SoFi

Students who graduate with a master’s degree carry an average debt of $69,140, according to the Education Data Initiative. Fortunately, there are many ways to pay for grad school, including options that don’t require borrowing.

Keep reading to learn more on how to pay for grad school in 2025, including how to take out graduate student loans, how to qualify for scholarships and grants, and other ways to reduce your total tuition.

Ways to Pay for Grad School Without Taking on Debt

You can pay for grad school without taking on debt by filling out the FAFSA, applying for scholarships and grants, or working for an employer who offers tuition reimbursement. Continue reading for even more strategies to pay for grad school without taking on debt.

1. Fill Out the FAFSA

The first step to seeing if you qualify for financial aid is to fill out the Free Application for Federal Student Aid, or FAFSA®.

Your FAFSA will determine your eligibility for federal student loans, federal work-study, and federal grants. In addition, your college may use your FAFSA to determine your eligibility for aid from the school itself. Here’s a closer look at federal grants and federal work-study programs.

Federal Grants

Unlike student loans, federal grants do not need to be repaid. Grants for college for grad students include TEACH Grants and Fulbright Grants.

The TEACH Grant, or Teacher Education Assistance for College and Higher Education Grant, has relatively stringent requirements and is available for students pursuing a teaching career who are willing to fulfill a service obligation after graduating.

The Fulbright Grant offers funding for international educational exchanges. Sponsored by the U.S. government, it supports students, scholars, teachers, and professionals to study, research, or teach abroad.

Federal Work-Study Program

Federal work-study for grad students provides part-time jobs to help cover educational expenses. These positions are often related to a student’s field of study or serve the community. Eligibility is based on financial need, and earnings are exempt from being counted as income on the FAFSA, maximizing financial aid opportunities.

2. Figure Out What Your University Can Offer You

After narrowing down your federal options, make sure to consider what university-specific funding might be available. Many schools offer their own grants, scholarships, and fellowships. Your school’s financial aid office likely has a specific program or contact person for graduate students who are applying for institutional assistance.

Many schools will use the FAFSA to determine what, if anything, the school can offer you, but some schools use their own applications.

Although another deadline is the last thing you need, seeking out and applying for school-specific aid can be one of the most successful ways to pay for grad school. Awards can range from a small grant to full tuition remission.

3. Employer Tuition Reimbursement

It might sound too good to be true, but some employers are happy to reimburse employees for a portion of their grad school costs. Employers that have tuition reimbursement plans set their own requirements and application processes.

Make sure to consider any constraints your employer puts on their tuition reimbursement program, including things like staying at the company for a certain number of years after graduation or only funding certain types of degree programs.

4. Become an In-State Resident

If you’re applying for graduate school after taking a few years off to work, you might be surprised to find how costs have changed since your undergraduate days. Graduate students interested in a public university can save tens of thousands of dollars by considering a university in the state they already live in.

Each state has different requirements for determining residency. If you are planning on relocating to attend grad school, be sure to look into the requirements for the state of the school you are planning to attend.

Certain states require only one year of full-time residency before you can qualify for in-state tuition, while others require three years. During that time, you could work as much as possible to save money for graduate school. More savings could mean fewer loans.

Recommended: 6 Ways to Save Money for Grad School

5. Become a Resident Advisor (RA)

Resident Advisors (RAs) help you get settled into your dorm room, show you how to get to the nearest dining hall, and yell at you for breaking quiet hours.

RAs may be underappreciated, but they’re often compensated handsomely for their duties. Students are typically compensated for a portion or all of their room and board, and some schools may even include a meal plan, reduced tuition, or a stipend. The compensation you receive will depend on the school you are attending, so check with your residential life office to see what the current RA salary is at your school.

Serious savings. Save thousands of dollars

thanks to flexible terms and low fixed or variable rates.

6. Find a Teaching Assistant Position

If you’re a graduate student, you can often find a position as a Teaching Assistant (TA) or Research Assistant (RA) for a professor. The position will be related to your undergrad or graduate studies and often requires grading papers, conducting research, organizing labs, or prepping for class.

TAs can be paid with a stipend or through reduced tuition, depending on which school you attend. Not only can the job help you to potentially avoid student loans, but it also gives you networking experience with people in your field.

The professor you work with can recommend you for a job, bring you to conferences, and serve as a reference. Being a TA may help boost your resume, especially if you apply for a Ph.D. program or want to be a professor someday. According to ZipRecruiter, the average TA earns $15.66 an hour, as of November 2025.

Recommended: How to Become a Graduate Assistant

7. Apply for Grants and Scholarships

Applying for grants and graduate scholarships is a smart way to fund graduate school without accumulating debt. Start by researching opportunities specific to your field, school, or demographics. Many scholarships focus on academic achievements, leadership, or community involvement, while grants often emphasize financial need.

An easy way to search for scholarships is through one of the many websites that gather and tag scholarships by criteria. Keeping all your grad school and FAFSA materials handy means that you’ll have easy access to the information you’ll need for scholarship applications.

8. Utilize Military Education Benefits (If Eligible)

Military education benefits can significantly reduce or even eliminate the cost of graduate school for qualifying service members, veterans, and sometimes their families. Programs like the GI Bill® and the Yellow Ribbon Program can cover tuition, fees, and even housing costs at many institutions. Additionally, some branches offer tuition assistance while on active duty, enabling students to pursue advanced degrees with little to no out-of-pocket expenses.

How to Pay for Grad School With Student Loans

Grad students may rely on a combination of financing to pay for their education. Student loans are often a part of this plan. Like undergraduate loans, graduate students have both federal and private student loan options available to them.

Federal Loans for Graduate School

There are different types of federal student loans, and each type has varying eligibility requirements and maximum borrowing amounts. Graduate students may be eligible for the following types of federal student loans:

•   Direct Unsubsidized Loans. Eligibility for this loan type is not based on financial need.

