Aug
20
2025
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What Happens to Student Loans When You Die?

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

No one plans for their student loans to outlive them. We all expect to have paid off loans for college or graduate school long before middle age, let alone within our lifetimes. But it’s important to have a grasp of what happens to student loans when you die. Not knowing the policy can cause you a lot of anxiety. Will the loan be wiped away? Will the burden fall on your parents or spouse? The answers depend on what kinds of loans you have.

If you die before your student loan is paid off, your loan will be “discharged” (canceled) -– but only if it’s a federal loan. Your family will not be responsible for repaying a federal student loan. With a private loan, it will also most likely be discharged, but in certain cases there could be complications. And if you had a cosigner, it’s more likely there will be complications.

According to EducationData.org, 6.3% of federal borrowers are 62 years of age and older. The average 62-year-old federal borrower owes $42,780 in federal educational debt, including Parent PLUS loans. So if you’re one of these older borrowers, getting the facts now may help put your mind at rest. Here’s what can happen to your loans in a variety of scenarios.

What Happens to Federal Student Loans?

If you took out student loans from the federal government, the loans will be discharged when you die. When a loan is discharged, the balance becomes zero and the government won’t try to collect on the loan.

There is currently no tax burden once loans are discharged as a result of death. However, this is only true until the end of 2025, at which point this tax code expires and policies could change.

Also, your parent’s PLUS loan will be discharged if your parent dies or if you (the student on whose behalf your parent obtained the loan) die.

You’ll likely want to make sure that your loved ones have the information they need now -– at a minimum, the name of your loan servicer and, ideally, your loan ID numbers and your Social Security number.

Family or friends would need to provide your loan servicer with that documentation to confirm the death, usually an original or copy of your death certificate. They can call your loan servicer to ask about the specific requirements.

The bottom line: If you have any kind of federal student loan, you don’t need to worry about your relatives being burdened with the debt if you pass away.



💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.

What Happens to Private Student Loans?

More than 91% of all student loan debt is made up of federal student loans, according to EducationData.org. What happens to private student loans when you die? The rules are different from those covering federal student loans. It is possible that with a private student loan, someone will be pursued for repayment after you die.

The Consumer Financial Protection Bureau says, “Unlike federal student loans, private student lenders are not legally required to cancel private student loans for borrowers who die or become disabled. Because of this, in some instances, private student loan debt may pass on to a spouse or cosigner of the loan.”

Some private lenders will cancel the loan upon the loan holder’s death, but it typically depends on the type of loan and the laws in your state. Make sure to read your private loan agreement carefully now to see what protections your lender offers. If you have questions, it might be wise to consult a lawyer. In the case that your lender doesn’t discharge your loans after death, the lender would first try to collect the money from your estate.

If you don’t have an estate, they would turn to your student loan cosigner, if you have one. If there isn’t one, then the lender would likely try to collect from your spouse. Whether your spouse would actually be liable depends on the state in which you live. If you live in a community property state – Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin – and took out the student loan while you were married, your spouse could be responsible.

What Happens If You Have a Cosigner?

Federal student loans almost never involve a cosigner, but private loans often do in order to improve a borrower’s financial profile. Enterval Analytics said that in 2025, 93% of undergraduate private loans were cosigned.

A cosigner has agreed to pay the debt if you default, which means they will be just as responsible for the loan as you are. If you die, a private lender could seek to collect payment from the cosigner. However, some lenders may waive the remaining debt if the primary borrower (student) dies. Again, you need to check the policy.

If you have a loan with a cosigner and want to take this burden off of them, you could consider trying to refinance the loan in only your name. This could be an option if your credit, income, and employment history have improved since you took out the loan, and you can now qualify on your own.

It’s worth asking what happens if the situation is reversed: What if your cosigner dies? In some cases, your loan would go into “student loan auto-default,” meaning the lender would immediately require you to pay the full amount of the remaining loan, even if you’ve been making payments regularly until then.

If you cannot pay the full amount as requested, the holder on the loan could put you into this immediate default. That would harm your credit rating for a number of years.

However, not all banks will invoke the “auto-default” if your cosigner dies. Also, this depends on the bank being aware that the cosigner is no longer alive.

If you are in the terrible situation of knowing that your cosigner will die soon, you might want to be proactive to avoid the auto-default possibility. You may want to ask your lender for a release of the cosigner. Be aware that it might not be easy to obtain a release if your credit profile isn’t strong.

Recommended: Applying for a Student Loan Cosigner Release

What Can You Do to Protect Loved Ones?

It is pragmatic to worry about what happens to student loans when you die. To ensure that your spouse or cosigner doesn’t end up with a large debt burden in the event of that happening, one course of action is to pay off your student loans faster.

