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A pass/fail grading system allows a student to receive either a grade of “P” (pass) or “F” (fail) for a particular class instead of the usual letter grading system. Many colleges offer this option in order to encourage students to explore new academic areas without having to worry about it affecting their transcripts.

However, the pass/fail grading system comes with some limitations, including restrictions on which and how many classes you can take pass/fail each year. And, in some cases, taking a class pass/fail can still have an impact on your academic record.

Read on to learn exactly what pass/fail means, what a passing (and failing) grade is, and when to consider a pass/fail option.

How Pass/Fail Grading Works

The traditional grading system was initially established centuries ago by English universities like Oxford and Cambridge as a way of encouraging students to work harder. While letter grades may still be the dominant system in American universities, some schools have deviated from this structure, establishing their own ways of evaluating students largely based on the pass/fail system.

Reed College in Portland, Oregon has a unique style of grading that encourages students to “focus on learning, not on grades.” While students are still assigned grades for each course, these grades are not distributed to students. Instead, students are given lengthy comments and reports on their academic performance. Reed does not have a dean’s list or honor roll either.

At Brown University students can take an unlimited number of classes “satisfactory/no credit (S/NC),” and GPAs are not calculated. They also do not name student’s to a Dean’s list.

Some schools, including Swarthmore College and MIT, have students take all classes pass/fail in the first semester of their freshman years. Swarthmore’s policy is meant to encourage students to stretch themselves and take risks, and is aligned with their policy of collaboration as opposed to competition with classmates, while MIT’s policy is designed to help students adjust to increased workloads and variations in academic preparation and teaching methods.

In both cases, taking the emphasis off grades is meant to improve students’ experiences of higher education, helping them to take full advantage of their time on campus.

Of course, most schools emphasize letter grades more than Brown and Reed, as it allows them to distinguish high achievers and highlight specific areas where students excel or may need to improve.

It’s common, however, for colleges to allow students to take one class pass/fail per semester. Typically, this is only offered for elective (not core) classes. Often, a grade of “P” is equal to a grade of D- or higher, but has no impact on the student’s overall grade point average. A grade of “F,” however, will usually have the same effect on the grade point average as a traditional failure.


💡 Quick Tip: Private student loans offer fixed or variable interest rates. So you can get a loan that fits your budget.

What Are The Benefits of Pass/Fail?

While college can be a rewarding and stimulating time for students, it also has its challenges, including constant pressure to keep up your grades. The beauty of taking a class pass/fail is the sense of freedom it gives you — once the stress of getting a perfect grade is removed, you are at liberty to fully embrace the kind of intellectual curiosity that should be at the heart of a college experience.

Maybe you’re a pre-med student and want to take a painting class, or perhaps you’re majoring in sociology and want to dabble in art history. These options can lead you down unexpected paths, opening creative doors you might have avoided if you were solely focusing on your GPA.

Recommended: How Grades Affect Your Student Loans

The Limits to Pass/Fail

The pass/fail system also has some potential downsides. One is that should you end up doing really well in the class, you generally can’t change your mind and ask to take the class for a grade rather than pass/fail. By the same token, if you do poorly in a class, you can’t make a belated request for a pass/fail.

In addition, pass/fail grades generally don’t count toward a major or minor, which limits your options when deciding whether or not to go this route.

While it’s hard to know for sure, some students feel that taking a higher number of pass/fail classes could reflect poorly on their college academic record and be a strike against them when applying for a job or to graduate school. However, it’s also possible that a potential employer or an admissions officer might be impressed by a student’s breadth of study and sense of initiative in studying “outside the box.”


💡 Quick Tip: Master’s degree or graduate certificate? Private or federal student loans can smooth the path to either goal.

The Takeaway

Taking a few of your classes pass/fail can be a great way to explore new academic areas of interest during college, and is unlikely to adversely impact your post-grad opportunities, including summer internships, employment, and graduate school.

While employers and graduate school admissions officers generally prefer to see quality grades over pass/fail grades, they will typically review applications holistically, and grades are just one of many ways you can show your skills, knowledge, and leadership potential. Indeed, taking a few pass/fail classes that are outside your major can show intellectual curiosity.

Whether you take a class pass/fail or for a letter grade won’t have any impact on how many credits you get from the course — or the cost of tuition. If you’re concerned about how you’ll cover the cost of your education, keep in mind that you have a range of options — including savings, scholarships, grants, work-study programs, and federal or private student loans.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

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

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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.

