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If you’re on the standard 10-year repayment plan and your federal student loan payments are high relative to your income, a student loan income-based repayment plan may be an option for you.

New changes to the plans, including a new plan called SAVE that was introduced by the Biden Administration, will reduce many borrowers’ payments. Read on to learn whether income-based student loan repayment might be right for your situation.

What Is Income-Based Student Loan Repayment?

Income-based student loan repayment plans were conceived to ease the financial hardship of government student loan borrowers and help them avoid default when struggling to pay off student loans.

Those who enroll in the plans tend to have large loan balances and/or low earnings. Graduate students, who usually have bigger loan balances than undergrads, are more likely to enroll in a plan.

The idea is straightforward: Pay a percentage of your monthly income above a certain threshold for 20 or 25 years and you are eligible to get any remaining balance forgiven. (The SAVE plan would forgive balances after 10 years for borrowers with original loans of $12,000 or less.)

By the end of 2022, 45% of Direct Loan borrowers were enrolled in an income-based repayment plan, according to Federal Student Aid, an office of the U.S. Department of Education. But borrowers have often failed to recertify their income each year, as required, and are returned to the standard 10-year plan.


💡 Quick Tip: Often, the main goal of refinancing is to lower the interest rate on your student loans — federal and/or private — by taking out one loan with a new rate to replace your existing loans. Refinancing makes sense if you qualify for a lower rate and you don’t plan to use federal repayment programs or protections.

2 Income-Driven Student Loan Repayment Plans

While people often use the term “income-based repayment” generically, the Department of Education calls them income-driven repayment (IDR) plans. There are four, but two plans recently stopped accepting new borrowers. We’ll focus on the two that are still open to you:

•   Income-Based Repayment (IBR)

•   Saving on a Valuable Education (SAVE), which replaces the previous Revised Pay As You Earn (REPAYE) plan

Your payment amount is a percentage of your discretionary income, defined for IBR as the difference between your annual income and 150% of the poverty guideline for your family size.

For the SAVE plan, discretionary income is the difference between your annual income and 225% of the poverty line for your family size. This new plan could substantially reduce borrowers’ monthly payment amounts compared to other IDR plans. For IBR and SAVE, the payment is 5% to 10% of your discretionary income.

Got it? But wait; there’s more. Note the number of years in which consistent, on-time payments must be made and after which a balance may be forgiven, as well as who qualifies.

How Income-Based Student Loan Repayment Works

In general, borrowers qualify for lower monthly loan payments if their total student loan debt at graduation exceeds their annual income.

To figure out if you qualify for a plan, you must apply at StudentAid.gov and submit information to have your income certified. Your monthly payment will then be calculated. If you qualify, you’ll make your monthly payments to your loan servicer under your new income-based repayment plan.

You’ll generally have to recertify your income and family size every year. Your calculated payment may change as your income or family size changes.


💡 Quick Tip: When rates are low, refinancing student loans could make a lot of sense. How much could you save? Find out using our student loan refi calculator.

What Might My Student Loan Repayment Plan Look Like?

Here’s an example:

Let’s say you are single and your family size is one. You live in one of the 48 contiguous states or the District of Columbia. Your adjusted gross income is $40,000 and you have $45,000 in eligible federal student loan debt.

The 2023 government poverty guideline amount for a family of one in the 48 contiguous states and the District of Columbia is $14,580, and 150% of that is $21,870. The difference between $40,000 and $20,385 is $18,130. That is your discretionary income.

If you’re repaying under the IBR plan, 10% of your discretionary income is about $1,813. Dividing that amount by 12 results in a monthly payment of $151.08.

Under the SAVE Plan, however, your discretionary income is the difference between your gross income and 225% of the poverty line, which comes out to $32,805. The difference between $40,000 and $32,805 is $7,195, which is your discretionary income; 5% of your discretionary income is about $360. That amount divided by 12 results in a monthly payment of $30.

The Federal Student Aid office recommends using its loan simulator to compare estimated monthly payment amounts for both repayment plans.

Which Loans Are Eligible for Income-Based Repayment Plans?

Most federal student loans are eligible for at least one of the plans.

Federal Student Aid lays out the long list of eligible loans, ineligible loans, and eligible if consolidated loans under each plan.