You can do this by increasing the amount you pay every month, going above your minimum monthly payment, or possibly shortening the payment term through refinancing. Note that refinancing federal loans means losing access to federal programs.

Another option is to build a savings cushion that can be put toward your debt if you die.

How Student Loan Refinancing Can Help

Do student loans die with you? Not always. But there are things you can do now, including releasing any cosigners to make it less likely they’ll be pursued for the debt after your death. Refinancing your student loans may also be a good way to speed up repayment, leaving less of a potential obligation behind in case you die.

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


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

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

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


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.

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

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

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20
2025
A woman sitting in front of her laptop, with her glasses in her hand, staring off into space as she contemplates what to do after college.

Do Part-Time Students Have to Pay Back Student Loans?

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

Beginning August 1, federal student loan holders who are enrolled in the SAVE Plan will see interest accrue on their student loans, but payments are still suspended. Eligible borrowers can apply for and recertify under the Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), and Pay As You Earn (PAYE) Repayment Plans, as well as Direct Consolidation Loans. Many changes to student loans are expected to take effect July 1, 2026. We will update this page as information becomes available. To learn the latest, go to StudentAid.gov.

The timeframe when part-time students need to begin paying back student loans depends on the types of loans they have. Essentially, if a student meets their college’s requirements for half-time enrollment, they are generally not required to make payments on federal student loans while in school. However, private student loans have their own terms. Depending on the lender, students may be required to make payments on their loan while they are enrolled in school.

Students may be part-time because of their financial situation, caregiver or parental duties, medical issues, or other reasons. Knowing how part-time student loan repayment works can help students budget and plan ahead.

Key Points

•   In general, part-time college students don’t have to pay back student loans while they are enrolled in school at least half time.

•   Part-time students with federal student loans will get a six-month grace period after graduating, withdrawing, or dropping below half-time enrollment before they have to repay their loans.

•   Borrowers with private student loans who attend college part-time may not get a grace period before they need to start repaying their loans.

•   Each private lender has different terms. Some private lenders may require students to repay their loans while in school.

•   Methods to repay federal student loans include the standard repayment plan and income-driven repayment plans; private loan borrowers may want to consider refinancing.

What Is a Part-Time College Student?

A part-time college student is someone who is not taking a full course load during any given academic quarter or semester. Individual schools set the standards for what counts as a full- or part-time student, but in general, full-time students may take about 12 credits or four classes at a time.

Part-time students may take anywhere from six to 11 credit hours or two to three classes per academic period.

Students may choose to attend college part-time in order to take care of family obligations, work a day job, or because of other circumstances that don’t allow them to take four classes at one time.

Recommended: Full-time vs. Part-time Students

Repaying Student Loans as a Part-Time Student

Exactly when do part-time students have to pay back student loans? In general, part-time students may not need to pay back their federal student loans while they are attending school as long as they don’t drop below half-time enrollment — or as long as they haven’t graduated.

What does this mean in practicality? If you’re a part-time student and you are taking at least half of the full-load credit hours, you generally won’t need to start paying off your federal student loans until you graduate, withdraw, or drop below half-time enrollment. Federal loans also come with a student loan grace period, meaning you technically won’t be required to make payments for six months after graduating, withdrawing, or dropping below half-time enrollment.

For example, if a full course load at your school is 12 credits, and you’re taking six credits this semester, you are still enrolled at least half-time, and wouldn’t normally be required to start paying back your federal student loans.

If, however, you drop down below half-time enrollment by taking only one three-credit class, you would no longer be attending school at least half-time and may be required to start paying off your federal student loans.

Take control of your student loans.
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When Do I Have to Start Paying Back My Student Loans?

If you are a part-time student who graduates, withdraws, or drops below half-time enrollment, you may not need to start paying back your federal student loans right away. Many new grads, or those entering a repayment period for the first time, are given a six-month grace period, as mentioned above, before they have to start paying federal student loans back.

The exact length of any grace period depends on the type of loan you have and your specific circumstances. For example, Federal Direct Subsidized Loans and Direct Unsubsidized Loans all have a standard six-month grace period before payments are due.

Factors That May Influence the Grace Period

If you’re a member of the armed forces and you are called to active duty 30 days or more before your grace period ends, you could delay the six-month grace period until after you return from active duty.

Another situation that could impact your grace period is if you re-enroll in school at least half-time before the end of the grace period. You will receive the full grace period again on your federal student loans when you graduate, withdraw, or drop below part-time enrollment.

This is because, in general, once you start attending school at least half-time again, you’re no longer obligated to start making payments on federal student loans. In this situation, you would still get a grace period after you graduate, even though you may have used part of a grace period while you were attending school less than half-time. Note that most loan types will still accrue interest during the grace period.