•   Direct PLUS Loans. Eligibility for this loan type is not based on financial need; however, a credit check is required to qualify for this type of loan. As of July 1, 2026, Grad PLUS Loans will no longer be available (Parent PLUS Loans will still be available, however).

•   Direct Consolidation Loans. This is a type of loan that allows you to combine your existing federal loans into a single federal loan.

Federal Student Loan Forgiveness Programs

Federal student loan forgiveness programs either assist with monthly loan payments or can discharge a remaining federal student loan balance after a certain number of qualifying payments.

One such program is the Public Service Loan Forgiveness (or PSLF) program. The PSLF program allows qualifying federal student loan borrowers who work in certain public interest fields to discharge their loans after 120 monthly, on-time, qualifying payments.

Additionally, some employers offer loan repayment assistance to help with high monthly payments. While loan forgiveness programs don’t help with the upfront cost of paying for grad school, they may offer a meaningful solution for federal student loan repayment. (Unfortunately, private student loans don’t qualify for these federal programs.)

Private Loans for Graduate School

If you’re not eligible for scholarships or grants, or you’ve maxed out how much you can borrow using federal student loans, you can apply for a private graduate student loan to help cover the cost of grad school.

Private loan interest rates and terms will vary by lender, and some private loans have variable interest rates, which means they can fluctuate over time. Doing your research with any private lender you’re considering is worth it to ensure you know exactly what a loan with them would look like.

Also, keep in mind that private student loans do not offer the same benefits and protections as federal student loans. It’s best to use all federal funding first before relying on private funding.

Comparing Federal vs. Private Loan Options

Understanding the differences between federal vs private student loans is important when considering grad school loans. Each option offers unique benefits, eligibility rules, and repayment features that can impact long-term costs.

•   Federal loans: These loans are funded by the government and typically offer more borrower protections, such as fixed interest rates, income-driven repayment plans, and potential for deferment, forbearance, or loan forgiveness programs. They usually don’t require a cosigner and are often based on financial need.

•   Private loans: Offered by banks, credit unions, and other private lenders, these loans often have variable interest rates that can be higher than federal loans. They usually require a strong credit history or a cosigner, and their repayment terms and borrower benefits are generally less flexible than federal options.

Recommended: Private Medical School Loans

Steps to Take Before Applying to Graduate School

Before applying to graduate school, it’s important to consider the earning potential offered by the degree in comparison to the cost. At the end of the day, only you can decide if pursuing a specific graduate degree is worth it. Here are a few steps to take before applying to grad school.

1. Research Potential Earnings by Degree

Perhaps you are already committed to one degree path, like getting your JD to become a lawyer. In that case, you should have a good idea of what the earning potential could be post-graduation.

If you’re considering a few different graduate degrees, weigh the cost of the degree in contrast to the earning potential for that career path. This could help you weigh which program offers the best return.

2. Complete the FAFSA

Regardless of the educational path you choose, filling out the FAFSA is a smart move. It’s completely free to fill out and you may qualify for aid including grants, work-study, or federal student loans. Federal loans have benefits and protections not offered to private loans, so they are generally prioritized first.

3. Estimate Your Cost of Attendance

Estimating your cost of attendance will help you understand the full financial commitment beyond just tuition. This estimate should include fees, textbooks, housing, transportation, and personal expenses, as well as potential increases in tuition over time. By creating a detailed budget upfront, you can compare programs more accurately, anticipate funding needs, and avoid surprises once you enroll.

4. Explore Financing Options

As mentioned, you may need to rely on a combination of financing options to pay for grad school. When scholarships, grants, and federal student loans aren’t enough, private loans can help you fill in the gaps.

When comparing private lenders, be sure to review the loan terms closely — including factors like the interest rate, whether the loan is fixed or variable, and any other fees. Review a lender’s customer service reputation and any other benefits they may offer, too.

The Takeaway

Grad school is a big investment in your education, but the good news is there are grants and scholarships that you won’t have to pay back. Some employers may also offer tuition reimbursement benefits, or you could find work as a Resident Advisor to supplement your tuition costs. If you need more funding to finance grad school, there are federal and private student loans.

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

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

Does FAFSA give money for grad school?

FAFSA provides access to federal financial aid for graduate school, including Direct Unsubsidized Loans and Grad PLUS Loans (through July 1, 2026). Graduate students may not qualify for federal grants but can explore assistantships, scholarships, and work-study opportunities through FAFSA to help cover their educational expenses.

Does Pell Grant cover a master’s degree?

No, the Pell Grant does not cover master’s degree programs. It is a federal grant specifically designed for undergraduate students with financial need. Graduate students must explore other funding options like scholarships, assistantships, and federal loans to finance their education.

Is it worth paying for grad school?

Paying for grad school can be worth it if the degree significantly boosts your career prospects, earning potential, or personal goals. Consider the return on investment, including salary increases and opportunities. Research funding options and weigh potential debt against long-term benefits to determine if grad school aligns with your financial future.

What are the best student loans for graduate school?

The best student loans for graduate school often start with federal options, like Direct Unsubsidized Loans, because they offer fixed rates, borrower protections, and forgiveness eligibility. Private student loans can be a good alternative for borrowers with strong credit who may qualify for lower interest rates and flexible terms.

Can I get scholarships for graduate school?

Yes, you can get scholarships for graduate school. Many universities, private organizations, professional associations, and foundations offer merit-based, need-based, and field-specific awards. You can apply before or during your program, and using scholarship databases or your school’s financial aid office can help you find opportunities that match your background and goals.

---

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.

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.

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

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.

SOISL-Q425-047

Read more

Credit card debt is a national issue in the United States. In fact, according to the Federal Reserve Bank Of New York, Americans’ total credit card balance was $1.21 trillion as of early 2025 — a new record, but not in a good way.

If you’re one of the many people struggling with credit card debt, you know that getting out from under it isn’t easy. The good news, however, is that you do have options. What follows are some smart, simple credit card debt elimination plans that can help you make a dent in your debt — without giving up everything in your life that brings you joy.