Of course, private student loans are not eligible for any federal income-driven repayment plan, though some private loan lenders will negotiate new payment schedules if needed.

Pros and Cons of Income-Based Student Loan Repayment

Pros

•   Borrowers gain more affordable student loan payments.

•   Any remaining student loan balance is forgiven after 20 or 25 years of repayment; and, as of July 2024, after 10 years of repayment for those in the SAVE plan with original loan balances of $12,000 or less.

•   An economic hardship deferment period counts toward the 20 or 25 years.

•   The plans provide forgiveness of any balance after 10 years for borrowers who meet all the qualifications of the Public Service Loan Forgiveness (PSLF) program.

•   The government pays all or part of the accrued interest on some loans in some of the income-driven plans.

•   Low-income borrowers may qualify for payments of zero dollars, and payments of zero still count toward loan forgiveness.

•   New federal regulations will curtail instances of interest capitalization and suspend excess interest accrual when monthly payments do not cover all accruing interest.

Cons

•   Stretching payments over a longer period means paying more interest over time.

•   Forgiven amounts of student loans are free from federal taxation through 2025, but usually the IRS treats forgiven balances as taxable income (except for the PSLF program).

•   Borrowers in most income-based repayment plans need to recertify income and family size every year.

•   On some plans, if a borrower gets married and files taxes jointly, the combined income could increase loan payments. (This is not the case with the SAVE Plan.)

•   The system can be confusing to navigate.

Student Loan Refinancing Tips From SoFi

Income-driven repayment plans were put in place to tame the monthly payments on federal student loans for struggling borrowers. For instance, the new SAVE Plan offers the lowest monthly payments of all IDR plans. (Those who have private student loans don’t qualify for IDR plans.)

If your income is stable and your credit is good, and you don’t need federal programs like income-driven repayment plans or deferment, refinancing your student loans is an option. (To be clear, refinancing federal student loans makes them ineligible for federal protections and programs like income-driven repayment and loan forgiveness for public service.) With refinancing, the goal is to pay off your existing loans with one new private student loan that ideally has a lower interest rate.

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

FAQ

Is income-based repayment a good idea?

For borrowers of federal student loans with high monthly payments relative to their income, income-based repayment can be a good idea. Borrowers may want to check out the new SAVE Plan, which provides the lowest monthly payments of the income-driven repayment options.

What is the income limit for income-based student loan repayment?

There is no limit. If your loan payments under the 10-year standard repayment plan are high for your income level, you may qualify for income-based student loan repayment.

What are the advantages and disadvantages of income-based student loan repayment?

The main advantage is lowering your monthly payments, with the promise of eventual loan forgiveness if all the rules are followed. A disadvantage is that you have to wait for 10, 20, or 25 years depending on the plan you’re on and how much you owe.

How does income-based repayment differ from standard repayment?

With the standard repayment plan, your monthly payments are a fixed amount that ensures your student loans will be repaid within 10 years. Under this plan, you’ll generally save money over time because your monthly payments will be higher. With income-based repayment, your monthly loan payments are based on your income and family size. These plans are designed to make your payments more affordable. After a certain amount of time ranging from 10 to 25 years, depending on the plan, any remaining balance you owe is forgiven.

Who is eligible for income-based repayment plans?

Under the new SAVE plan, any student loan borrower with eligible student loans can participate in the plan. With the PAYE and IBR plans, in order to be eligible, your calculated monthly payments, based on your income and family size, must be less than what you would pay under the standard repayment plan. Under the ICR plan, any borrower with eligible student loans may qualify. Parent PLUS loan borrowers are also eligible for this plan.

How is the monthly payment amount calculated in income-based repayment plans?

With income-based repayment, your monthly payment is calculated using your income and family size. Your payment is based on your discretionary income, which is the difference between your gross income and an income level based on the poverty line. The income level is different depending on the plan. With the SAVE Plan, for instance, your discretionary income is the difference between your gross annual income and 225% of the poverty line for your family size.

For IBR and SAVE, your monthly payment is 5% to 10% of your discretionary income.

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.

Private student loans are often used to bridge the gap between what a student receives in federal funding and the cost of attending college. While private loans can help students meet educational financial needs, they’re generally more expensive than federal loans and don’t come with federal benefits such as income-driven repayment plans or forgiveness.