SOIS0723004

When an undergraduate’s financial aid doesn’t meet the cost of attendance at a college or career school, parents may take out a Direct PLUS Loan in their name to bridge the gap.

These loans are available to parents when their child is enrolled at least half-time at an eligible school. Before you apply, it’s important to understand the benefits and challenges of this kind of federal student loan.

A “Direct” Difference

First, to clarify, there are federally funded Direct Loans that are taken out by students themselves. Then there are federally funded Direct PLUS Loans, commonly called Parent PLUS Loans when taken out by parents to help dependent undergrads.

To apply for a Parent PLUS Loan, students or their parents must first fill out the Free Application for Federal Student Aid (FAFSA®).

Then a parent typically applies for a PLUS Loan on the Federal Student Aid site. A credit check will be conducted to look for adverse events, but eligibility does not depend on the borrower’s credit score or debt-to-income ratio.


💡 Quick Tip: Some lenders help you pay down your student loans sooner with reward points you earn along the way.

Pros of Parent PLUS Loans

At least 3.5 million parents (and in some cases, stepparents) have taken out Parent PLUS Loans to lower the cost of college. Here are some upsides.

The Sky’s Almost the Limit

The government removed annual and lifetime borrowing limits from Parent PLUS Loans in 2013, so parents, if they qualify, can take out sizable loans up to the student’s total cost of attendance each academic year, minus any financial aid the student has qualified for.

Fixed Rate

The interest rate is fixed for the life of the loan. That makes it easier to budget for the monthly payments.

Flexible Repayment Plans

The options include a standard repayment plan with fixed monthly payments for 10 years, and an extended repayment plan with fixed or graduated payments for 25 years.

More College Access

PLUS Loans can allow children from families of more limited means to attend the college of their choice.

Loan Interest May Be Deductible

You may deduct $2,500 or the amount of interest you actually paid during the year, whichever is less, if you meet income limits.

Recommended: Are Student Loans Tax Deductible?

Cons of Parent PLUS Loans

Many Parents Get in Too Deep

The program allows parents to borrow without regard to their ability to repay, and to borrow liberally, as long as they don’t have an “adverse credit history.” (If they did have a negative credit event, they may still be able to receive a PLUS Loan by filing an extenuating circumstances appeal or applying with a cosigner.)

The average Parent PLUS borrower has more than $29,000 in loans, a financial hardship for many low- and middle-income families.

And if a student drops out, parents are still on the hook.

Interest Accrual

PLUS loans are not subsidized, which means they accrue interest while your child is in school at least half-time. You’ll need to start payments after 60 days of the loan’s final disbursement, but parents can request deferment of repayment while the student is in school and for up to 6 months after. Interest will still accrue during that time.

The Rate

The current interest rate for Direct PLUS Loans is 8.05%

Origination Fee

The government charges parents an additional fee of 4.228% of the total loan.

Fewer Repayment Options

Parents who struggle with payments typically have access only to the most expensive income-driven repayment plan, which requires them to pay 20% of their discretionary income for 25 years, with any remaining loan balance forgiven. And parents must first consolidate their original loan into a Direct Consolidation Loan.

Options to Pay for College

Instead of PLUS Loans, private student loans may be used to fill gaps in need.

Private lenders that issue private student loans typically look at an applicant’s credit score and income and those of any cosigner. The lenders set their own interest rates, term lengths, and repayment plans. Some do not charge an origination fee.

You may want to compare annual percentage rates among lenders, and decide if a fixed or variable interest rate would be better for your financial situation.

Any time a student or parent needs to borrow money for education, a good plan is a good idea.

Sometimes scholarships can significantly reduce the amount of money that needs to be paid out of pocket for college, and personal savings and wages can also help. But it isn’t unusual for students to also need to take out loans.


💡 Quick Tip: Parents and sponsors with strong credit and income may find much lower rates on no-fee private parent student loans than federal parent PLUS loans. Federal PLUS loans also come with an origination fee.

Refinancing a Parent PLUS Loan

The goal of Parent PLUS Loan refinancing is to get a lower interest rate than the federal government is charging.

And student loan refinancing may allow children to transfer PLUS Loan debt into their name.

Refinancing could potentially lower your interest rate, which gives you the option to either:

•  Reduce your monthly payments

•  Pay the loan off more quickly, which may allow you to pay less interest over the life of the loan

Note that Parent PLUS Loans come with certain borrower protections, like the income-based repayment option and Public Service Loan Forgiveness, that you would lose if you refinanced. Also note that if you refinance with an extended term, you may pay more interest over the life of the loan.