How Do You Determine Debt Level?

First things first: In order to pay off debt, it can be helpful to know actual numbers. One way to help get concrete numbers is to gather monthly credit card statements and start to add up total debts. While sitting down and adding up those numbers might seem scary, getting all the information can be a great first step to tackling credit card debt once and for all.

When adding up the amount of debt owed, it might also be helpful to take interest into account — thanks to high interest rates, some debts may actually now be higher than the initial amount owed, even after making payments. A credit card interest calculator can help determine the cost of debt once interest is factored in.

💡 Quick Tip: Credit card interest rates average 20%-25%, versus 12% for a personal loan. And with loan repayment terms of 2 to 7 years, you’ll pay down your debt faster. With a SoFi personal loan for credit card debt, who needs credit card rate caps?

Accounting for Living Expenses

We all know that credit card payments aren’t the only expense in life, which means part of tackling credit card debt may require assessing the other expenses life brings.

To understand exactly where your money is going each month, you may want to take stock of your current income and expenses. This simply involves going through your last three or so months of bank and credit card statements, adding up what is coming in each month on average (income) as well as what is going out each month on average.

You may also want to break down your spending into categories, then divide those categories into two buckets — essential expenses and nonessential expenses. To free up funds for debt repayment, you may need to cut back on some nonessential spending, such as dining out, streaming services, and clothing.

Recommended: Budgeting for Basic Living Expenses

Creating a Budget

After taking stock of financials like your monthly expenses, hunkering down and making a budget is the next logical step. Making a budget doesn’t have to be highly restrictive or complicated. The idea behind budgeting is simply that, rather than spend money willy-nilly as expenses come up, you make sure your spending actually lines up with your priorities.

There are many different types of budgets but one simple approach you might consider is the 50-30-20 rule, which recommends putting 50% of your money toward needs (including minimum debt payments), 30% toward wants, and 20% toward savings and paying more than the minimum on debt payments.

Establishing a Plan To Tackle Debt

Once you have an idea of how much you can spend beyond the minimum on credit card repayment, you’ll want to come up with a strategy to pay off your debt. There is no one-size-fits-all plan for credit card debt elimination, so it is important to consider what type of payoff plan will work best for your specific circumstances.

One popular debt elimination plan is called the snowball method. It’s called this because much like building a snowball, you start with your smallest debt, and then roll on to the next highest debt, and so on.

So for example, if a borrower has three separate credit cards with balances of $1,000, $5,000, and $10,000, the snowball method would call for paying off the card with the $1,000 balance first by putting extra money towards that debt while paying on only the minimum balance on the cards with $5,000 and $10,000 balances.

Once the $1,000 debt is paid off, the borrower would then use the newly freed up money from the $1,000 debt payment to start making higher payments on the $5,000 debt and so on. This method is popular because paying off a small debt can help you gather momentum to keep paying off larger debts.

Another popular pay-off plan is the avalanche method. This involves paying off the balance of the credit card with the higher interest rate first. In this scenario, a borrower who has three separate credit cards with interest rates of 17%, 20%, and 22% would focus on paying down the credit card with the 22% interest rate first.

Why focus on the credit card with the highest interest rate? Cards with higher interest rates generally cost you the most over time. Thus, paying off the card with the highest interest rate first could help you save money instead of allowing it to accrue more interest while you pay off other credit cards.

Recommended: What Is the 10 Percent Credit Card Interest Rate Cap Act?

Considering Consolidation

If the snowball or avalanche method doesn’t seem right for you, you may want to consider credit card consolidation. Consolidating your credit card debt involves either transferring your debt to a new credit card with, ideally, a lower interest rate, or taking out a personal loan, ideally with a lower interest rate, to pay off existing credit card debt.

Why replace one type of debt with another type of debt? Some borrowers may qualify for a lower interest rate on a personal loan than the rate they are paying on their credit card debt, which can help you save money. Consolidation also simplifies the debt repayment process. Instead of paying multiple credit card bills each month, you only have to make one payment — on the personal loan.

A personal loan also typically comes with a fixed interest rate and established repayment term. This means that the interest rate agreed to at the start of the loan stays the same throughout the length of the loan.

And unlike the revolving debt of credit cards, personal loans are known as installment loans because you pay them back in equal installments over a predetermined loan term. This means that you won’t accrue interest for an indeterminate time, as is possible with a credit card.

Recommended: Guide to Unsecured Personal Loans

The Takeaway

Having a credit card elimination plan in place is key to getting rid of high-interest debt. To get started, you’ll want to assess where you currently stand, find ways to free up funds to put towards debt repayment, and choose a debt payoff method, such as the avalanche or snowball approach. Another option is to get a debt consolidation loan, which is a kind of personal loan.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.

FAQ

How to create a plan to pay off credit card debt?

Yes, you can create a plan to pay off credit card debt yourself. You would need to figure out how much you owe to your creditors and then begin paying off debt. While making at least the minimum payment on all accounts, focus on paying down one debt at a time. Put any extra funds towards this goal.

What is the 7-year rule for credit card debt?

The 7-year rule says that negative marks stay on your credit report for seven years or possibly longer and can negatively impact your credit score. After that period, most of these marks fall off your report.

Can I create my own debt management plan?

You can create your own debt management plan, but you will need to manage making payments on time yourself and communicating with creditors as necessary.

---

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.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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 .

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

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

SOPL-Q225-068

Read more

If a debt goes unpaid for long enough, it can eventually end up with a collection agency. That’s when the aggressive phone calls and letters usually start. Hearing from a debt collector can feel stressful, overwhelming, and even scary. However, it doesn’t have to be. Understanding how debt collection agencies work — and what your rights are — can help you navigate a difficult situation with more confidence and less panic.

Below, we break down what collection agencies actually do, how they’re different from debt buyers, what steps you should take if you’re contacted, and how this process can affect your credit.

How Does Debt Collection Work?