But even without federal benefits, there are ways to make private loan repayment easier. If you refinance private student loans with more favorable terms than your existing loans — for example, at a lower interest rate — you can save money over the life of the loan. Here’s what to know about refinancing private student loans to decide if this option is right for you.

Refinancing Private Student Loans

While the majority of student debt is made up of federal loans, about 8.8% is private, according to the Education Data Initiative. For students at public and not-for-profit schools, private loans can help students meet financial needs after other sources of federal aid (such as loans, grants, scholarships, or work-study programs) are exhausted. For students at for-profit schools, private loans may be the only source of funding available.

Private loans don’t come with federal student loan benefits (such as deferment, forbearance, forgiveness, or income-driven repayment plans) to make repayment easier. While some private lenders offer deferment or forbearance options, interest will typically still accrue during this period, increasing the overall balance of the loan.

When you refinance private student loans, you replace your existing loans with a new loan, ideally one with more favorable terms.

Recommended: Types of Federal Student Loans

Can I Refinance My Private Student Loans?

People often think they’re stuck with their existing loans, but you may be able to refinance private student loans to secure better terms. If you have a steady job, a good credit score, and a solid financial profile, you may qualify for a lower interest rate or better terms.

A new interest rate and loan term can mean a lower monthly payment – though you may pay more interest over the life of the loan if you refinance with an extended term. By contrast, a shorter term will likely raise your monthly payment, but you’ll pay off your loan sooner.


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

Can I Refinance My Private Student Loans With My Federal Loans?

Yes, you may be able to refinance private student loans together with federal loans with a private lender, but the federal government does not consolidate or refinance private student loans.

If you’re paying on multiple federal and private loans, refinancing can simplify your payments because it consolidates all of your student loans into one loan. However, bundling your loans together means losing access to the federal loan benefits and protections mentioned earlier.

Keep in mind some federal loans might have lower interest rates than a private lender. And if you’re taking advantage of loan forgiveness programs or income-based repayment plans that come with federal loans, it may not make sense to refinance and lose access to those options. If you’re not planning to take advantage of federal loan benefits or protections, however, a private student loan refinance can make your repayment journey easier.

How to Refinance Private Student Loans

Wondering how to refinance private student loans? If you’re interested in pursuing a private student loan refinance, here’s how to get started:

Prepare Your Financial Information

To provide a quote, most lenders will need some personal financial information, such as your total student loan debt, income, cost of housing, and an estimate of your credit score.

Check Rates With Multiple Lenders

Private lenders set their own rates and terms, so it’s important to shop around. In addition to getting a rate estimate (which involves a soft credit check that shouldn’t affect your credit score), you’ll want to ask about any other fees (such as an origination fee), if there’s a prepayment penalty, and if they have any deferment or forbearance programs.

Choose a Lender and Apply

As you review the options, consider the amount of interest you’ll pay over the life of the loan and factor in the cost of any fees. Depending on how long the term length is, for example, the lowest interest rate might not translate to the lowest amount of total interest.

When you apply, you’ll need to supply documents that back up the financial information you shared for the initial rate check. Depending on your credit and financial history, applying with a cosigner may help you secure a better interest rate. Be sure to continue to make payments on your existing loans while you wait for your new loan to be approved.


💡 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 lower rate.

Can I Get My Private Student Loans Forgiven?

There are no private student loan forgiveness programs similar to the federal loan forgiveness programs. If you have federal loans, you might qualify for forgiveness after 120 qualifying monthly payments (or 10 years) under certain circumstances, such as working in public service.

You may also qualify for federal loan forgiveness after 20 or 25 years of making timely, qualifying, income-based payments. The only way private loans might be forgiven is in the case of death or disability, and even that is on a case-by-case basis.

If your private loan payments are draining your bank account, consider calling your lender to discuss your options instead of falling behind on payments. You may be able to negotiate new terms to make it easier to pay on time. Or as mentioned, you can consider refinancing private student loans. Refinancing might allow you to find better loan rates or terms than those of your existing loans.

What Should I Consider Before Refinancing?

If you’re thinking of refinancing, odds are you’re hoping to lower your interest rate, simplify your repayment process, and save money. In order to get a low rate that will make refinancing worth it, it’s a good idea to look at your overall finances before you apply.