You may lose out on any grace period if you consolidate your federal student loans with the federal government during your grace period. In that scenario, you’ll typically need to start paying back your loan once the consolidation is disbursed.

Repayments for Private Student Loans

If you have private student loans, you may not get a grace period before you start paying back your loans. Student loans taken out from private lenders don’t have the same terms and benefits as federal student loans, which means that private student loans may not offer a grace period at all or it may be a different length than the federal grace period.

Some lenders may require students make payments on private student loans while they are enrolled in school. If you have a private loan or are considering a private loan, check with the lender directly to understand the terms for repayment, including whether or not there is a grace period.

How Do I Pay Back My Student Loans?

When it comes to part-time student loan repayment, there are things you can do to make paying back your loans as painless as possible. When you enter loan repayment on a federal student loan, you’ll be automatically enrolled in the Standard Repayment Plan, which requires you to pay off your loan within 10 years.

However, there are currently several other types of federal student loan repayment plans available, including income-driven repayment plans, and it is always worth learning about the different plans so you can make an educated choice.

One thing to be aware of, however, is that as per the U.S. domestic policy bill that was passed in July 2025, there will only be two repayment options in total for borrowers taking out their first loans on or after July 1, 2026: the Standard Repayment Plan, which is a 10-year repayment plan, and the Repayment Assistance Program (RAP). RAP is similar to previous income-driven plans that tie payments to income level and family size.

As mentioned, private student loans have different requirements than federal student loans. Individual lenders will determine the repayment plans available to borrowers.

Recommended: Student Loan Forgiveness Guide

Take a Look at Refinancing

One option you may want to consider is student loan refinancing with a private lender. Refinancing your student loans allows you to combine your federal and/or private student loans into one new, private loan with a new interest rate — ideally, a lower rate — and new terms.

You can use a student loan refi calculator to see how much refinancing might save you.

It’s important to remember, however, that student loan refinancing isn’t right for everyone. If you refinance your federal loans, they will no longer be eligible for any federal benefits or repayment assistance, such as the Public Service Loan Forgiveness (PSLF) program or income-driven repayment plans.

The Takeaway

Part-time student loans who are enrolled at least half-time, based on the definition at their school, are generally not required to make payments on their federal student loans. Private student loans have terms and conditions that are set by each individual lender, and may require students make payments on their loans while they are enrolled in school.

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

Do part-time students qualify for federal student loans?

Yes, federal student loans, including federal Direct Subsidized and Unsubsidized loans, are available for part-time students as well as full-time students. To qualify, a student will need to fill out the Free Application for Federal Student Aid (FAFSA®) to see what they are eligible for.

Because you will be taking fewer classes as a part-time student, you may be offered less than the annual cap of $5,500 for federal loans for first-year dependent undergraduate students. Lenders for private student loans typically allow part-time students and full-time students to borrow up to the total cost of attendance at their school.

When does the grace period begin for part-time students?

The grace period for part-time students with federal student loans who graduate, withdraw, or drop below half-time enrollment is typically six months.
The exact length of any grace period depends on the type of loan you have. For example, federal Direct Subsidized Loans and Direct Unsubsidized Loans have the standard six-month grace period before payments are due. Private student loans may not have a grace period at all. Check with your lender to find out about the specifics for your loan.

Can I defer student loans as a part-time student?

Yes, part-time students can typically defer federal student loans in specific situations. This includes when they are in school at least half-time — their loans are usually put into deferment automatically in this case. Other types of deferment a part-time student might be eligible for include economic hardship deferment and unemployment deferment. Students need to apply for these types of deferment at studentaid.gov.

Are repayment options different for private vs federal loans?

Yes, repayment options are different for private vs. federal student loans. Federal student loans currently offer several different repayment options, including the 10-year Standard Repayment plan and income-driven repayment plans that base monthly payments on your discretionary income and family size.

Private lenders don’t offer the same terms and benefits that federal student loans do. Some private lenders may require students to make payments on their loans while they are enrolled in school. If you have a private loan, check with the lender directly about the terms for repayment.

What happens if I drop from full-time to part-time enrollment?

If you drop from full-time to part-time enrollment in school, it could affect your financial aid award. You may end up with less federal aid. For instance, the annual cap on federal loans for full-time first-year dependent undergraduate students is $5,500. If you become a part-time student you may no longer be eligible for that amount. If you are considering dropping from full-time to part-time enrollment, discuss the idea with your school’s financial aid office to see how your aid might be impacted.

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

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

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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


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

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

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

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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20
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What Determines Student Loan Refinance Rates?

