If you’ve dropped out of college but are still carrying student loan debt, you have a number of repayment options, depending on your income and credit profile. Some private lenders (including SoFi) may allow you to refinance your federal student loan, but others will not.
College dropout rates indicate that up to 39% of undergraduates do not complete their degree program, according to the most recent data from EducationData.org. If anyone hopes that not graduating gets them off the hook for paying back a student loan, the answer is a resounding no. Federal and private student loans must be repaid if you drop out of college before earning a degree.
Lenders believe that not having a degree can pose difficulties in getting a high-earning job. College dropouts make an average of 35% less income than bachelor’s degree holders. And some data show that college dropouts are four times as likely to default on their loans compared to graduating counterparts.
Table of Contents
Key Points
• Refinancing student loans without a degree is challenging due to perceived higher risk and lower income potential.
• Many private lenders require borrowers to have a degree, limiting refinancing options.
• Federal loan consolidation simplifies payments and may lower monthly amounts by extending the loan term.
• Income-driven repayment plans adjust monthly payments based on income and family size, offering financial flexibility.
• The IBR plan provides potential forgiveness of outstanding balance after 20 years of consistent repayment.
Take control of your student loans.
Ditch student loan debt for good.
Can You Refinance Student Loans Without a Degree?
Student loan refinancing allows you to pay off federal student loans with a private one carrying different terms. For some borrowers, this new loan might come with a lower interest rate or lower monthly payment than their existing debt, particularly if they have a strong credit and employment history.
However, many private lenders won’t allow you to refinance student loans if you haven’t graduated. Some lenders require that you have at least an associate degree from a Title IV accredited school in order to be eligible for refinancing.
Title IV schools are eligible to process federal student aid under the Higher Education Act. You can verify whether the institution you attended is a Title IV school on the Federal Student Aid (FSA) website.
Even though some of the most popular lenders require you to have a degree, that doesn’t mean you can’t refinance student loans if you did not graduate. There are some financial institutions that may offer refinancing to borrowers who dropped out.
Federal Student Loan Consolidation Without a Degree
There are other solutions to easing your burden. If you have more than one federal student loan, not having a degree doesn’t stop you from being able to combine them through a Direct Consolidation Loan. Doing so could be beneficial because it allows you to make just one payment every month instead of many, potentially with multiple loan servicers. That can make things simpler for you and make it more likely that you’ll remember to pay your loans on time.
Another reason to consider consolidation is that you could qualify for a lower monthly payment by extending the term of the loan (though you’d pay more interest over the life of the loan). Also, by consolidating, loans that wouldn’t otherwise qualify might become eligible for income-driven repayment plans or the Public Service Loan Forgiveness program.
Should I Consolidate Student Loans?
Consolidation isn’t for everyone, however. As we mentioned above, extending the term of the loan means interest will have more time to stack up. Plus, if you’ve already been making payments under an income-driven repayment plan or toward Public Service Loan Forgiveness, you could lose credit for those payments and have to start over.
You can apply for a Direct Consolidation Loan as soon as you leave school or are enrolled less than half-time. You’d submit an application through the FSA website. If your loans are still in the grace period, you can ask for the consolidation to be delayed so that it’s closer to the end of that period. If you receive the loan, you’ll need to start repaying it 60 days after it’s paid out.
Repayment Options for Federal Student Loans
Borrowers who have dropped out of school may want to consider repaying their loans under an income-driven repayment (IDR) plan. These plans are designed to make loans easier to manage by basing your monthly payments on your discretionary income and family size. Currently, there are three IDR plans, but only one of them — the Income-Based Repayment (IBR) Plan — offers forgiveness on any outstanding balance after 20 years.
You can also apply for forbearance or deferment, temporarily pausing or lowering your payments if you qualify. Keep in mind that forbearance and deferment have financial pros and cons, including the fact that in most cases, interest will accrue during these periods.
Refinancing Your Student Loans
Now or in the future, you may be able to apply for student loan refinancing. You can check your rates with several lenders (using a soft credit check, whenever possible) to compare rates and terms and see what you might prequalify for.
If you decide to complete a full application, the lender may ask for information like your Social Security Number, outstanding loans and repayment history, income, and employment history. They typically complete a credit check to find out your FICO® Score and look for any red flags, like a history of missed payments, student loan default, eviction, or bankruptcy.
Those who don’t initially qualify for refinancing, or get a favorable rate, can try reapplying with a cosigner — someone who guarantees to repay the loan if the primary borrower can’t.
If you feel you need a cosigner, one with strong credit history and a solid income and employment history (among other financial factors) could help you qualify. If you do use a cosigner, remember that if you default, any missed payments on your end may damage their credit.
It’s important to bear in mind with refinancing that, if approved, you would lose out on several options. These include:
• Access to temporary loan payment relief through approved periods (deferment or forbearance) when you do not have to make payments because of financial hardship, continuing your education, or military service.
• No interest accumulation on subsidized student loans during periods when payments are deferred.
• Access to repayment plans based on your income, including one plan, the IBR plan, that offers loan forgiveness once you have been in repayment for 20 years.
Recommended: Refinancing Student Debt With a Cosigner
The Takeaway
Not completing your college degree is far from uncommon. However, it can be frustrating to carry a student loan balance for a degree you don’t have.
Not all lenders offer student loan refinancing to borrowers who don’t have at least an associate degree, but some lenders do (including SoFi). Plus there are other options, such as applying for income-driven repayment and exploring other federal programs to help with loans.
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.
FAQ
Can I get a loan without a degree?
Yes, it’s possible to get student loans without a degree — if you are currently enrolled in school. The federal student loan program offers student loans to qualifying borrowers who are attending eligible institutions. Students may also look into private student loans.
Can you refinance student loans without a job?
Refinancing student loans without a job may be more challenging than if you are able to show a record of stable employment. However, lenders evaluate a variety of factors when making lending decisions including employment history, income, and credit score, among other factors. The lender is trying to evaluate whether you are able to repay the loan. If you are able to show other sources of income — outside of a traditional job — it may be possible to refinance your student loans.
Do you need to graduate to refinance student loans?
In many cases, yes, you do need to graduate before you can refinance student loans. Many private lenders won’t allow you to refinance your student loans if you haven’t graduated. However, there are some lenders that are willing to refinance student loans for borrowers who did not graduate.
SoFi Student Loan Refinance SoFi Loan Products
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 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.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SOSLR-Q425-037