Lenders make offers based on a variety of factors including (but not limited to) proof of a stable job, a healthy cash flow, a good credit score, and a reliable history of paying back previous debts. If you need to, take a few months to work on improving your credit score to increase your chances of getting a better interest rate.

If you’re planning on refinancing your federal loans with your private loans, make sure you won’t miss out on federal advantages down the road. For instance, if you plan to return to school full-time, you could be eligible to defer your federal loans while you’re back in school. Once you refinance your student loans, you’re no longer able to defer payment or have access to any other federal loan benefits.

Recommended: What Is Considered a Bad Credit Score?

Refinance My Private Student Loan

If you’re wondering: Should I refinance my private student loans? It can help to look at the interest rates on your loans and your monthly payment amount. If you can refinance private student loans with better terms than your existing loans and you won’t need access to federal benefits for any federal loans, refinancing might be a good option for you.

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

FAQ

Can you refinance a student loan?

Yes, you can refinance private and federal student loans with a private lender. When you refinance, you replace your existing loans with a new loan, ideally one with more favorable terms. If you refinance federal loans, however, you will lose access to federal benefits and protections.

Can student loans be forgiven if refinanced?

No, if you refinance federal student loans, you’ll have a new private loan with new terms and no longer have access to federal benefits and protections, including forgiveness. Private lenders do not offer programs similar to the federal loan forgiveness programs.

Why would you refinance student loans?

Refinancing student loans allows you to replace your existing loans with a new loan with new terms. You may be able to save money if you refinance with a lower interest rate or if you shorten your term length to pay off your loan faster. Refinancing can also give you the opportunity to change the terms of your existing loan to remove a cosigner and simplify your repayment process by replacing multiple loans with a single loan.

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.

Student loans, like any loans, have an interest rate (and, sometimes, other loan fees). While interest rate accrual on existing federal student loans was paused from March 2020 through August 2023 due to the Covid-19 forbearance, the 2023 debt ceiling bill officially ended the payment pause, requiring interest accrual to resume on Sept. 1 and payments to resume in October 2023. And of course, any new student loans — federal or private — will have an interest rate that impacts the total cost of the loan.

So what is the average student loan rate? While it would be difficult to nail down the average rate of all active student loans held by borrowers, we know the interest rates of new federal student loans, as well as the range of rates for private student loans.

What Is The Average Student Loan Interest Rate?

The interest rate on a student loan varies based on the type of student loan. Federal student loans issued after July 1, 2006, have a fixed interest rate. The rates on newly disbursed federal student loans are determined annually by fixed formulas specified in the Higher Education Act of 1965 (HEA).

These are the federal student loan interest rates for the 2023–24 school year:

•   5.50% for Direct Subsidized or Unsubsidized loans for undergraduates

•   7.05% for Direct Unsubsidized loans for graduate and professional students

•   8.05% for Direct PLUS loans for graduate students, professional students, and parents

All three of those rates have risen from the 2022-2023 school year, and the undergraduate rate has doubled since the 2020-2021 school year.

Source: Studentaid.gov

This means that the average rate for the three main types of federal student loans is 6.87%:

Source: Studentaid.gov

Private student loan interest rates vary by lender and each has its own criteria for which rates you qualify for. Private student loans can have either fixed interest rates that remain the same over the life of the loan or variable rates that can start lower than a fixed interest rate but then go up over time, based on market changes.

Private lenders may also offer different interest rates if you have a cosigner on your student loan. The interest rates on private student loans can vary anywhere from 4% to 17%, depending on the lender, the type of loan, and on individual financial factors including the borrower’s credit history.

Recommended: Types of Federal Student Loans

How Are Interest Rates Determined?

As mentioned previously, the interest rates on federal student loans are set annually by fixed formulas specified in the HEA. The rates are tied to the financial markets — federal law sets them based on the 10-year Treasury note and a statutory add-on percentage with a maximum rate cap.

Since July 2006, all federal student loans have fixed interest rates. Although federal student loans are serviced by private companies or nonprofits selected by the federal government, these loan servicers have no say in the federal interest rate offered.

For private student loans, the lenders set their own rates, though they often take cues from federal rates. Each lender has their own algorithm and credit standards. The rates quoted for student loans vary based on each applicant’s individual situation — though generally the better a potential borrower’s financial history is, the better rate they may be able to qualify for.