What Determines Student Loan Refinance Rates?

By | Fresh Out of School, Going to College, Student Loans, student_loan | Comments Off on What Determines Student Loan Refinance Rates?

Private lenders that refinance student loans base rates they offer on the loan term, the borrower’s risk profile, and a rate index. Typically, the most financially stable applicants get the lowest rates.

When the goal is a lower rate, lower monthly payments, or both, the fixed or variable rate you qualify for makes all the difference. (You can also get a lower rate by refinancing with an extended term, but if you do so you may pay more interest over the life of the loan.)

Here’s a look at what you need to know about how interest rates for student loan refinances work.

Student Loan Refinancing, Explained

When you refinance, you take out a new private loan and use it to pay off your existing federal or private student loans. The new loan will have a new repayment term and interest rate, which hopefully will be better.

Most refinancing lenders offer fixed or variable interest rates and terms of five to 20 years. Shortening or lengthening your existing student loan term or terms can affect your monthly payment and the total cost of your new loan. The two key ways to save money by refinancing are:

•   A shorter repayment term

•   A lower rate

Then again, someone wanting lower monthly payments might choose a longer term, but that may result in more interest paid over the life of the loan.

There are no fees to refinance student loans. Nor is there any limit to the number of times you can refinance. Lenders will want to see a decent credit score, a stable income, and manageable debt. Adding a cosigner may strengthen your profile.

Refinancing federal student loans into a private student loan renders federal benefits moot.

Is Consolidation the Same as Refinancing?

Student loan consolidation and refinancing are terms that are often used interchangeably, but they are not technically the same thing. In general, consolidation means combining multiple loans to create one simplified payment. However, student loan consolidation most often refers to a federal program that allows you to combine multiple types of federal student loans into a single loan. The new loan will have a new term of up to 30 years, but the new rate will not be lower.

However, student loan consolidation most often refers to a federal program that allows you to combine multiple types of federal student loans into a single loan. The new loan, called a Direct Consolidation Loan, will have a new term of up to 30 years, but the new interest rate will not be lower.

Refinancing of student loans is offered by private lenders, such as banks and credit unions. Federal and/or private student loans are refinanced into a new loan that ideally has a better rate; you can refinance a single loan, or consolidate multiple loans into a single new loan through this refinancing process.

If you refinance federal student loans privately, you lose access to federal repayment plans, forgiveness programs, and other benefits.

What Are Interest Rates?

Interest rates are the amount lenders charge individuals to borrow money. When you take out a loan, you must pay back the amount you borrowed, plus interest, usually represented by a certain percentage of the loan principal (the amount you have remaining to pay off).

When interest rates are high, borrowing money is more expensive. And when interest rates are low, borrowing can be cheaper.

Interest rates can be fixed, variable, or a hybrid. For fixed interest rates, lenders set the rate at the beginning of the loan, and that rate will not change over the life of the loan.

A variable interest rate is indexed to a benchmark interest rate. As that benchmark rises or falls, so too will the variable rate on your loan. Variable-rate loans may be best for short-term loans that you can pay off before interest rates have a chance to rise.

Hybrid rates may start out with a fixed interest rate for a period of time, which then switches to a variable rate.

How Is Interest Rate Different From APR?

While interest rate refers to the monthly amount you’ll need to pay to borrow money, annual percentage rate (APR) represents your interest rate for an entire year and any other costs and fees associated with the loan.

As a result, APR gives you a better sense of exactly how expensive a loan might be and helps when comparing loan options.

What Factors Influence Student Loan Interest Rates?

Interest rates for federal student loans are set by Congress and change each year. Federal loans use the 10-year Treasury note as an index for interest rates. These rates apply to all borrowers.

Private lenders, on the other hand, will look at other factors when determining interest rates, such as credit score and credit history. Their interest rates are not governed by legislation so rates can be higher or lower than the federal one, depending on the type of loan and terms. Prevailing interest rates, however, still play a big factor since they change annually.

Typically, lenders see those with higher scores as more likely to pay off their loans on time, and may reward this with lower interest rates. Lenders see borrowers with lower scores as being at greater risk of defaulting on their loans. To offset the risk, they tend to offer higher interest rates.

Some lenders offer a rate discount if you sign up for their autopay program.

What Drives Student Loan Refinancing Rates?

Student loan refinancing rates are driven by many of the same factors that drive rates on your initial loan, such as credit score and credit history. You may want to consider refinancing during an era of low rates or if your financial situation has improved. For example, if you’ve increased your income or you’ve paid off other debts and your credit score received a boost, you may look into refinancing your loans at a lower interest rate.

