SoFi

Packing up and heading off to college is an absolutely thrilling time in a young person’s life. However, with all the fun comes a lot of responsibility. One of the first, and perhaps most important, choices a college student must make is exactly where they want to live.

Students may choose between living on- or off-campus, though some schools require freshmen to live on-campus. On-campus housing is generally a convenient option for students because they will be close to their classes. Off-campus housing can potentially be less expensive than living on-campus.

Here are a few things to consider on your journey to finding college housing.

1. Start With a Budget

College student housing can get expensive very quickly, especially if a student decides to live in off-campus housing.

It’s important to begin any college housing search by first determining a budget. How much rent can the student actually afford month-to-month while also maintaining enough funds to pay for tuition, food, and other living expenses? Figuring out a personal housing budget is a wholly unique process for each student.

Budgeting Considerations for College Students

Students should sit down and map out all monthly expenses either alone or with a loved one to figure out just how much they can afford and go from there. While developing your budget, consider things such as:

•   Transportation costs to get to and from campus

•   Utilities and internet

•   Whether the apartment will be furnished or will require you to bring (or buy) furniture

•   How you’ll split these costs with roommates

•   Grocery costs vs. relying on the college dining plan

Some considerations and costs may vary depending on whether you choose to live on- or off-campus. If you are still debating between on- or off-campus housing, it may help to map out two budgets to capture the difference in cost and expenses between the two options. SoFi’s Ca$h Course: A Student’s Guide to Money has more information on setting up your college budget.

Paying for Housing Expenses

In addition to costs, evaluate sources of income so you have an idea of how you will pay for your tuition and housing expenses. Have an honest discussion with your parents or guardians about how much they are able to contribute toward housing and tuition expenses.

In addition to savings, undergraduate loans can be used to pay for housing expenses. Students may apply for both federal or private student loans. Federal student loans have certain benefits like deferment options and income-driven repayment options that aren’t necessarily afforded to private student loans. Therefore, federal student loans are typically prioritized over private student loan options. Learn more about the differences between private and federal student loans in SoFi’s private student loan guide.

Students who qualify for a need-based Pell Grant can also use these funds toward their housing expenses. Some scholarships may have restrictions on how the funding can be used, but others will be flexible and can be used for any qualifying education expense including housing costs. When doing your scholarship search, be sure to read the fine print so you understand if there are any restrictions up front.

Recommended: Guide to Unclaimed Scholarships

2. Decide on On-Campus or Off-Campus Housing

After outlining your budget it’s time to answer another big question: On-campus housing or off? This is a major consideration for many students and can be budget-dependent.

It can also be dependent on what year the student is as many colleges require students to live on campus during their freshman year. But, after that, it’s likely up to students.

Each choice has its merits and its pitfalls so weigh the pros and cons of on-campus vs. off-campus housing before deciding.

Recommended: Budgeting Tips for High School Students and Those Entering College

On-campus Housing

For those who want to live on-campus, there are likely a number of options available at their school. This can include residence or dorm halls. Think of these as apartment buildings, but smaller. Some dorms require students to share rooms with other students, and often only come with one bathroom per floor (though there are a lucky few who may be able to snag a private bath).

Dorms often do not come with private kitchens, though they may have a shared space. This often means students will likely also purchase a meal plan, so factor that in when budgeting.

Beyond dorms, students may also be able to live in on-campus apartments or in fraternity or sorority housing. These homes are typically maintained by private Greek organizations and admittance to the frat or sorority is usually required in order to live in the house. Room styles in Greek housing can vary greatly, along with availability, even as a member.

Note that some fraternity or sorority housing options are considered off-campus housing so you may need to check the housing program at your university.

Older students may also want to look into graduate housing, family housing, or co-op living on their university or college campus.

Off-Campus Housing

Off-campus housing may vary depending on where you go to school. The first option may be to just remain living at home with parents or guardians. Though this may not be the college dream for many, it can be one way to cut expenses in both housing and food.

If a student chooses to remain home he or she should sit down with their parents or guardians prior to the start of the school year to go over expectations on both sides. Have the tough conversations about curfews, chores, and anything else one would typically discuss with any other roommate.

Of course, college students may also look for off-campus housing by renting a nearby apartment or home either alone or with friends. Renting alone could be an option for those who like their space and quiet time for studying, but, this could also become prohibitively expensive as that person would also have to pay all the bills on their own.