To learn more about private and federal student loans check out our student loan help center. If you’re looking to reduce your interest rate, student loan refinancing may be right for you.


💡 Quick Tip: Ready to refinance your student loan? With SoFi’s no-fee loans, you could save thousands.

How Is Student Loan Interest Calculated?

After a three-year payment pause, the debt ceiling bill officially ended the Covid-19 forbearance, requiring federal student loan interest accrual to resume on Sept. 1 and payments to resume in October 2023.

Interest on federal student loans typically accrues daily. To calculate the interest as it accrues, the following formula can be used:

In other words, you will multiply your outstanding loan balance by the interest rate factor. Then, multiply that result by the days since you last made a payment.

To calculate that interest rate factor you can divide the interest rate by the number of days of the year (365). For example, let’s say you have an outstanding student loan balance of $10,000, an interest rate of 4.75%, and it’s been 30 days since your last payment. Here’s how to calculate your interest:

Many private student loans will also accrue interest on a daily basis, however, the terms will ultimately be determined by the lender. Review the lending agreement to confirm.

Recommended: When Do Student Loans Start Accruing Interest?

What to Look for in a Student Loan Interest Rate

When you take out a federal student loan, you’ll receive a fixed interest rate. This means that you’ll pay a set amount for the term of the student loan. In addition, all of the terms, conditions, and benefits are determined by the government. Federal student loans also provide some additional perks that you may not find with private lenders like income-driven repayment (IDR) plans.

The Saving on a Valuable Education (SAVE) Plan is one of the IDR options to consider if you’re a federal student loan borrower. The SAVE Plan is the most affordable repayment plan for federal student loans, according to the U.S. Department of Education. Borrowers who are single and make less than $32,800 a year won’t have to make any payments under the SAVE Plan. (If you are a family of four and make less than $67,500 annually, you also won’t have to make payments.)

Private student loans can have higher interest rates and potentially fewer perks than federal student loans. You may want to take advantage of all federal student loans you qualify for before comparing private loan options.

Average Interest Rates for Student Loans FAQ

Here are some common questions about the average interest rates of student loans:

What Is a Good Fixed Interest Rate for Student Loans?

When it comes to cost, the lower the interest rate, the better. The lower the interest rate, the less a borrower will owe over the life of the loan, which could help individuals as they work on other financial goals. If you’re taking out federal loans, the student loan interest rate is set by federal law, so you don’t have a choice for what is and isn’t a reasonable interest rate.

When it comes to private student loans, it’s wise to shop around and compare your options to find the most suitable financing solution. Since every lender offers different terms, rates, and fees, getting quotes from multiple lenders may help you select the best option for your personal needs. Keep in mind that the rate you receive on a private student loan is largely dependent on your credit score and other factors, whereas federal student loan interest rates are based on HEA formulas and not your creditworthiness.

Also keep in mind that private student loans do not have the same borrower protections as federal student loans, including IDR plans or deferment options, and should be considered only after all federal aid options have been exhausted.

Is $30K In Student Loans Bad?

If you owe $30,000 in student debt, you’re right in line with the national average. More than 40 million consumers have outstanding student debt as of 2023, and the average borrower owes about $35K, according to TransUnion®.

Is a 4.75% Interest Rate Good?

With interest rates on private student loans ranging anywhere between 4% and 17%, and the three types of federal student loan rates averaging 6.87% for the 2023-2024 school year, a 4.75% interest rate in 2023 is lower than what most students can get on a new student loan.

How Can I Reduce the Interest Rates on my Student Loans?

The interest rate on federal student loans, while fixed annually for the life of the loan, does fluctuate over time. For example, the rates for Direct Subsidized and Unsubsidized loans for undergraduates doubled from 2.75% in 2020–21 to 5.50% in 2023–24.

To adjust the rate on an existing student loan, borrowers generally have two options. They can refinance or consolidate the loans with hopes of qualifying for a lower interest rate.

Refinancing a federal loan with a private lender eliminates them from federal borrower protections such as income-driven repayment plans or Public Service Loan Forgiveness. The federal government does offer a Direct Consolidation Loan, which allows borrowers to consolidate their federal loans into a single loan. This will maintain the federal borrower protections but won’t necessarily lower the interest rate. When federal loans are consolidated into a Direct Consolidation Loan, the new interest rate is a weighted average of your original federal student loans’ rates.