Many graduates haven’t had much time to build a credit history. A cosigner with good credit may help an individual qualify for a refinance at a lower rate. Cosigners share responsibility for loan payments, of course. So if you miss a payment, they’ll be on the hook.

Refinance Student Loans With SoFi

You might choose to refinance student loans when interest rates are relatively low or your financial situation has improved, potentially providing access to a new private student loan at a lower rate.

Refinancing may be a good move for borrowers with higher-interest private student loans and those with federal student loans who don’t plan to use federal programs like income-driven repayment, Public Service Loan Forgiveness, or forbearance.

A student loan refinancing calculator can help you determine how much you might save by refinancing your student loans. You can compare your options on different loan terms while keeping in mind that a longer term could increase your total interest costs.

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

How are student loan refinancing rates calculated?

Lenders base interest rates largely on factors like an applicant’s credit history, income, debt, and prevailing interest rates which change annually.

Does refinancing save you money?

When you refinance your student loans with a new loan at a lower interest rate, you will pay less interest over the life of the loan, given the same or similar loan terms.

What is an average interest rate for student loans?

The average interest rate among all student loans, federal and private, is 5.80%, according to Education Data Initiative researchers. Private student loan rates have a wide range for fixed- and variable-rate loans and generally run from 3.19% to 17.95%.

For the 2025-2026 school year, the interest rate on Direct Subsidized or Unsubsidized loans for undergraduates is 6.39%, the rate on Direct Unsubsidized loans for graduate and professional students is 7.94%, and the rate on Direct PLUS loans for graduate students, professional students, and parents is 8.94%. The interest rates on federal student loans are fixed and are set annually by Congress.

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

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


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

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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20
2025
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What Happens if I Miss a Student Loan Payment?

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

Beginning August 1, federal student loan holders who are enrolled in the SAVE Plan will see interest accrue on their student loans, but payments are still suspended. Eligible borrowers can apply for and recertify under the Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), and Pay As You Earn (PAYE) Repayment Plans, as well as Direct Consolidation Loans. Many changes to student loans are expected to take effect July 1, 2026. We will update this page as information becomes available. To learn the latest, go to StudentAid.gov.

Missing student loan payments can have a variety of negative consequences, including damage to your credit score and wage garnishment. If you are struggling to make your payments, don’t risk going into delinquency or default. There are ways to make your monthly student loan payments more affordable.

Here’s what borrowers should know about missing student loan payments plus options to help them pay off their student loans.

Key Points

•  Missing just one federal student loan payment makes the loan delinquent and can lead to default if a borrower continues to miss payments.

•  Defaulting on a federal student loan can result in severe consequences, including wage garnishment and loss of eligibility for further federal financial aid.

•  It may be possible to discharge your student loan balance in certain specific situations, or temporarily stop federal student loan payments through deferment or forbearance.

•  Private student loans have less flexibility, and missing payments may quickly lead to increased fees, higher interest accrual, and potential legal action for recovery.

•  Borrowers may be able to lower monthly student loan payments by working with their lender, choosing a new repayment plan, or student loan refinancing.

What Happens if I Miss a Federal Student Loan Payment?

Missing federal student loan payments typically leads to delinquency. If payments continue to be missed, the loans may go into default, which can result in severe consequences.

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What Happens When You Miss a Student Loan Payment

Your federal student loan is delinquent the day after you miss a payment. Even if you start making the next payments, your account will remain delinquent until you make up for the missed payment or receive deferment or forbearance.

Once 90 days pass, your loan servicer will let the major credit reporting agencies know that your loan is delinquent. Your credit score will take a hit, making it more difficult to qualify for good terms on loans or credit cards or to rent an apartment.

If you continue to miss payments, your loan will go into default. Federal student loans go into default after 270 days of missed payments. Defaulting on your student loan has serious consequences. The entire amount you owe on your loan, including interest, becomes due immediately.

In addition, you won’t be able to take out any other student loans, and you’ll no longer qualify for deferment or forbearance. Your credit rating will be damaged, and it will be difficult to get a credit card or qualify for a mortgage or car loan. The government can take your tax refund or federal benefits to pay off your loan. You could have your wages garnished, meaning your employer will take part of your paycheck and send it to the government to be applied toward the loan.

Your loan holder can also take you to court — there’s no statute of limitations. You may be responsible for collection fees, attorney’s fees, and other costs.

In other words, you want to avoid student loan default if you possibly can.

What Happens if I Miss a Private Student Loan Payment?

Private lenders usually give you less leeway than the federal government when you miss student loan payments. Exactly what happens if you miss a private student loan payment depends on the lender’s specific policies and your loan terms. A private lender can tack on late fees and transfer your loan to a debt collection agency, for example.