Eligibility for refinancing Parent PLUS loans depends on factors such as your credit history, income, employment, and educational background.

The Takeaway

Millions of parents have used federal Parent PLUS Loans to help pay for their children’s college education. Anyone tempted to take out one of these loans may want to know the pros, cons, and options.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

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

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.

SOIS0723033

Attending college is a big milestone that both parents and students look forward to for many months.

While this is a highly anticipated event, college move-in day can also be a very stressful and emotional day for both students and parents. Attending a college that is out of state can be another nerve-wracking factor.

Moving can be challenging, especially if it’s hot or you have to climb up several sets of stairs. Fortunately, there are several things you can do ahead of time over the summer that can help ensure the day goes as smoothly as possible.

Preparing for the Big Day

Getting organized beforehand is one surefire way to prepare for the big move as a college freshman. Here are a few ideas to help you and your child get ready for move-in day.

Getting Familiar with Dorm Room Rules

Being prepared and learning what the college dorms allow students to bring can relieve some potential headaches. Colleges typically post a list of items that students can bring and ones that are prohibited in the residence halls.

Sticking to the basics is a good start since your child can buy more items from a local store or have it shipped to them at a later date.

Recommended: College Essentials: What to Bring to College

Coordinating with Your Roommate

Recommend that your child contact their roommate over the summer and discuss their interests and what items each of them are bringing. This can be one way to help avoid bringing duplicates, especially for larger items like TVs or bean bags.

Another idea is to coordinate the time you are going to move in so you can assist each other during the process. This can also be helpful if the parents are interested in meeting each other.

Packing with Purpose

Packing for college can be a frustrating task, but one way to expedite the chore is to have your child label all the containers and boxes so you know what’s already packed and can easily find things once you arrive. If you have items that are more fragile, consider putting them into heavy plastic containers so they are less likely to be damaged during the move.

Also consider making a list of must-have items, to limit the chance that something important is forgotten. For example, bedding, computer, school supplies, a first aid kit, and basic tool kit — which can be extremely useful on move-in day.

If your child is attending a college that is out of state or in a different climate, you may have to build out a more weather-appropriate wardrobe. For instance, if your child is moving to a college in the Midwest from Florida, you might buy and pack weatherproof boots, jackets, scarves, gloves, and other clothing suited for colder temperatures.

If they are attending college in a warmer climate, consider packing more t-shirts and shorts and leave some of the sweatshirts and wool sweaters at home.

Recommended: College Planning Guide for Parents

Planning Travel Arrangements

Once you’ve organized and packed all of your child’s belongings, it’s time to decide how you’ll get everything to campus. This will likely depend on factors like how far away the school is.

Consider renting an SUV or a moving van if the university is within driving distance and you own a smaller vehicle. If you plan on driving, pack the car strategically, so items you’ll need first (like cleaning supplies), are easily accessible when you arrive.

If you’re planning to fly to the college, another strategy may be to mail some of the belongings to the residence hall ahead of time, if it is permitted.


💡 Quick Tip: Parents and sponsors with strong credit and income may find much lower rates on no-fee private parent student loans than federal parent PLUS loans. Federal PLUS loans also come with an origination fee.

What to Expect on Move-In Day

While going to college is really exciting for your child and your family, consider limiting the number of people you bring with you on moving day. You know the saying “too many cooks in the kitchen,” well the same philosophy can apply to a move.

Having too many people could actually slow down or complicate the process. Plus, it’s likely that many students and their parents will all be in the residence halls at the same time. Dorm rooms can be pretty small and having more people in the space could create more chaos and tension.

Instead, consider planning a visit when there is more flexibility. Many colleges have a family weekend in the fall. This could provide an opportunity for a longer, more relaxing and fun visit, especially if grandparents, aunts, and uncles also want to tag along.

Since many students move in during late summer, it can help to be prepared for heat (and humidity, depending on the local climate). It’s likely going to be hot, especially if the residential dorm does not have central air conditioning and only window units or getting to a top floor requires traipsing up and down several flights of stairs.

Consider bringing a fan to help circulate some air while you get everything settled.

Doing all that heavy lifting is no easy task. Wear comfortable clothing and shoes for the move and bring another outfit to change into later as you tour the campus or grab dinner with your child.