Debt collection is the process of pursuing payment on overdue debts. Having a “debt in collections” means the original creditor (such as a credit card company, an auto lender, or a utility) has sent the debt to a third-party person or agency to collect it.

Typically, a debt doesn’t go to collections if you miss one payment. If nonpayment goes on for a while (typically 90 to 180 days), however, the original creditor may decide to give up trying to collect from you and write the debt off as a loss. This process is known as a charge-off. At that point, they will usually do one of two things: assign the debt to a third-party debt collection agency or sell it to a debt buyer.

Once the debt is transferred or sold, the collection process intensifies. You may start receiving letters, phone calls, or emails from the debt collector. Their goal is to recover as much of the debt as possible, either in full, through a payment plan, or via a negotiated settlement.

💡 Quick Tip: Everyone’s talking about capping credit card interest rates. But it’s easy to swap high-interest debt for a lower-interest personal loan. SoFi credit card consolidation loans are so popular because they’re cheaper, safer, and more transparent.

What Is a Debt Collector?

A debt collector is any individual or company whose primary job is to recover money owed on delinquent accounts. They might be part of a collection agency, a law firm specializing in collections, or an in-house department of the original creditor.

Under the Fair Debt Collection Practices Act, debt settlement companies are required to follow strict guidelines when contacting consumers. They are prohibited from using abusive, deceptive, or unfair practices. For example, they can’t call before 8 a.m. or after 9 p.m., harass you, or misrepresent themselves.

Recommended: What Is the Difference Between Personal Loan vs Credit Card Debt?

What Do Collection Agencies Do?

Collection agencies work on behalf of creditors to recover unpaid debts. Generally the way they make money is by receiving a percentage — usually between 25% and 50% — of the amount they recover. Commissions tend to be on the higher end of that range for older debts, since they are more difficult to collect.

Collection agencies can — and do — use a variety of tactics to recover funds, including:

•  Calling you at home or work

•  Sending letters, text, or emails

•  Contacting you through social media

•  Showing up at your front door

•  Contacting your friends and family to confirm your contact information (they can’t do this more than once, however, or reveal why they need the information)

•  Take you to court to recover a past-due debt

When dealing with collections, it’s important to keep in mind that there is a statute of limitations on debt. Collectors generally have between three to six years to file a lawsuit over old debts (the timeline varies by where you live and type of debt). The clock starts when your debt was first recorded delinquent. After the statute of limitations ends, a collection agency cannot legally sue you for the debt. They can, however, still hound you for the money.

How Is This Different from a Debt Buyer?

A debt buyer doesn’t work for the creditor like a debt collection agency does. They buy debts that have been charged off by creditors, sometimes buying a collection of old debts from a single creditor. How much these collectors pay for debt varies but it can be as little as a few cents on the dollar.

Because debt collectors own the debt, they generally have more freedom to negotiate than collection agencies that are merely collecting on someone else’s behalf. Also because they often pay so little for debt, any recovery can represent a profit.

Like debt collection agencies, debt buyers sometimes use aggressive tactics to collect a debt. However, they are subject to the same state and federal laws designed to protect borrowers from harassment.

Recommended: Credit Card Debt Collection: What Is It and How Does It Work?

How to Deal With a Debt in Collections

Finding out that a debt is in collections can be alarming. However, taking deliberate, informed steps can help protect your finances and your rights.

Verify the Debt

Before paying anything, it’s important to always verify the debt. Debt collectors are required by law to send you a debt validation notice within five days of contacting you. This notice should include:

•  The debt collector’s name and address

•  The name of the creditor

•  The amount owed

•  What to do if you don’t think it’s your debt

•  Your debt collection rights

If you’re unsure about the validity of the debt or the amount, send a written request for verification within 30 days. This forces the agency to provide documentation proving the debt is legitimate. If the debt is not valid, you can dispute it with the collector.

Negotiate a Payment Plan or Settlement

If the debt is legitimate, consider negotiating. Many collectors are willing to accept a lump-sum settlement for less than the full balance, especially if they purchased the debt cheaply. Alternatively, you might be able to arrange a payment plan that fits your budget.

When negotiating, be sure to consider your financial situation and avoid agreeing to any terms you can’t realistically meet. Once you sign off on a payment plan or make a payment on old debt, it restarts the clock on the statute of limitations.

Get Agreements in Writing

Before sending any money to a collection agency, make sure you have a written agreement that outlines the terms. This document should specify the amount to be paid, the payment schedule, and whether the agency will report the account as “paid in full” or “settled” to credit bureaus.

Getting agreements in writing protects you from future disputes and ensures you have proof of compliance.

How Does a Debt in Collections Affect Your Credit?

Missed payments on a debt already negatively impact your credit profile. When a debt goes into collections, the situation typically worsens.

When the original creditor decides to stop trying to collect on your debt and closes your account, the charge-off goes on your credit report. Once the debt goes to collections and the debt collector sends you a notice, the collector will create a new collection account, which also lands on your credit report.

Both the charge-off and the collection account are negative entries, and can cause an immediate drop in your credit scores of 50 to 100 points, possibly more.

While paying the debt collector will not remove the collection account from your credit report, it’s generally a good idea to do so. For one reason, some newer credit scoring models ignore collection accounts with a zero balance. Potential lenders also tend to view paid-off collection accounts more favorably when they check your credit report as part of a credit application. On top of that, you’ll no longer be harassed by the debt collection company.

Alternatives to Debt Collection Agencies

You can avoid having debt land in collections by taking steps to manage and pay down existing debt. Here are some strategies to consider.

Consumer Credit Counseling Services

Nonprofit credit counseling agencies offer free or low-cost services to help you gain better control of your finances. You can often get counseling, budgeting advice, and credit education from a certified counselor free of charge.

For an added fee, a counselor can also set up a debt management plan. This means they will negotiate with creditors on your behalf to lower your interest rates and fees and establish a payment plan that works for you. They then consolidate your payments into one monthly amount. You make a single payment to the counseling agency, which distributes the funds to your creditors.