Refinancing student loans with a private lender may allow qualifying borrowers to secure a lower interest rate or preferable loan terms. Note that extending the repayment term will generally result in an increased cost over the life of the loan.

To see how refinancing could work for your student loans, take a look at the student loan refinance calculator.


💡 Quick Tip: Federal parent PLUS loans might be a good candidate for refinancing to a lower rate.

The Takeaway

The average student loan interest rate varies depending on the loan type. The interest rate for federal Direct Unsubsidized and Subsidized loans is set annually by federal law and fixed for the life of the loan. The interest rate on private student loans is determined by a variety of factors including the borrower’s credit history and may range anywhere from 4% to up to 17%.

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.

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.

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.

Congratulations, you’ve graduated from high school. Now, you’ve got just a few more weeks to soak up all that home has to offer before heading off to college.

The summer before college can be a transformative time in its own right. It’s a time to reflect, wrap up loose ends, and spend quality time with the people you love at the places you love one last time before heading off on your own.

At the same time, there are a number of tasks you’ll need to complete to make sure your transition to school goes as smoothly as possible. Here’s a simple checklist that can help ensure you make the most of your last summer before college.

Getting Organized

Now is the time to clear out the old so you can bring in the new. The bedroom is a good place to start.

Clear out your closet: Use the summer to clean out your closet and dresser and get rid of any clothing you may no longer need or want for college. Start by pulling every single item out and making a giant pile on the floor, separating the clothing into piles to keep, toss, and donate. Donating gently used items to a local charity or second-hand shop will help them find a second life.

Toss old academic work: Go through notebooks, binders, and bookbags, using the same sorting method as with clothing. Cleaning out your computer and deleting any files you no longer need — perhaps moving some to cloud storage — can allow you to enter college with a clean desktop and plenty of space on your hard drive.

Start packing: To make the moving process a little smoother, try organizing your items and packing slowly over the summer instead of cramming it all into one day. Creating boxes labeled as bedding, kitchen, bathroom, academic, and miscellaneous — maybe limiting the size of that particular box, though — then adding items as you’re organizing will make moving easier when the time comes.


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

Cleaning up Your Social Media

Just like cleaning out your closet, it’s probably time to think about cleaning up your social media presence, too. You may have joined Facebook groups or liked pages that no longer reflect your interests or what you believe in.

On Twitter and Instagram, it may be a good idea to look back at your content to make sure what you’re sharing is appropriate for future employers to see. If not, you might want to consider deleting it.

Finally, think about your social media handles and your email address. If possible, it might be a good idea to use your full name or a combination of first initial and last name — something clean and simple. Potential employers will likely look at this information before hiring for summer internships or future jobs, so presenting yourself as a professional might pay off in the long run.

Recommended: College Freshman Checklist for the Upcoming School Year

Spending Quality Time With Your Family

Even though your parents may have sometimes embarrassed you through your high school years and your siblings may have annoyed you since you became siblings, you’ll probably still miss them when you head off to college. Use this time to make memories with your family so you have something fond to look back on if you’re ever homesick.

Over the summer, try creating family date nights. Play board games, cook together, go to your favorite restaurants, the movies, whatever makes you all happy. As a bonus, you’ll get to visit all your favorite hometown spots along the way, too.

Recommended: 5 Ways to Start Preparing For College

Connecting With Your New Roommate

If you’re living in a dorm in the fall, you likely already know who your roommate will be. You may want to use the few weeks before school begins to connect with them, via phone, text/email, Facetime, or, if possible, in-person.

Consider making a list of dorm room items that you can share, and try making a list of ground rules before you even move in. This could help alleviate any issues before they ever begin.

Recommended: A Guide to Making Friends in College

Preparing Your Dorm Essentials

After chatting with your roommate and figuring out what you both need, it’s time to make a full list of dorm essentials. This list should include bedding, toiletries that fit into a basket to carry to and from shared bathrooms, a pair of slippers to use in common areas (including shower areas), and office supplies like pens, paper, notebooks, labels, rubber bands, scissors, and sticky notes.

You’ll now be responsible for doing your own laundry, so make sure to add on a laundry basket and detergent. The list can also include decorations such as desk lamps, a bulletin board, and any fun decor that fits your style.