Bringing water and snacks is generally a good idea too, especially if you are moving furniture and other heavier items. Putting the drinks in a cooler will help keep them cold, especially if the room does not have a refrigerator. Make sure you have enough for the roommate and their parents.

Determine whether the residence hall has a dolly or other items that you can borrow because they can help make the move easier. Signing up for those items early can help ensure that you can use them the day you move in. Otherwise, you can buy one from a local hardware store or split the costs with a roommate or another friend who is living in the same residence hall.

Students who have other friends who are also moving in during the same day might want to consider connecting beforehand so they can help each other move, especially bulky or heavier pieces of furniture.

During the unpacking process, your child might find that they brought too many personal belongings or packed things they either don’t actually need or don’t have room for.

For instance, if the roommate also brought a television and there is no room for two, you could pack yours up and take it home.

While you may be concerned about whether your child has enough necessities like sheets, toothpaste, and food, there are likely several stores on or near the campus.

If your student lives near a grocery or drugstore, they can buy other items later on or they can have the items delivered to them. Many retailers offer free shipping and stores at college campuses often have special offers suited for students.

Move-in day can be emotional, for everyone involved. As hard as it is to say goodbye, try not to hang around too long — let your child adjust to their new surroundings, hang out with their new roommate, make new friends in their residence hall, and get ready for their first day as a freshman.


💡 Quick Tip: Parents and sponsors with strong credit and income may find much lower rates on no-fee private parent student loans than federal parent PLUS loans. Federal PLUS loans also come with an origination fee.

Considering SoFi Private Student Loans

As you gear up for move-in day, you may have other concerns, including how you’re going to cover the cost of your child’s education. Financing your child’s education is a large responsibility and can be complicated. While there are some ways to prepare for college, like filling out the FAFSA to apply for federal aid, some families do not receive enough to pay for tuition and room and board entirely.

After exhausting federal aid options, you might want to explore the option of private student loans. You can be the cosigner of your child’s application for a private student loan. You also have the option of taking out a private parent student loan. Just keep in mind that private student loans don’t offer the same protections, like government-sponsored forgiveness programs, that come with federal student loans.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

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

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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.

SOIS0723025

When you realize that the average tab for law school tuition approaches $50,000 a year (more than double the average cost of other graduate schools) you may wonder — how will I ever be able to pay for law school?

Fortunately, there are numerous programs that can cover part, or even all, of your legal education, including scholarships, grants, and loans. Read on to learn more about how to pay for law school without going broke.

Average Cost of Law School

The cost of law school will vary depending on where you study. According to educationdata.org, the average total cost of law school is $220,335.

Tuition alone runs, on average, $146,484 (or $48,828 per year), while living expenses average $73,851(or $24,617 per year).

And the cost of law school keeps going up. In fact, law school tuition costs have risen by about $5,350 every five years since 2005. Based on that inflation rate, the average yearly cost of tuition for the 2024-2025 academic year is expected to be $51,624.

Private and Public Law School Tuition

Public law schools generally run about $21,130 a year less per year than private law schools. If you attend a traditional three-year law program, the gap between public and private schools increases to around $63,380.
Based on tuition alone, the most expensive law school is Columbia University at $78,278 a year, while the least expensive is University of Memphis at $12,208 a year.

However, when you include living expenses, the most expensive law school is Stanford University, ringing in at $46,233 a year, while the least costly school is Oklahoma City University, at $12,600 a year for tuition and living expenses.


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

How to Pay for Law School

1. Apply for Federal Aid, Grants, and Scholarships

Filling out the Free Application for Federal Student Aid (FAFSA) allows you to find out whether you qualify for federal grants, work-study programs, federal student loans, as well as student aid from your state or school.

The FAFSA may be a familiar presence since your undergrad days, but now you may be considered an independent student. You may be eligible for a Direct Unsubsidized Loan (current rate: 7.05%), Direct PLUS Loan (current rate: 8.05%), or the federal work-study program.

Keep in mind that the aggregate federal student loan limit, which includes federal loans for undergraduate study, is $138,500 for graduate or professional students.

Law schools also typically offer some form of need-based financial aid based on information you provide on your FAFSA.

In addition to submitting the FAFSA, you may also want to seek out law school scholarships and grants from non-government sources. Grants and scholarships can be particularly helpful because they don’t require repayment. The Law School Admission Council’s website is a good resource for possible scholarship opportunities.

If you’re going into public interest law, you may also want to research the many programs that offer tuition assistance or law school loan forgiveness for working in eligible legal areas.

