year toward the repayment of school loans.

Student loans from private lenders do not qualify for PSLF.

Student Loan Consolidation

Federal student loan consolidation lets you combine multiple federal student loans into a single new loan with a fixed rate. Your new rate is the weighted average of the old student loans’ interest rates rounded up to the nearest eighth of a percentage point. That means the rate might actually be slightly higher than the prior rate on some of the loans.

If your monthly payment decreases, it’s likely the result of lengthening the term (up to 30 years), which can mean paying more interest over time.

By the way, you can’t include private student loans in this type of a consolidation loan.

Student Loan Refinancing

For many dental school grads, consolidating multiple student loans into a single loan with a private lender, and then refinancing the balance at a lower interest rate, makes sense. Student loan refinancing makes it easier to manage your finances: You’ll get one bill each month from a single lender, instead of several bills for varying amounts that are based on different rates.

Depending on how you structure your loan, a lower interest rate might allow you to pay back your debt faster. That can save you a substantial amount of money over the life of the loan.

You can also choose a term that lowers your monthly payments, leaving more money in your pocket to be used for other things: building an emergency fund, starting a family, and investing for retirement.

Tips for Thriving as a New Dentist

Here are some ways you can set yourself up for success from the very start of your career.

•   Create a budget you can stick to. Leave room for annual and quarterly expenses as well as incidentals.

•   Start a savings plan. The sooner you start saving and investing, the sooner you can enjoy compound growth, which is when your money grows faster over time.

•   Set up automatic payments for student loans. This helps you make payments on time, plus many loan service providers offer a discount if you arrange to autopay.

•   Look into different ways to invest. In addition to maxing out your 401(k) or 403(b), you may also want to consider vehicles such as a health savings account or individual retirement account.

•   Get familiar with your employee benefits package. Find out what perks your employer offers, such as help with student loan repayment.

Recommended: Budgeting as a New Dentist

The Takeaway

Though a typical dental school student owes nearly $294,000 by the time they graduate, there are several student loan payment options that can help borrowers pay down debt more efficiently. All four federal student repayment options, for example, set your monthly payments based on your income and family size. And depending on your employer, you may also qualify for a forgiveness program.

Have multiple loans? Federal student loan consolidation lets you combine them into one new loan with new terms and a new interest rate. Student loan refinancing, which lets you consolidate multiple student loans into a single loan with a private lender, is another option to consider.

It might be beneficial to look for a refinancing lender that offers extras. SoFi members, for example, can qualify for rate discounts and have access to career services, financial advisors, networking events, and more—at no extra cost.

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

IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS, PLEASE BE AWARE THAT THE WHITE HOUSE HAS ANNOUNCED UP TO $20,000 OF STUDENT LOAN FORGIVENESS FOR PELL GRANT RECIPIENTS AND $10,000 FOR QUALIFYING BORROWERS WHOSE STUDENT LOANS ARE FEDERALLY HELD. ADDITIONALLY, THE FEDERAL STUDENT LOAN PAYMENT PAUSE AND INTEREST HOLIDAY HAS BEEN EXTENDED TO DEC. 31, 2022. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE THE AMOUNT OR PORTION OF YOUR FEDERAL STUDENT DEBT THAT YOU REFINANCE WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
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If you’re a doctor or studying to be one, chances are you have student loans. A typical medical school graduate has an average student loan debt of $202,450, according to the Education Data Initiative. That’s seven times as much as the average college student owes.

Paying back the loans can be a challenge for doctors during residency and the early part of their career. But the good news is, the profession tends to pay well. In 2023, a typical entry-level doctor earned around $210,000 per year.

Ways to Pay Off Medical School

No matter how much you owe, it’s smart to have the right repayment strategy in place. This can help ensure your monthly loan payments are manageable and your financial health is protected.

Let’s take a closer look at the various student loan payment options available.

Choose a Repayment Plan

When it comes to federal student loans, borrowers have four different repayment options. No matter which plan you choose, your monthly loan payment will be based on your income and family size. If you need to change your plan at any time, you can do so without incurring fees.