Debt Settlement

If you’re more than 90 days past due on a debt and suffering financial hardship, you might consider debt settlement, also known as debt relief. This is a strategy where you negotiate with your creditors to lower your debt in return for one lump sum payment. You can try this yourself or hire a debt settlement company, though the latter often charges high fees and may not guarantee success.

Just keep in mind that settling a debt can negatively affect your credit file, since settled accounts stay on your credit report for up to seven years. However, for those overwhelmed by debt, it may be preferable to ongoing collections or bankruptcy.

Debt Consolidation

Debt consolidation involves combining multiple debts — typically high-interest debts like credit card balances — into a single loan or credit account. The main goal with this debt payoff strategy is to simplify repayment and potentially lower the interest rate or monthly payments. Some common ways to consolidate debt include:

•   Debt consolidation loans: These are essentially personal loans that are used to pay off other debts and rates tend to be lower than credit cards.

•   Balance transfer credit cards: These are credit cards that let you move balances from others cards; some offer a 0% introductory rate.

•   Home equity loans or lines of credit: This involves borrowing against your home equity to pay off debts.

Before you consolidate debt, it’s important to look closely at rates and any added fees to make sure the move will be cost effective.

💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. One question can save you many dollars.

Bankruptcy as a Last Resort

Personal bankruptcy is a legal process designed to provide relief for people facing severe financial difficulties who are unable to repay their debts. There are two main types for individuals:

•   Chapter 7: This allows you to discharge most types of unsecured debt, such as credit card balances and medical bills, but you must first liquidate non-exempt assets to repay as much of the debt as possible.

•   Chapter 13: This allows you to restructure your debt under a new repayment plan that usually spans three to five years.

Keep in mind that bankruptcy has serious long-term credit consequences. It stays on your credit report for seven to 10 years (seven for Chapter 13 and 10 for Chapter 7), making future borrowing more difficult.

The Takeaway

If you’ve gotten a phone call or letter from a debt collector, it’s important to understand how debt collection agencies work and how to handle debt in collections. Ignoring a collector won’t make the debt go away. Instead, it’s better to gather as much information as possible to make informed decisions.

If you’re struggling with multiple high-interest debts, keep in mind that there are options available to help regain control of your finances.

Credit cards have an average APR of 20%–25%, and your balance can sit for years with almost no principal reduction. Personal loan interest rates average 12%, with a guaranteed payoff date in 2 to 7 years. If you’re carrying a balance of $5,000 or more on a high-interest credit card, consider a SoFi Personal Loan instead. See your rate in minutes.

SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.

FAQ

What rights do you have when dealing with a collection agency?

When dealing with a collection agency, you have rights under the Fair Debt Collection Practices Act. Collectors must treat you fairly and cannot harass, threaten, or lie to you. They must identify themselves, provide proof of the debt if requested, and cannot contact you at inconvenient times (such as before 8 a.m. or after 9 p.m.). You also have the right to request all communication in writing and to dispute the debt within 30 days of first contact.

Can a debt collector sue you or garnish wages?

Yes, a debt collector can sue you for unpaid debt. If they win the lawsuit, they may obtain a court judgment allowing wage garnishment. However, collectors must notify you and give you a chance to respond. State and federal laws also limit how much a creditor can garnish from your wages. Always respond to legal notices promptly, and consider speaking with an attorney or credit counselor if you’re being sued over a debt.

How do you remove a collection from your credit report?

To remove a collection from your credit report, start by checking if it’s accurate. If it’s incorrect or too old (over seven years), you can dispute it with the credit bureau. For valid collections you’ve paid, you might request a “goodwill deletion” after you’ve paid it. This involves calling or writing to the collection agency and asking to have the account deleted as a gesture of goodwill. They don’t have to comply, but they might.

Does paying off collections improve your credit score?

It might. Some credit scoring models consider accounts in collections, even if they are paid. However, newer FICO and VantageScore models ignore paid collections, which means paying them off can be beneficial. Regardless, settling or paying off collections looks better to lenders and can help you qualify for credit in the future. It also prevents further action, like lawsuits. Always ask for a written confirmation of payment or settlement.

What’s the difference between a debt collector and a debt buyer?

A debt collector is a company hired by a creditor to collect money on their behalf. They don’t own the debt but earn a fee or commission for collecting payment. A debt buyer, on the other hand, purchases delinquent debts from original creditors, often for pennies on the dollar, and then owns the debt outright. Your rights remain the same under both.

---

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.

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 .

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.

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

SOPL-Q325-008

Read more

College comes with a lot of expenses. On top of tuition, fees, books, and housing, you might also want to occasionally go out and have fun. Maybe you want to go shopping, see a movie, or meet friends for lunch or dinner. That’s not always easy on a student budget. Fortunately, there are widely available deals and discounts designed just for college students. Here’s where you can find them.

Major Retailers

1. Amazon

Amazon Prime for Young Adults gives college students a six-month free trial, followed by a discounted Prime subscription ($7.49/month). You also get access to student-exclusive offers, including free Grubhub+ and 5% cash back on a wide variety of purchases.

2. Sam’s Club

Sam’s Club offers qualified college students 60% off a Club membership or $50 off a Plus membership (which comes with free curbside pickup and free delivery on orders of $50-plus). Students need to apply online to qualify.

💡 Quick Tip: You’ll make no payments on some private student loans for six months after graduation.

3. Target

Target Circle’s College Student Appreciation program offers exclusive perks and discounts to students, which could come in handy when you’re shopping for your dorm room. To access deals, including 50% off Circle 360, you need to verify your student status (by uploading a student ID, class schedule, or tuition receipt) and join Target Circle for free.

4. Costco

A Costco membership can also help make college more affordable. College students who join Costco as a new Gold Star Member through UNiDAYS (a site that verifies student status and offers exclusive student deals) can get a $40 Digital Costco Shop Card.