You can also check whether your school offers graduate student assistantships, which would cover some of your tuition in exchange for helping with research or teaching.

Recommended: Guide to Law School Scholarships

2. Consider a Part-Time Job or Temp Work

It can be challenging to make a side job jibe with your academic responsibilities, but if you can manage it, making some money while you’re still in school can be one of the best ways to reduce the debt you take on.

It might be a good idea to see if you can get a job that also boosts your résumé, such as working for a professor or as a paralegal.

Even if you can’t commit to a consistent job, you might consider temping during breaks, slow periods, and summers. A staffing agency may be able to quickly set you up with work that lasts just a few weeks or months. Short-term work can include customer service, data entry, or serving as an executive assistant.

If you have additional skills, such as a background in accounting or IT, you may be able to qualify for more specialized roles that demand higher pay. Some temp agencies even specialize in staffing for legal organizations.

3. Attend Law School Part Time

It’ll take longer to complete your degree, but working full time while you go to law school part time is another way to support yourself as you go.

Part-time programs usually allow you to earn your J.D. in four years rather than three. The downside is that you might miss out on opportunities such as clinics, summer clerkships, and student organizations.

4. Look Into Military Aid

The Department of Veterans Affairs (VA) has many educational benefit programs. One of the most popular is the Post-9/11 GI Bill program (Chapter 33), which provides eligible veterans and members of the Reserves with funding for tuition, fees, books, and housing.

Law schools that participate in the Yellow Ribbon Program provide additional funding to veterans, or their children, who are eligible for the Post-9/11 GI Bill benefits. The Department of Veterans Affairs matches these schools’ contribution, which could potentially help you to attend law school at a significantly reduced price.

Recommended: What Are Student Loans for Military Dependents?

5. Think About Private Student Loans or Refinancing

After grants, scholarships, and federal student loans, you may want to consider a private student loan to fill any gaps. If you have good or excellent credit (or can recruit a cosigner who does), you may be able to get a lower rate than some federal graduate school loans.

If you have loans from your undergraduate education or your first year or two of law school, refinancing your student loans with a private lender may allow you to take advantage of a lower interest rate and, depending on the loan term you choose, could lower your monthly payment or put you on track to repay your loans faster. (Note: You may pay more interest over the life of the loan if you refinance with an extended term.)

Just keep in mind that private student loans don’t offer the same protections you get with federal loans, such as forbearance, income-based repayment plans, and loan forgiveness programs. However, some private refinance lenders provide flexible options while you’re in school or experiencing economic hardship.


💡 Quick Tip: It’s a good idea to understand the pros and cons of private student loans and federal student loans before committing to them.

Paying for Bar Exam Expenses

Sitting for the bar exam, a two-day affair, requires preparation (and often a bar review course), exam registration fees, and possibly travel expenses.

You may want to hunt around for bar preparation scholarships to help cover these costs. If you’re working for a law firm, your employer will usually cover the cost of the prep course. And many firms will pay review course fees for prospective employees.

Still, if you find yourself short, you could take out a “bar loan” in your final semester of law school or up to a year after graduating. A bar loan is a type of private loan you can use to cover all the costs associated with taking the bar. While rates can be high, they are generally lower than what you would pay with a credit card.

Recommended: What to Do After You Graduate From Law School

The Takeaway

While earning a law degree may lead to a lucrative career, figuring out how to pay for law school can be challenging. The good news is that there are numerous programs, including financial aid, work-study, scholarships, grants, and loans that can help you cover the cost of your legal degree.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

SoFi 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.

SOIS0223002

Making principal-only payments on student loans (either monthly or just occasionally) can help speed up the payback time and lower your overall borrowing costs. But just making extra payments on your loan won’t necessarily lower your loan’s principal balance. You typically need to take a few extra steps to ensure that your extra payments actually go toward principal — and not interest on the loan.

Reed on to learn exactly what a principal-only student loan payment is and how to be sure you’re doing it right.

What Is a Principal-Only Student Loan Payment?

To understand what principal-only payments are, it helps to understand how student loan repayment works.

When you take out a student loan, you need to repay the principal balance. (the amount you borrowed), interest (the cost of borrowing the principal) and, in some cases, fees (which are often paid up front).

When it’s time to start repaying your student loan, you are usually required to make at least a minimum payment each month. That payment will go towards both your principal balance and interest. In the beginning, most of your payment will go toward interest and very little towards principal. Over time, however, the balance shifts — more of your monthly payment will go toward principal and less will go towards interest.