•   Standard Repayment Plan. This plan spreads out payments evenly over 10 years. For example, if you have a loan balance of $200,000 at 6.54%, your monthly payment will be about $2,275.

•   Graduated Repayment Plan. With a graduated plan, your payments start out lower and then gradually increase over time, typically very two years. Repayment takes place over 10 years.

•   Extended Repayment Plan. You can choose either fixed or graduated payments, and repayment takes place over 25 years.

•   Income-Driven Repayment Plans. There are four types of income-driven repayment plans: Income-Contingent Repayment (ICR), Income-Based Repayment (IBR), Pay As You Earn (PAYE), and Revised Pay As You Earn (RPAYE). Repayment takes place over 20 or 25 years, depending on your income and the plan you choose. At the end of the repayment period, the remaining balance is forgiven, though this amount may be taxable.

As you weigh your options, think about the length of the repayment term and the monthly payment amount. With a longer repayment term, your monthly bill is lower but the amount of interest you pay over the life of the loan is higher. With a shorter term, you pay less in interest over the life of the loan but your monthly payment is higher. A student loan payoff calculator will give you an idea of your monthly payment for different repayment terms.

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

Loan Forgiveness Programs

Loan forgiveness programs can wipe out some or all of your medical student loan debt, provided you meet certain criteria. If you work for an eligible nonprofit or public service agency, for example, you may qualify for the Public Service Loan Forgiveness (PSLF) program. Considering a job with a local, state, tribal, or federal government organization or with a nonprofit organization? You could be eligible for federal Direct Loan forgiveness after 10 years in an income-based plan.

You may also qualify for a federal or state loan-repayment assistance program if you provide service to certain areas or segments of the population. For instance, the National Health Service Corps Loan Repayment program will erase as much as $50,000 of eligible student debt, tax-free, if you work for at least two years in an approved medical facility.

Student loans from private lenders do not qualify for PSLF.

Student Loan Consolidation

If you’re paying off more than one federal loan, federal student loan consolidation may be an option worth exploring. Consolidation lets you combine different federal student loans into a single new loan with a fixed rate. The new rate is a weighted average of all your federal loan rates, rounded up to the nearest eighth of a percent. This may result in a slightly higher rate than you were paying before on some loans.

When you consolidate, you have the option to choose a new repayment plan that extends the life of the new loan up to 30 years. Keep in mind that you can’t include any private student loans in this type of consolidation loan.

Student Loan Refinancing

With student loan refinancing, you combine private and federal student loans into one new loan with a private lender, and then refinance the balance at a potentially lower interest rate. This in turn can lower how much you pay in interest over the life of your loan. Refinancing can also make it easier to manage student loan payments. Instead of bills from different lenders, you get one bill each month from one lender.

You can choose a new length for your loan, which lets you adjust your monthly payments. This may be especially helpful if you choose to refinance during your residency.

Recommended: A Guide to Private Student Loans

The Takeaway

Attending medical school isn’t cheap, and it’s common to graduate with significant student loan debt. The good news is, there are several repayment options that can help you tackle your debt more efficiently and protect your financial health. For example, if you have federal student loans, your monthly payments are based on your income and family size. You may qualify for a forgiveness program, which could erase part or all of your balance.

Have more than one loan? Consolidation lets you combine multiple federal loans into a single loan with new terms and a new fixed rate. With student loan refinancing, you combine private and federal student loans into a single loan with a private lender and then refinance it at a potentially lower interest rate.

Refinancing can be a great choice for working medical school graduates who have higher-interest PLUS loans, Direct Unsubsidized Loans, and/or private loans.

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

After you file the Free Application for Federal Student Aid (FAFSA®), you’ll receive a financial aid award from the colleges to which you’ve been granted admission. You may receive scholarships, grants, and loans. When you receive your financial aid awards from institutions, they may not cover every dollar of tuition, room, board, and fees. As a result, you may find that you cannot afford a particular institution.

It may be possible to negotiate your financial aid award with the financial aid office at each institution you’re considering. Continue reading for more information about how to negotiate financial aid awards and how to get more money from colleges.

What Is Financial Aid?