Technology

5. Apple

Keep this in mind when you’re preparing for college: Apple offers special pricing for current and recently accepted college students (along with their parents). For example, you can get a 13” Macbook Air starting at $899 or an iPad air from $549.

6. Microsoft

Students (as well as parents and teachers) can save up to 10% off eligible computers and accessories with Microsoft’s student discount.

7. Dell

Dell offers 10% off when you register for Dell Rewards and verify your student status.

8. Lenovo

College students get an extra 5% off their tech purchases at Lenovo. Incoming students can also access the deal by providing a letter of acceptance. You simply need to verify your student status through ID.me during checkout.

9. Adobe

Adobe allows students to get Creative Cloud Pro for $24.99/month for the first year and $39.99/month after that (it’s normally $66.99/month). To get the deal, you need to provide a school-issued email address during purchase so you can be instantly verified.

Clothes

10. Aeropostale

Students can benefit from an extra 15% off at Aeropostale. To take advantage of the deal, you’ll simply need to register and verify your student status with UNiDAYS.

11. J.Crew

J.Crew gives students with a valid student ID 15% off purchases both in store and online. The discount can be used up to four times a month.

12. Hanes

Need some basics, like tees or undergarments? Hanes offers students 10% off online purchases. To score your discount, you need to verify your student status through ID.me and get a promo code.

13. The North Face

The North Face gives students a 10% discount when shopping in store or online. To get the discount in person, simply show your ID at the register. For online purchases, you’ll need to verify your student status on the site.

14. Tommy Hilfiger

Tommy Hilfiger offers students 15% off online or in-store. First, you have to create or log in to your ID.me account.

15. Levi’s

Levi’s offers students 15% off online purchases after you verify your student status on the site.

16. Club Monaco

Students who are Club Monaco fans can get 15% off both online and in-store through Student Beans, a money-saving website and app for college students.

17. Docker’s

Docker’s offers students a generous 25% off all purchases made online. You simply need to verify your student status through the site.

18. H&M

H&M gives students 10% off online orders through UniDAYS.

19. Champion

Champion offers college students 15% off full-price items and 5% off sale items through UniDAYS when shopping online.

Recommended: Guide to Saving Money in College

Restaurants

20. Burger King

You can typically get Burger King deals through Student Beans, such as free any size fries, when you order online and pick up in store.

21. Chick-fil-A

Student discounts vary by location, but many Chick-fil-As offer students deals, such as a free drink with any purchase.

22. Dunkin’

Dunkin’ offers a 10% off student discount at participating locations. To claim the deal, simply show your student ID to your cashier.

23. Arby’s

You can save 10% on your Arby’s meal when you show your student ID at participating locations.

24. Buffalo Wild Wings

Want to catch the game and eat some wings with friends? Students can score 10% off at many Buffalo Wild Wings locations.

25. Waffle House

Looking for a late-night meal? Students can enjoy a 10% discount at participating Waffle Houses.

26. IHOP

If you don’t have a Waffle House nearby, many IHOP locations also offer 10% off for students.

27. Qdoba

Qdoba offers a 10% student discount when you show a valid student ID at participating locations.

28. Taco Bell

Craving a Crunchwrap Supreme? You can get a 10% student discount at participating Taco Bells.

💡 Quick Tip: Need a private student loan to cover your school bills? Because approval for a private student loan is based on creditworthiness, a cosigner may help a student get loan approval and a more competitive rate.

Travel & Transportation

29. Zipcar

New Zipcar University members get their first year free. The student membership allows you to reserve cars by the hour or day, and includes gas, secondary insurance, and up to 180 miles per day. (Other fees, such as a young driver fee, may apply.) 

30. Amtrak

Students between the ages of 17 and 24 can travel by Amtrak train for 15% off when booking at least one day in advance.

31. United Airlines

United Airlines offers a 5% flight discount to MileagePlus® members who are 18 to 23 years old. To get the deal, you need to book through the United app.

32. Hotels.com

Through Student Beans, you can get a 10% student discount at Hotels.com. You’ll get a discount code that you can use at checkout. Better yet, it can be applied on top of on-site promotions.

33. FlixBus

You can get 10% off Flixbus tickets with Student Beans. Simply use your FlixBus student discount code at checkout.

34. Hertz

Hertz offers up to 25% off, and up to 2.0% cash back, for students through ID.me.

35. Budget Truck Rentals

Budget Truck Rentals offers students 20% off local moves and 15% off one-way moves any day of the week. Use the discount code TRUKU.

36. Penske

Penske offers college students a 10% discount on all truck rentals and unlimited miles on one-way moving truck rentals. Simply use the discount code STUDENT at checkout. You’ll need to provide a college ID or proof of enrollment status at pickup to receive the discount.

37. Red Coach

RedCoach offers high school, college, and graduate students 10% off tickets. To get the discount, check the student option at checkout then show your student ID card to the driver along with your ticket.

Recommended: College Move-In Day Tips for Parents

Entertainment

38. AMC

Students get a lower ticket price at select AMC theaters every day. Just bring your photo student ID (and maybe some extra money for popcorn).

39. Cinemark

Student discounts at Cinemark vary by location and time of day, so check with the local box office to see what kind of deal you can snag.

40. Apple Streaming

Apple’s student music subscription is $5.99 per month for up to 48 months (normally $10.99 per month). You also get Apple TV at no extra cost.

41. Hulu

Hulu offers students its ad-supported plan for just $1.99 a month (an 83% discount). If you’re interested in a bundle, check out the deal below.

42. Spotify Bundle

As a student, you can get Spotify Premium Student with Hulu (with ads) free for one month and $5.99/month after that. You can cancel anytime.

43. The Washington Post

The Washington Post has a digital all-access student subscription plan for just $1 every four weeks for one year, then $7 every four weeks after that.

44. Paramount+

As a student, you can get 50% off any Paramount+ Plan. You just need to verify your student status on their website.