Also, private lenders can sue you if you stop paying your student loans. If they win, a court can sign a judgment allowing them to garnish your wages. States set the statute of limitations for lawsuits about payment of private loans; the time period usually ranges from three years to a decade. But the lender can continue trying to collect the debt for as long as they want. Plus, certain actions can reset the statute of limitations, such as making a payment or even acknowledging that the debt belongs to you.

Will My Loans Eventually Go Away if I Can’t Pay?

If you stop paying your student loans, they will not simply go away. However, it may be possible to qualify for student loan forgiveness or discharge.

For example, federal student loans can be discharged if you suffer from a total permanent disability or your school closes while you’re attending it or soon after you leave. You can also pursue student loan forgiveness programs, such as Public Service Loan Forgiveness or Teacher Loan Forgiveness.

For federal loans, borrowers may be able to enroll in an income-driven repayment (IDR) plan. These repayment plans aim to make student loan payments more manageable by basing them on the borrower’s discretionary income and family size.

As of August 2025, there are three income-driven repayment plans you can enroll in, but only one of them — the Income-Based Repayment (IBR) Plan — may allow borrowers to have the outstanding balance of their loan canceled after 20 years.

However, the U.S. domestic policy bill that was passed in July 2025 will eliminate a number of student loan repayment plans. For borrowers taking out their first loans on or after July 1, 2026, there will be only two repayment options: the Standard Repayment Plan and the Repayment Assistance Program (RAP).

The Standard Repayment Plan is a refashioned plan that will have fixed payments with a term based on the loan amount and ranging from 10 to 25 years. RAP is similar to previous income-driven plans that tied payments to income level and family size. On RAP, payments range from 1% to 10% of adjusted gross income for up to 30 years. At that point, any remaining debt will be forgiven. If a borrower’s monthly payment doesn’t cover the interest owed, the interest will be cancelled.

What if I’m Experiencing Financial Hardship?

If you are having a tough time financially, don’t just ignore your loans; instead, approach your lender or loan servicer to discuss your options.

For federal loans, an income-driven repayment plan that bases your monthly payments on your discretionary income and family size might help, as noted above. Just keep in mind that repayments plans will be changing significantly in July 2026.

You might also be able to qualify for a deferment or student loan forbearance, allowing you to temporarily stop or reduce payments. If you’re in deferment, depending on the type of loan you have, you may not have to pay the interest that accrues during the deferment period. Some of the reasons you can currently apply for deferment include: you’re in school, in the military, or unemployed. However, as part of the new domestic policy bill, economic hardship and unemployment deferments are being eliminated for student loans made on or after July 1, 2027.

You can apply for student loan forbearance if your federal student loan payments represent 20% or more of your gross monthly income, you’ve lost your job or seen your pay reduced, or you can’t pay because of medical bills, among other things. Interest accrues on your loans while they are in forbearance. As part of the new domestic policy bill, however, forbearance will be capped at nine months in any 24-month period.

Private lenders are not required to offer relief to student loan borrowers facing hardship, but some do. Check with your lender to find out what your options are.

Will I Be Sent to Collections if I Do Not Pay My Student Loans?

It is possible that if your student loan is in default it may be sent to a collections agency. Federal Direct Loans in default are managed by the Department of Education’s Default Resolution Group. The Default Resolution Group oversees collections for all federal student loans that are in default, so the loans are not sent to a private collections agency.

Private student loans may be sent to a collection agency as soon as the loan enters default, which is generally after 90 or 120 days of non-payment, depending on the lender.

What if I Don’t Expect My Situation to Change Anytime Soon?

Deferment, forbearance, and relief offered by private lenders are temporary solutions. If your financial hardship looks like a long-term issue, you’ll need a more permanent fix.

With federal loans, you may be eligible for a payment plan that makes your loan more manageable, such as one of the repayment plans mentioned above.

Private student loans are not eligible for income-driven repayment, and most private lenders don’t offer this option. If you’re struggling to afford your private student loan bills, it’s worth explaining your situation to the lender and seeing if they can work with you on a feasible repayment plan. It’s in their interest to continue collecting even partial payments from you, rather than seeing payments stop altogether and having to go through the trouble of lawsuits or referrals to collection agencies.

Why You May Want to Consider Refinancing

Another potential long-term solution to unaffordable payments is student loan refinancing. With a private lender, you can refinance federal student loans, private loans, or both. Refinancing involves obtaining a new loan to pay off all of your old loans and getting new terms and a new interest rate. Just be aware that if you refinance federal loans, you lose access to federal programs like federal deferment and student loan forgiveness.