Financial aid is money you receive based on your financial aid award. There are different types of financial aid components that make up a financial aid award. You may want to think of it as a puzzle that could include grants, scholarships, work-study, and federal student loans. You can accept and decline different parts of the “puzzle” to create your own financial aid award. Applying for student loans, grants, certain scholarships, and work-study involves filing the FAFSA.

Grants and scholarships are forms of financial aid that you don’t have to pay back. Grants typically come from the federal government, states or colleges, and the amount you can get in grant money depends on your need and the type of institution you attend.

Scholarships on a financial aid award letter typically come from the institution for various reasons. They may be based on merit (for example, for good grades) or on talents you possess, such as music or athletic talent.

Work-study is a type of financial aid in which students who have financial need qualify for part-time employment on campus.

Federal student loans may also appear on your financial aid award. Federal student loans, which come from the federal government, must be repaid — with interest.

Every college offers a different amount of financial aid to the same student. In other words, if you apply and get accepted to five different schools, you will likely get five different aid awards. It’s worth learning more about how financial aid works at each institution by asking a financial aid professional at each institution you visit.

Recommended: FAFSA Guide

Is Your Financial Aid Amount Negotiable?

Yes, you can negotiate your financial aid amount. However, it’s important to realize that some pieces of the financial aid award are not negotiable. For example, first-year undergraduate dependent students can qualify for no more than $5,500 in subsidized and unsubsidized federal student loans. No more than $3,500 of this amount may be in subsidized loans.

In addition, it’s also important to understand that colleges may be limited in the amount they can offer you for additional financial aid. Even if you ask for all the gaps to be covered between the total cost and the amount you receive in financial aid, colleges may only be able to offer a small amount of additional financial aid.

5 Tips for Negotiating Financial Aid

Let’s take a look at a few tips for negotiating financial aid, from the presentation process to writing a letter for financial aid, as well as providing relevant supporting documentation.

1. Present the Financial Aid Office With a Specific Amount You Need

You can present the financial aid office with a specific amount you need, but before you do that, it’s a good idea to think through a few other factors beyond the numbers you see on your financial aid award. When you review financial aid awards, it’s important to go over each one with a fine-toothed comb.

Each financial aid award will list the financial aid you’ve received, but it’s a good idea to get an idea of the full costs, including tuition, room, board, and fees, before you choose a college. Some fees may not pop up until later, such as lab fees, club organization dues, athletic fees, parking fees, and more. Ask the financial aid office for a comprehensive list of fees that might crop up.

It’s also important to factor in tuition increases. You can ask the financial aid office for the average increase amount.

Note that scholarships usually don’t increase as tuition increases occur, which means that if scholarships don’t change and tuition increases, you’ll be responsible for making a larger tuition payment. Some schools do freeze tuition, so find out more about how that works at the institutions you’re considering attending.

After you’ve done all your homework, you can then decide on a specific amount of money you’d like to see from each financial aid office.

2. Put Everything in Writing

Ask the financial aid department about their financial aid appeal process or consult the website of the financial aid office to find out about the supportive documentation you need to provide to qualify for more financial aid. Following directions may help increase your chances of success.

Write a high-quality financial aid appeal letter to the director of financial aid, using a business letter format, and a formal tone — skip the fancy fonts! Your letter should be as businesslike and respectful as possible, but very direct. Explain how interested in the school you are and identify the forms you’ve submitted.

3. Explain Why You Should Get More Money

It’s important to shore up your desire to obtain more financial aid by demonstrating a need for more financial aid. In other words, you have to have a good reason to need more financial aid — in most cases, you can’t just say you simply want more financial aid. Financial aid offices also will likely not award you more aid just because a parent is unwilling to contribute to education costs or file the FAFSA or if a parent does not claim the student as a dependent.

The institutions you’d like more money from could require you to fill out a special circumstances form, which is a form that shares situations that affect your family’s ability to pay for college. A special circumstances form shares your family’s unique financial circumstances with the institution when you appeal.