45. YouTube Premium

YouTube Premium (which allows you to enjoy YouTube and YouTube Music ad⁠-⁠free) is available to students at a discounted rate of $7.99 a month, after a free one-month trial. You can cancel at any time.

46. The Economist

The Economist offers students an Espresso subscription (which offers quick daily updates on important issues) for free and an annual digital subscription for $62.25, a steep 75% off.

💡 Quick Tip: Even if you don’t think you qualify for financial aid, you should fill out the FAFSA form. Many schools require it for merit-based scholarships, too.

Home Goods

47. Ghost Bed

As a student or teacher, you can get 27% off your entire order at GhostBed. To take advantage of the deal, just click on the ID.me button and then “Student ID” to sign up and get verified.

48. Mattress Firm

After verifying your student status through ID.me, Mattress Firm will give you a single-use coupon code that can be used in-store or online. You get an extra 20% off select purchases or an extra 10% off Purple with the code.

49. Purple

You can also get a 10% discount directly from Purple. Once you verify your eligibility, you’ll be emailed a coupon for 10% off your order.

50. Helix

After verifying your student status at Helix, you’ll receive a one-time 25% discount code to apply during checkout.

51. Puffy

Puffy offers a generous student and educator discount — $1,425 off any Puffy mattress.

52. Brooklyn Bedding

Brooklyn Bedding offers a 5% discount and free shipping to students. You simply need to verify your eligibility through ID.me.

The Takeaway

Student discounts can help you save on everything from food and clothing to electronics and entertainment. Even with these deals, however, you may still need help covering your college expenses.

If you completed the FAFSA and didn’t get enough financial aid to pay all of your school bills, keep in mind that you may be able to get a private student loan to help fill in any gaps. Unlike federal student loans, which have strict application deadlines, you can apply for private student loans at any time — including mid-semester.

Private student loans also allow you to borrow up to 100% of the school-certified cost of attendance. Just keep in mind that private student loans don’t offer the borrower protections — like income-driven repayment plans and deferment or forbearance — 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.

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

How many times can you use a student discount?

It depends on the company. Some retailers and restaurants allow you to use your student discount once per visit or purchase; others limit you to a certain number of times per month or year.

How much is the average student discount?

Student deals typically give you 10% to 15% off, though you may find some discounts for 50% off or even higher. In some cases, a student discount may come with restrictions, such as only being able to use it on full-price merchandise. So it’s always a good idea to compare your student discount to any other available deals and sales.

Do student discounts only apply to college students?

Typically, student discounts only apply to college and graduate students. In some cases, high school students can get deals if they have an email that ends in .edu. The colleges and programs that retailers recognize can vary, but you can expect most major colleges and universities to be eligible.

---

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

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

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

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

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

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

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.

SOISL-Q425-020

Read more

A Master Promissory Note (MPN) is a legally binding document that outlines your promise to repay borrowed funds, along with the terms and conditions that govern your student loans.

Understanding how an MPN works can help you avoid surprises and make more informed borrowing decisions. From how long the agreement remains valid to what responsibilities you’re agreeing to, knowing the details of an MPN ensures you’re fully prepared before accepting student loan funds.

What Is a Master Promissory Note?

A Master Promissory Note (MPN) is a legal document that contains the terms and conditions for federal student loans. When you sign an MPN, you are promising to repay your loan(s) and any accrued interest and fees to the U.S. Education Department.

Borrowers with federal student loans can typically sign just one MPN that covers multiple years of borrowing, rather than signing a new MPN each year. This means you are accepting the amount of each year’s new loans under the terms of the existing MPN.

There are two types of MPNs:

•   Direct Subsidized/Unsubsidized Loan MPN: A student borrower must complete and sign this MPN before a school can make the first disbursement of a Direct Subsidized or Direct Unsubsidized Loan.

•   Direct PLUS Loan MPN: A graduate/professional student borrower or parent borrower must complete and sign this MPN before a school can make the first disbursement of a Direct PLUS Loan. Keep in mind that as of July 1, 2026, new Grad PLUS Loans will no longer be available. Those that received one before June 30, 2026 may continue borrowing under current terms through the 2028-29 academic year.

Key Information to Review in Your MPN

A promissory note will provide you with a wealth of information about your student loan (or loans). Here’s a closer look at what you’ll find in a Master Promissory Note.

Repayment Options

Federal loans come with several options to help you manage your debt post-graduation, such as income-driven repayment plans and forgiveness programs. These options are all outlined in your MPN. You’ll want to take time to review them, especially as you enter the repayment phase of your borrowing journey.

If you have private student loans, your promissory note will also outline your repayment options and any borrower benefits you have access to (such as reduced-payment plans or forbearance). Before signing the contract, you’ll want to review the repayment details and make sure everything you have discussed with your lender is reflected in the promissory note.

Student loan refinancing is an alternative repayment strategy that allows borrowers to replace one or more existing student loans with a new loan from a private lender, ideally at a lower interest rate or with different terms. While refinancing can simplify repayment and reduce monthly payments or total interest costs, it also converts federal loans into private debt, meaning borrowers will give up any federal benefits. Refinancing replaces your original MPN with a new agreement.

Deferment Options

Student loan deferment lets you postpone payments on your student loans for a certain period of time. You won’t have to pay your student loan bills during a deferment, but interest might accrue during this time, depending on your loan type.

Federal loans offer deferment during a number of different situations, including being enrolled in school at least half-time (and for six months after you graduate), being unemployed, economic hardship, and active military service. Under Trump’s One Big Beautiful Bill, however, loans made after July 1, 2027 will no longer be eligible for deferments based on unemployment or economic hardship.

Like federal student loans, private student loans are typically placed into deferment while you’re enrolled at least half-time in school, and you may also have a six-month grace period after you graduate before you need to start making payments. Interest will generally accrue on private student loans during a period of deferment. Private loans may also offer other deferment options, but every lender is different, so you’ll need to check your promissory note.

Recommended: Do Student Loans Build Credit?