Refinancing your student loans could make sense if you qualify for a lower interest rate, which could lower your payments and reduce the amount you spend in interest over the life of the loan. Or, if you choose a longer loan term, you could also lower your monthly payments, which can make the loan more affordable for you now. However, you may pay more interest over the life of the loan if you refinance with an extended term.

The Takeaway

Missing student loan payments can have serious consequences, including delinquency and default, which can damage your credit score and even result in your wages being garnished.

There are options for borrowers who can’t afford their monthly loan payments. These include an income-driven repayment plan, student loan forgiveness, or refinancing to more favorable loan terms, if eligible. Taking steps to manage student loans before missing payments can help a borrower avoid the negative financial ramifications of delinquency and default.

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


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

FAQ

What happens if I’m late on a student loan payment?

If you are late on a student loan payment even by one day, the loan may be considered delinquent. The loan will remain delinquent until a payment is made or you enter into federal deferment or forbearance.

Does a late payment on a student loan affect credit?

A late payment may have a negative impact on your credit score. Federal loans are normally reported to the credit bureau if they remain delinquent for 90 days. Private student lenders may report a late payment to credit bureaus after 30 days.

What happens if you miss a student loan payment by 270 days?

If you fail to make payments on your federal student loan for 270 days, the student loan will enter into default. Consequences of default are serious. The total balance of the loan becomes due immediately, your wages may be garnished, your tax refund could be withheld, and your credit damaged.

Private student loans may go into default earlier— typically, after 90 or 120 days, depending on the lender.

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

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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.


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

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

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

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

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ACT vs. SAT: Which Do Colleges Prefer?

By | Going to College, Life & Career, Student Loans, student_loan | Comments Off on ACT vs. SAT: Which Do Colleges Prefer?

When it comes to college admissions, two standardized tests stand out: the ACT and the SAT. Both are designed to assess a student’s readiness for higher education, but they have distinct differences in format, content, and scoring.

Keep reading to learn more about how these tests compare, which one you should take, and how colleges feel about these two exams.

Key Points

•  Most colleges do not have a strong preference between the ACT and SAT; they accept both tests equally and consider them as part of the overall application package.

•  One difference is that the ACT includes a science section and covers more advanced math topics, while the SAT focuses more on critical reading and writing.

•  Students should choose the test that aligns better with their strengths and testing style. Taking practice tests for both can help determine which one is a better fit and where you are likely to perform better.

•  The SAT is scored on a scale of 400 to 1600, combining scores from the Math and Evidence-Based Reading and Writing sections, while the ACT is scored on a scale of 1 to 36, averaging the scores from four sections: English, Math, Reading, and Science.

•  Thorough preparation is essential for both tests. Understanding the specific requirements and preferences of your target colleges can help you tailor your test preparation and application strategy effectively.

Purpose, Structure, and Cost

The SAT and ACT are two exams that serve the same purpose. Colleges utilize both exams to determine admission and award merit-based scholarships. Both tests are similar in length and structure, with the SAT taking 2 hours and 14 minutes, and the ACT taking 2 hours, 55 minutes (without essay), and 3 hours, 40 minutes (with essay) to complete.

For the 2025-26 school year, it costs $68 to register for the SAT. There are additional charges if you change test centers ($34) or you register late ($38). Your first four score reports are free if you order them within nine days after the test date. After that, any additional reports you want to send to multiple colleges cost $15 each.

The cost to register for the ACT for the 2025-26 school year is $65 with no writing ($25) or science ($4). There are additional charges if you change test centers ($44) or you register late ($38). Your registration fee covers reports for you, your high school, and up to four colleges (if you provide the codes when you register). Additional score reports are $19.



💡 Quick Tip: You can fund your education with a low-rate, no-fee private student loan that covers all school-certified costs.

The Subject Matter

These two exams cover similar subject matter and include an optional essay portion, although there are some key differences worth noting when it comes to preparing to take these exams. The main difference between the ACT and SAT subject matter is that the ACT has a science section, whereas the SAT does not.

ACT Subject Matter

The ACT includes four main sections: English, Math, Reading, and Science, with an optional Writing section. The English section focuses on grammar, usage, and rhetorical skills, while the Math section covers a broader range of topics, including trigonometry and advanced algebra. The Reading section tests comprehension and analysis of passages, and the Science section evaluates a student’s ability to interpret, analyze, and evaluate scientific information and data.

SAT Subject Matter

The SAT is structured into two main sections: Evidence-Based Reading and Writing, and Math, with an optional Essay section. The Evidence-Based Reading and Writing section is divided into Reading and Writing & Language tests, focusing on critical reading, vocabulary, and writing skills. The Math section is split into two parts: one that allows the use of a calculator and one that does not, and it emphasizes problem-solving and data analysis, with a greater focus on algebra and less on advanced math topics like trigonometry.