The following situations may qualify as special circumstances and could allow you to receive more financial aidIf your family is:

•   supporting multiple households,

•   has experienced a one-time jump in income,

•   has secondary or elementary school expenses,

•   had to make a retirement fund withdrawal for emergency purposes,

•   has funeral expenses or unreimbursed medical and dental expenses, educational debt, a job loss, or has had a significant reduction in income.

Read the instructions carefully to learn how to successfully submit the special circumstances form for your institution.

4. Provide Any Relevant Supporting Documents

When writing your letter and filling out your special circumstances form, you’ll likely need to provide evidence of your family’s situation, which could include:

•   Divorce documentation or decree

•   Court documentation to substantiate a separation

•   Copy of parent marriage certificate

•   Copy of family member death certificate

•   Letter from employer documenting the last date of employment if no longer employed

•   Documentation of year-to-date earnings, unemployment, and/or disability benefits

•   Copies of three most recent paycheck stubs

•   Documentation of termination of child support payments

•   Documentation one-time income or benefits

•   Documentation of medical expenses not covered by insurance for family members

•   Documentation of elementary or secondary school tuition paid

Follow the instructions your school’s financial aid office includes.

5. Follow Up

You may need to allow several weeks for the financial aid appeal to be processed (sometimes four to six weeks), but if you don’t hear back from the financial aid office about a change in your award letter, you may want to reach back out to make sure you’ve submitted all the required documentation. You may have forgotten a critical component of the financial aid appeal, which could hold up a final decision.

Alternatives to Financial Aid

While financial aid can help you get through school, it’s not the only way to pay for college. There are alternatives to relying completely on financial aid to get through school. Consider working while in school, asking relatives for help, and accessing private student loans. Let’s take a look.

Working While in School

Working while in school or on breaks during the summer can help alleviate some of the costs of college. You may not be able to rely on the work-study award to pay for the full cost of college because work-study is limited to a specific number of hours, as determined by your financial aid award.

Finding a part-time job can help pay for a wide variety of college expenses and can offer valuable professional experiences.

Asking Relatives for Help

Relatives may be willing to help you pay for college. When parents, aunts, uncles, grandparents or other relatives chip in, it can alleviate a chunk of college costs, particularly when combined with a part-time job while in school.

It’s a good idea to make sure both you and your relative(s) agree that these types of payments are gifts, not loans. You don’t want to be surprised by a relative that expects repayment as soon as you’re done with school. You may even want to write down the amount of money, terms, and conditions involved, and have both parties agree and sign before you accept any money for college.

Private Student Loans

Private student loans are loans that, unlike federal student loans, do not come from the federal government. Private student loans typically come from private organizations, such as banks, credit unions, and other organizations. You can also check with the college or university you plan to attend for information about private student loans.

Like federal student loans, however, private student loans must be repaid along with interest payments. Repayment terms and benefits vary depending on the lender, and interest rates could be fixed or variable. (All types of federal student loans offer fixed interest rates only.)

Unlike federal student loans, private student loans may not offer the borrower protections afforded to their federal counter parts, so they are generally considered as a last-resort option. Take the time to shop around among several private student lenders before you land on the right one for you. Learn more about private student loans in our private student loans guide.

Explore SoFi’s Private Student Loan Options

If you think you may need to cover some of your college costs with a private student loan, SoFi offers private loans that could help you pay for your education. Explore and compare federal and private loan options, terms, and interest rates to determine the best option for your educational needs.

Worried about rising interest rates? SoFi offers competitive interest rates for qualifying private student loan borrowers.

FAQ

Can you negotiate your financial aid offer?

Yes, you can negotiate your financial aid offer. Check with the college, university, or other postsecondary institution(s) you receive a financial aid award about the process before you attempt to negotiate. The institution may have very specific requirements in order to negotiate your award.

How can I negotiate more money for college?

Requesting more financial aid can be done by following the financial aid appeals process at the college(s) you’re considering. Typically, you can present a letter to the financial aid office, fill out the special circumstances document provided by the institution, and provide supporting documentation. Follow up if you haven’t heard back from the institution between four and six weeks.

How do I ask a college to match the financial aid another school offered me?