Interest Rate: Fixed vs Variable

Interest rates on student loans can be fixed or variable. With a fixed-rate loan, your interest rate will remain the same for the life of the loan. With a variable-rate loan, the interest rate on the loan fluctuates based on a market benchmark or index rate.

Federal student loans have fixed interest rates, which are set each year by federal law. To view current interest rates for federal student loans as well as previous years’ interest rates, visit the U.S. Education Department’s website.

Private student loans may give you a choice of fixed or variable rates. Your rate and whether it’s fixed or variable will be listed in your loan’s promissory note. If the rate is variable, it may start off lower than a fixed-rate option, but could rise over time leading to higher payments.

Student Loan Fees

Your promissory note will also detail any additional costs, such as any student loan fees. For example, federal student loans and some private student loans charge an origination fee, which is a percentage of your loan amount. This fee is typically taken from the loan before it is dispersed, which means you receive less than the full loan amount you accepted. Since the origination fee is included in the principal, you will also pay interest on it (even though you did not receive those funds).

Other student loan fees you may see listed on a promissory note include application fees, late payment fees, and collection agency fees (in the event you default on your loan and it goes to collections).

Borrower Rights and Responsibilities

When you sign a Master Promissory Note, you have the right to clear disclosure of your loan terms, including interest rates, fees, repayment options, and conditions for deferment or forbearance. You’re also entitled to information about loan servicing, access to income-driven repayment plans (for federal loans), and protections such as grace periods and cancellation or discharge options if you qualify.

Your responsibilities as a borrower include repaying the loan on time, keeping your contact information current, and using the funds for approved educational expenses.

Recommended: What Happens to Student Loans When You Drop Out?

When Is the Promissory Note Signed?

In general, borrowers will need to sign the promissory note for their loans before receiving any funds. Students who are borrowing federal student loans are able to sign their master promissory note online by logging into their federal student loan account. Typically, you’ll need to sign only one MPN for multiple subsidized and unsubsidized loans, and it will be good for up to 10 years of continuous education.

A private student loan lender may allow you to sign a promissory note online, or you may need to print it out, sign, and send it via regular mail.

What if a Promissory Note Is Not Signed?

For federal loans, a signed promissory note is required before the loan is disbursed. So, failing to sign the promissory note could mean you won’t receive your funds, or at least won’t receive them until the promissory note is signed.

A signed promissory note is also generally required for disbursement of a private student loan, though each lender will have their own requirements.

Do You Need a New Promissory Note Every Year?

Private lenders typically require students to sign promissory notes for each loan taken out, which means you may sign a new promissory note every year. Generally, federal student loan borrowers can sign a one-time Master Promissory Note that is good for up to 10 years of continuous education.

Recommended: How Do Student Loans Affect Your Credit Score?

Do Your Parents Need to Sign?

If you are borrowing a private student loan and a parent is acting as your student loan cosigner, they will likely need to sign the promissory note.

If you’re taking out a federal student loan for your undergraduate education, you are the only borrower and your parents do not need to sign your MPN.

If a parent is borrowing a Parent PLUS Loan to help pay for your college education, however, they will need to sign an MPN. As with a student MPN, a parent needs to sign only a single MPN once every 10 years. The government can provide multiple loans based on one parent MPN.

How Long Does the Master Promissory Note Process Take?

According to the Education Department, most people complete their Master Promissory Note online in less than 30 minutes. When you log into your account to fill out your MPN, keep in mind that the entire process must be completed in a single session, since you cannot save your progress.

Recommended: Financial Aid vs Student Loans

The Takeaway

A Master Promissory Note is a binding agreement that defines your responsibility as a student loan borrower. By understanding what the MPN covers and how long it remains valid, you can make informed decisions, borrow with confidence, and avoid unexpected issues as you manage your student 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.

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

FAQ

Do you have to do a master promissory note every year?

No, you do not have to sign a Master Promissory Note (MPN) every year for federal student loans. Once signed, it’s typically valid for up to 10 years and allows you to borrow multiple loans under that same MPN. MPNs are also not school-specific so you can typically use the same MPN even if you transfer colleges.

How do you get your student promissory note?

For federal loans, you can complete your Master Promissory Note on the Federal Student Aid website. It takes about 30 minutes to fill out and two to three business days to process. You will then be able to access (and download) your student promissory note by logging into your account. For private loans, you may be able to sign your promissory note online or you may need to print it out, sign it, and mail it to the lender. You’ll receive a copy of your promissory note along with your other loan materials.

How long does it take for a master promissory note to process?

Once you submit the Master Promissory Note (MPN) online, it usually takes about one to two business days for processing. This time frame allows for the U.S. Education Department to verify your information and communicate with your school regarding the loan. After your MPN is processed, your school will credit the loan funds to your account, and you can check your loan status on the Federal Student Aid website.

How do I get a copy of the promissory note for my student loan?

You can get a copy of your signed Master Promissory Note (MPN) for federal student loans by logging into your account on StudentAid.gov using your FSA ID. Navigate to your loan documents to find the MPN. You can then view, download, or print a copy for your personal records.

With a private student loan, your lender will typically provide you with a copy of the promissory note, along with several other documents, when they finalize the loan. If you can’t locate a copy, you can reach out to your lender and ask them to send you one.

Do I have to pay my student loans if I drop out of college?

Yes, even if you drop out of college, you’re still required to repay your student loans. Once you’re no longer enrolled in school at least half-time, student loans typically enter a grace period, which is often six months. After that, repayment begins. Dropping out does not eliminate your obligation to repay the debt, and failure to make payments could lead to loan default.

Will a student loan affect my credit score?

Yes, student loans directly affect your credit score. Once you take out a student loan, it becomes part of your credit report and, like other types of loans, can impact your payment history, length of your credit history, and credit mix. Making timely payments can help you build a positive credit history. However, missed or late payments can negatively affect your credit and score.

---

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.

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.

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

SOSLR-Q126-015

Read more