How Each Exam Is Scored

Both the SAT and ACT have unique scoring systems. Here’s a bit of information on each.

How the SAT Is Scored

The SAT is scored on a scale of 400 to 1600. Breaking down the scoring process a bit further, the SAT has not just a “total score,” but “section scores.” Each of the main sections, reading/writing and math, may be scored up to 800 points. These scores are then combined for the total.

Last but not least, students will receive subscores, evaluating their performance of certain or subject areas. These scores are included as a part of the total score, but this breakdown can be insightful for students looking to retake the test and improve their skill set.

Recommended: How to Help Your Child with SAT Practice

How the ACT Is Scored

The ACT is scored on a scale of 1 to 36. The ACT scoring system begins by taking into account how many questions a student answers correctly. The “raw scores,” which represent the number of correct answers on each test, are then converted to “scale scores.” Each subject section — English, Math, Reading, and Science—receives a scale score.

The “composite score,” which ranges from 1 to 36, is an average of each subject test, rounded to the nearest whole number. The scoring process is completed after identifying the percentage of correctly answered questions.

Recommended: Ultimate College Application Checklist

Do Colleges Prefer the ACT or SAT?

Both the ACT and SAT are widely accepted by U.S. colleges and schools generally don’t have a preference for one over the other. Many people believe that the SAT is more popular, especially with elite colleges, but that is a higher education urban legend.

There may, however, be some regional preferences between ACT vs SAT. College Raptor analyzed the numbers of students who applied to colleges with ACT or SAT scores (numbers that colleges and universities report to the government) and found that, while many states were split down the middle, a few lean more in one direction towards ACT or SAT. For example, Wisconsin leans heavily towards an ACT preference — there, 95.27% of applicants submitted ACT scores.

Knowing Which Test to Take

While some students opt to take both the SAT or ACT, some choose just one in order to focus on preparing for the test they believe they are more likely to score higher on. Neither test is generally easier than the other, but some students may find their different structures suit their needs better.

The SAT focuses more on critical reading, writing, and problem-solving, with a greater emphasis on algebra and data analysis in its Math section. The ACT, on the other hand, includes a Science section and covers a broader range of math topics, including trigonometry. If you excel in science and math, the ACT might be a better fit. If you are strong in reading and writing, the SAT could be more advantageous.

Taking a full-length practice test of each exam can give you a better idea of which test you’ll score higher on. Once you’ve determined which is a better fit, you can spend their time and resources preparing for just one test instead of two. If you feel comfortable preparing for and taking both exams, doing so can be beneficial as you will have two scores to choose between to send to colleges.


💡 Quick Tip: Federal student loans carry an origination or processing fee (1.057% for Direct Subsidized and Unsubsidized loans first disbursed from Oct. 1, 2020, through Oct. 1, 2026). The fee is subtracted from your loan amount, which is why the amount disbursed is less than the amount you borrowed. That said, some private student loan lenders don’t charge an origination fee.

Paying for College

The options don’t stop after you complete the test (or tests) of your choice. Once you use your solid scores to get into the college of your dreams, you and your family may be faced with some other big decisions, especially when it comes to paying for college.

Luckily, there are options — including grants, scholarships, and federal student loans — that can help offset the out-of-pocket costs. If you’ve exhausted those avenues and still have a funding gap, you may want to explore private student loans and or parent loans.

Private student loans are available through banks, credit unions, and online lenders. Unlike federal loans, applying for a private loan requires a credit check. Students who have solid financials (or a cosigner who does) typically qualify for the best rates and terms. Just keep in mind that private loans don’t come with the same protections, like government-sponsored forgiveness programs, that you get with federal loans.

The Takeaway

In the ongoing debate between the ACT and SAT, it’s clear that most colleges do not have a strong preference for one over the other. Both tests are designed to measure college readiness and are widely accepted. Ultimately, the choice should be based on which test aligns better with your strengths and testing style.

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 most colleges prefer the SAT or ACT?

Most colleges do not have a strong preference for one test over the other. They accept both and consider them equally in the admissions process.

How can students decide which test to take?

Students should consider their strengths and testing style. If you excel in science and advanced math, the ACT might be a better fit. If you are strong in reading and writing, the SAT might suit you more. Taking practice tests for both can also help determine which one you perform better on.

What are the main differences between the ACT and SAT?

The ACT includes a science section and covers more advanced math topics, while the SAT focuses more on critical reading and writing. The ACT is generally more straightforward, while the SAT can be more complex and requires strong reasoning skills.


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.

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

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

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