If you received two financial aid awards from two colleges, you can use a negotiating college tuition technique by showing the school that offers you less the better aid award from the other school. Doing this may make the most sense if they are similar institutions, such as if they are both private liberal arts colleges or if they are both large state universities. You’re most likely going to get a better response if you compare apples to apples instead of apples to oranges.

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Does it seem like your student loan balance never gets any smaller? This may ring true if you’re one of the 60% of borrowers who stopped making payments on their federal student loans during the Covid-19-related payment pause. (The moratorium also set the interest rate at 0%.)

But even when you start making monthly payments again, or if you graduated during the pandemic and are new to making payments, it still may seem like your loan balance isn’t budging much. Where do your payments go if not to the principal? The short answer: interest.

Understanding how and when student loans accrue interest can help you make smart choices about paying off your balance faster.

What Makes Up a Student Loan Balance?

Your student loan balance is made up of two parts: the amount you borrowed plus any origination fees (the principal) and what the lender charges you to borrow it (interest).

Once you receive your loan, interest begins to accrue. If it’s a Direct Subsidized loan, the federal government typically pays the interest while you’re in school and for the first six months after you graduate. After that, the borrower is responsible for paying the interest.

If the loan is a Direct Unsubsidized loan or a private student loan, the borrower is solely responsible for accrued interest.

How Do Payments Affect My Student Loan Principal?

Most people pay a fixed monthly payment to their lender. That payment includes the principal and the interest. At the beginning of a loan term, a larger portion of your payment goes toward paying interest, and a smaller portion goes to the principal. But the ratio of interest to principal gradually changes so that by the end of the loan term, your payment is mostly going toward the principal.

How Does an Income-Based Repayment Plan Affect My Student Loan Balance?

Things are a little different if you’re making payments under an income-based repayment plan. Your payments are tied to your income and shouldn’t exceed a certain percentage of your salary. The interest, however, doesn’t change based on your income.

This means there may be situations where your monthly payment doesn’t fully cover the interest charges for that month, much less contribute to your principal. In fact, your student loan balance may actually grow over time, despite the payments you make.

How Has the Payment Pause Impacted My Student Loan Balance?

When the government suspended payments on federal student loans, they also hit the pause button on interest accrual. Essentially, the debt has been frozen in time since March 2020. When the moratorium ends, interest will likely start accruing again.

Note that the payment pause didn’t include private student loans. For a refresher on the balance and interest rates on private loans, contact your loan servicer. Be sure the company has your most up-to-date contact information on file, so you don’t miss out on important information about your loans.

Your student loan servicer may have changed since the last time you made a payment. To find out which company is handling your federal student loans, log on to the Federal Student Aid website; the information will be listed in your dashboard. You can also call the Federal Student Aid Information Center at 800-433-3243.

To find out which company is handling your private student loans, contact the lender listed on your monthly statement and find out if they still handle your loan. More often than not, they will. If your loan servicer has changed, the lender can give you the new company’s contact information.

How to Pay Down Your Loan More Quickly

When it comes to repaying student loans, the key is to find an approach you’ll stick with. One way to tackle the debt is by making extra payments toward the principal. Even a little bit can help bring down the loan balance.

Another approach is to refinance to a lower interest rate. Or you could refinance to a shorter loan term. Or you could do both. Your payments may be higher, particularly if you switch to a shorter loan term, but you will be finished paying off the debt sooner. (Please note that if you refinance a federal student loan, you will lose access to federal protections and programs such as the Covid-related payment pause, the Public Service Loan Forgiveness program, and income-driven repayment plans.)

The Takeaway

The way loan payment schedules are set up is likely why your regular payments don’t seem to be making much of a dent to your balance or loan principal. Initially, more of your payment goes toward paying interest and less toward the principal. But gradually that changes so that by the end of the loan term, most of your payment is going toward the principal.

If you want to pay off your loan faster or generally pay less interest over the life of your loan, one strategy is to refinance student loans to a lower interest rate and/or a shorter loan term. If you decide refinancing makes sense for you, it might be beneficial to look for a refinancing lender that offers extras. SoFi members, for instance, can qualify for rate discounts and have access to career services, financial advisors, networking events, and more — at no extra cost.

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