Becoming Familiar With Your College Town

You can get familiar with your new town even before you set foot in it by checking out local publications, including local news sites and your school’s newspaper. You might want to make a list of restaurants you want to try and local attractions you’d like to see.

You might also consider sharing the list with your new roommate so you can explore the town together.

Recommended: How to Get Involved on Campus in College

Registering for Classes

It could be prudent to check out class offerings before registration even opens. Familiarize yourself with the classes offered in your degree program, which ones are available to freshmen, and which electives you’d like to take. Make a list and have it handy for registration day.

Pro tip: Sign up for classes as soon as registration is open because popular classes may fill up fast.

Recommended: Understanding Lower Division Vs. Upper Division Courses

Checking out Your Professors Online

Once you’ve got your classes lined up, it’s time to check out your future professors. Doing a bit of online research on the people who will be teaching you could help identify any potential future mentors.

Getting to know professors can make asking for recommendations for internships and jobs easier. If they don’t know you well, it might be difficult for them to recommend you.


💡 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. You can submit it as early as Oct. 1.

Getting Your Finances in Order

It’s time for the most adult step of all. During the summer before college, it’s probably time to get your finances in order. If you don’t already have a checking account, it’s a good idea to open one, ideally at a bank that you can access easily while at school.

Now is also a good time to explore — and discuss with your family — how you will finance all four years of your college education. If savings, financial aid, and federal student loans are enough to fully cover the cost of your education, you might also consider using private student loans to fill in any gaps.

Private student loans are available through private lenders, including banks, credit unions, and online lenders. Rates and terms vary, depending on the lender. Unlike federal student loans, private student loans will require a credit check. Generally, borrowers (or cosigners) who have strong credit qualify for the lowest rates.

Keep in mind, though, that private loans may not offer the borrower protections — like income-based repayment plans and deferment or forbearance — that automatically 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.

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

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When considering where to go to college, a young adult has a dizzying array of choices, including public vs. private schools and colleges vs. universities. There are also liberal arts colleges, which can be appealing to creative types and those seeking a broad education resulting in exemplary problem solving and communication skills.

But what exactly is a liberal arts college? And how are liberal arts colleges different from other colleges and universities?

Liberal arts colleges tend to put more focus on broad academics and personal growth than on professional training programs. An education from a liberal arts college is still valuable in helping students start their careers, but the emphasis is more on producing well-rounded individuals than putting graduates on a specific career track like engineering.

Students can major in a wide range of subjects at a liberal arts college, including the arts, literature, philosophy, social sciences, natural sciences, and even math or engineering. However, these colleges are meant to be a place that values learning, without strictly limiting what students are learning.

Read on to learn more about liberal arts colleges, including what they offer, how they compare to larger schools and public universities, and how you can cover the cost of a liberal arts education.

A More Personal Vibe

Though both universities and liberal arts colleges will help prepare students for entering the working world, there are some differences in what the experience will be like:

1. Liberal arts colleges are smaller. Most classes will have far fewer students than is the case at a university lecture hall, which can have hundreds attending at the same time.
2. Because of the smaller size, it may be easier for students to bond with their professors. The faculty members often have more time to spend with their students.
3. The focus of a liberal arts school is undergraduate education. At universities, there will likely be graduate programs and major research efforts.

A liberal arts college may be the best college fit for students who prefer a more personal experience where they can get to know faculty members and other students.

Those trying to decide which college is right for them can take this eight-question college personality quiz.


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

The Admissions Process

The application process for getting into a liberal arts college is similar to other schools. Students will have to submit the usual components: an application with transcripts, test scores, essays, and letters of recommendation.

Liberal arts colleges may have a different focus when it comes to reviewing applications, though, so it’s essential to keep the following information in mind when applying to a liberal arts college.

When it comes to test scores and grades, liberal arts colleges don’t always have specific requirements. Admissions can still be very competitive at these schools, but they’re often more interested in whether or not students challenged themselves in high school. Generally, they want to see that applicants are well-rounded but also have an area of interest they specialize in.

Extracurriculars are important when applying to any college, but liberal arts colleges often value a wide range of activities, not just those that involve leadership.

A liberal arts college may be more likely to value extracurricular activities that are outside the box, so students applying to these schools have more options for what they can get involved in.