Fortunately, student loans have no prepayment penalties. This means that If you make an extra, principal-only payment, it will lower the principal balance of your loan, and the lender will not be able to charge you a fee for paying some of your loan off early.

Unfortunately, when a lender receives a payment beyond the minimum due each month, they may simply apply it to next month’s bill rather than use that money to lower your principal. This means there are certain steps you need to take to make sure the money will only go towards principal (more on that below).

💡 Quick Tip: Pay down your student loans faster with SoFi reward points you earn along the way.

Why Making Principal-Only Payments Can Make a Difference

Since interest on a student loan is calculated daily on the principal balance at that time, the less principal you have left to pay, the lower your interest costs. As a result, paying extra on your student loan — and having that money go directly to the principal — can save you a significant amount of money. It also helps you pay off your student loans faster.

Of course, not everyone is in a position to pay more than the required amount in any given month, and that’s fine, too. You might simply choose to use an occasional windfall — such as a bonus at work or a cash gift — to make a principal-only payment on your student loans.

Recommended: 9 Smart Ways to Pay Off Student Loans

How to Make Principal-Only Payments on Student Loans

Just making an extra payment on your student loan doesn’t necessarily mean you are making a principal-only payment.

Generally, student loan servicers apply your payments first to cover any late fees you’ve incurred and then to accrued interest before they apply anything to your principal. Here are some tips that can help ensure any extra payments you make go toward your principal.

Tell Your lender Where to Direct Extra Payments

If you pay online through the servicer’s website, you might have the option to choose how the money gets applied. There may be an option that says “other amount” where you can enter an extra amount you want to pay towards your loan that month, as well as where that money should be applied, such as to the interest only, the interest and principal, or just the principal.

In some cases, you might see an option for “Do not advance the due date.” Clicking this will ensure that your lender treats your funds as an extra payment rather than applying them toward next month’s bill.

If you want to make a larger payment every month and have the extra applied to principal, you may also have the option of setting up standing instructions online, telling your servicer to send any extra money towards the principal.

If you pay by check or don’t see these options online, you’ll need to contact your loan servicer and ask how to make occasional or regular principal-only payments. You may need to send a standing order in writing.

Apply Extra Payments Strategically

If you have more than one student loan, you can typically request that your student loan servicer apply your extra payments to a specific loan (such as the loan with the highest interest rate) in order to ensure you can save money and meet your debt repayment goals.

There are two common approaches to paying down debt on multiple loans:

•   The snowball method This involves paying off the smallest loan first, then moving on to the next-biggest loan. This approach can give you a sense of making progress, and motivate you to keep going.

•   The avalanche method This tackles the loan with the highest interest rate first. Putting extra payments on the most expensive loan will save you the most money. However, it won’t allow you to cross a loan off your list as quickly.

Recommended: 6 Strategies to Pay off Student Loans Quickly

Keep a Close Eye on Your Statements

To make sure your principal-only payment was just that — it went to principal only — it’s a good idea to check your online account or loan statements each month to make sure any extra payments you made were correctly applied. You’ll also want to make sure the money was applied to the loan you specified.

If your lender didn’t apply your extra payment to the principal balance, you’ll want to reach out to ensure that future payments are accurately applied.

💡 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, 2024). 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.

Consider Refinancing Student Loans for Better Rates

Making principal only payments isn’t the only way to lower your interest costs and/or pay off your loan early. You might also be able to do this by refinancing your student loans with a private lender, such a bank, credit union, or online lender.

With a student loan refinance, you exchange one or more of your old loans for a new one, ideally with a lower rate or better terms. This process can be helpful if you have a solid credit score (or have a cosigner who does), since it might qualify you for a lower interest rate. In addition, you could choose a shorter repayment term to get out of debt faster.

You can refinance both federal and private student loans. Keep in mind, however, that refinancing federal student loans can result in a loss of certain borrower protections, such as income-driven repayment and student loan forgiveness. Because of this, you’ll want to consider the potential downsides of refinancing before making changes to your debt.

The Takeaway

The thought of finding extra money — beyond your required monthly payment — to pay down student debt may be daunting. But the benefits could make it worth the effort and sacrifice. Making principal-only payments will help reduce the interest you pay over the life of your student loan. And, the more often you pay down your principal balance, the faster you’ll pay off your student loans.

If you choose to make principal-only payments, you’ll want to communicate with your lender to make sure that those additional payments are applied only to your loan’s outstanding principal.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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.