The Common Application, which can be used to apply to more than 900 schools, only requires one essay. However, many liberal arts colleges will require at least two supplemental essays. The reason is that these schools tend to put a high value on writing and critical thinking. This can be beneficial for students who have strong writing skills but may be weaker in other areas.

Many liberal arts colleges are also interested in a student’s character and how they’ll contribute to the school, so they may put more weight on letters of recommendation and interviews than other schools.

Top Ranked Liberal Arts Colleges

According to U.S. News’s National Liberal Arts Colleges Rankings for 2022-2023, the top ten liberal arts colleges are:

1. Williams College
2. Amherst College
3. Pomona College
4. Swarthmore College
5. Wellesley College
6. Bowdoin College
7. Carleton College
8. United States Naval Academy
9. Claremont McKenna College
10. United States Military Academy at West Point
11. Middlebury College

Financial Value of a Liberal Arts Education

There’s a stereotype about people who pursue a liberal arts education: that they won’t find financial success and their degree could be useless. This claim isn’t backed by evidence, though, so students who feel like a liberal arts college is the right choice for them shouldn’t be scared away by this false narrative.

The gap in income between those who attend a liberal arts college and those who attend other schools isn’t necessarily linked to the institution.

Instead, it’s determined more by a student’s career path and the market forces at the time, according to two economists who analyzed the payoff of a liberal arts college education.

Another reason for this misconception is that people are unaware of the diverse selection of topics that are studied at liberal arts colleges. If people don’t actually know what is being studied at these colleges, they’ll have a more difficult time conceptualizing what a student’s future could entail.

Though graduates of liberal arts colleges may not earn as much as those from STEM-oriented institutions right away, the economists’ study found that 60% of students ended up in the top 40% of U.S. income after graduation, even if they started out in the bottom 60%.

Choosing where to attend college and whether or not it will have a “payoff” is personal to each student.

Attending a liberal arts college can lead to upward mobility, but students also have to take into account the cost of the education and the availability of financial aid when choosing which school will have the most value for them.

Paying for College

Along with the painstaking process of choosing where to apply for college and making a final decision, there is another difficult process: figuring out the cost of tuition and how to pay for it all.

Luckily, students usually have access to a few options that may help fund the yearly cost of attendance, which goes beyond tuition and fees to usually include room and board, books, supplies, transportation, loan fees, costs related to a disability, and reasonable costs for eligible study-abroad programs.

To figure out financing, a good place to start is by filling out the Free Application for Federal Student Aid (FAFSA). This will let you know if you are eligible for federal financial aid, which includes grants, scholarships, work-study, and federal student loans (which may be subsidized or unsubsidized).

Some private colleges use a supplemental form called the College Scholarship Service (CSS) Profile, to determine how to give out their own financial aid. The form is more detailed than the FAFSA. Almost every college that meets financial need for all enrolled students without federal student loans uses the CSS Profile.

Most liberal arts colleges are private and carry a relatively high “sticker price,” which includes tuition, fees, room and board. But students will typically pay less, and sometimes far less, when grants, scholarships, and other benefits are factored in.

If students will require loans to cover the cost of college, it’s recommended they take out federal loans before private loans, because the former come with benefits that the latter usually do not, like lower fixed interest rates and income-based repayment plans.

Private scholarships are also widely available. Some are need based; others are merit based. They’re offered by schools, companies, community organizations, religious groups, and more.

Private student loans are an option as well. Eligibility usually depends on a student’s income and credit score or those of a cosigner. These loans are available through banks, credit unions, and online lenders and rates and terms vary, depending on the lender.


💡 Quick Tip: Would-be borrowers will want to understand the different types of student loans that are available: private student loans, federal Direct Subsidized and Unsubsidized loans, Direct PLUS loans, and more.

The Takeaway

Whether you choose to go to a state university or a private liberal arts college, the experience will be enriching and can set you up for long-term career success.

Though a liberal arts school isn’t solely focused on teaching students a profession, a Bachelor of Arts from a reputable liberal arts school can lead to a rewarding career. The skills students learn at a liberal arts college — which include communication skills, analytic skills, the ability to work in a team, and a strong work ethic — are ones that often highly valued by today’s employers

While liberal arts colleges are known for their high cost, keep in mind that your actual cost of attendance will likely be much lower than the “sticker price,” once you take grants, scholarships, and other types of financial aid into consideration.

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.

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