By renting with friends a college student may gain a bit more independence while still being able to rely on others to split the cost of rent and other bills.

Note that student loans can be used to pay for both on- and off-campus living expenses.

Recommended: Using Student Loans for Living Expenses and Housing

3. Figure Out the Right Timeline

No matter which option a student chooses — on-campus or off — they must also follow the right timeline. Many colleges and universities have deadlines to declare the need for on-campus housing, while many college town rentals also follow a specific timeline for rentals.

Areas surrounding college campuses may be competitive for rentals. Some schools offer off-campus guides to get students started with their search. It may also help to do a bit of digging on your college community and ask friends who have moved off-campus in the past to see what the timeline is there.

4. Where to Look for Housing

For off-campus students, there are a plethora of options for looking for housing online. This includes websites like Zillow, Trulia, Apartments.com, Craigslist, and more. Each of these websites allows users to filter their searches by location, price, number of bedrooms and bathrooms, or any other specific needs.

A student and their potential roommates may want to sit down together to list out their wants vs. needs in housing (for example, a big kitchen, study area, outdoor space, or pet-friendly) and begin their search from there.

5. Tour Housing Options

Prior to committing to housing, take a bit of time and tour the homes in person. This can help you get a feel for a place, open up the cabinets, test the water pressure, see if the street noise is too much, or anything else that may bother someone. On the tour, a student may find items not to their liking or may find things that will allow them to negotiate the rent down. Go in and take plenty of notes.

6. Look at the Fine Print

Don’t sign a lease (or anything for that matter) without reading the fine print. Before putting a name on the dotted line make sure to read each and every section in a lease and ask questions of the landlord.

Also, it’s important to note it’s not a one-way street — you too can add things to the lease. However, a landlord will have to agree before making any changes. But, if there’s something you want in there for your own legal protection, it doesn’t hurt to ask for it.

7. Consider Renter’s Insurance

Students living off-campus may want to consider renters insurance. Those living in a dorm may be covered by their parents’ home or renter insurance policy if you are listed as a dependent. Renters insurance may protect a person’s things if they are lost, damaged, or stolen from the home.

For example, if a pipe bursts while a student is in class and their home is flooded, renters insurance could cover the cost of replacing their damaged items. And, renters insurance could even cover temporary living expenses if their home becomes unlivable.

The Takeaway

No matter where a student lives, things can most certainly get expensive. But, rather than stress about how they’ll pay for their newfound freedom, students should plan instead. And that begins by looking into all their financial options, including a SoFi private student loan.

Students, along with their parents or guardians, can apply for a private student loan with SoFi in minutes and get on their way to finding the perfect housing option for them. SoFi student loans have no origination fees, no late fees, and no insufficient fund fees.

Note that private student loans aren’t appropriate for every student, and are generally relied on after a student has explored other options including federal student aid and scholarships. Upon graduation, students can choose one of SoFi’s repayment options, paying back the loan on a timeline that works for them.

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.

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

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

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More than half to two-thirds of people who attend college take on debt — most often in the tens of thousands of dollars. According to the Federal Reserve, in 2021 the median amount of outstanding education debt was between $20,000 to $24,999 .

Federal student loans are one option for students looking to borrow to help pay for their education. In the case that federal loans aren’t enough, private student loans could be considered. Finding a reputable lender is essential when entering a long financial relationship.

Student loans are often the first major debt a young adult signs their name to, so evaluating potential lenders is a good first step when considering a private student loan.

There are some general considerations to keep in mind when evaluating private student loan lenders. Keep in mind these are general considerations when deciding between private student loan providers and not an exhaustive list.

Each potential borrower will need to consider her or his own financial situation to help make an informed decision.

1. First Things First: Reputation Before Rate

Before even considering the interest rates, savvy students look for indicators that a loan company is legitimate. Bottom-of-the-barrel interest rates might seem attractive, but if the bargain comes at the price of doing business with a dubious company, potential borrowers may want to steer clear.

Several options are available for researching a lender’s reputation. The Better Business Bureau or the local chamber of commerce are good first places to check.

Look up the name of the lender and the parent company, if there is one, to find any reviews that might be available. If nothing is found on these channels, a general search online often yields news stories or first-hand accounts pulled from multiple sources that can help paint a picture of how the lender treats customers.

Other ways to verify reputation and legitimacy are by checking any accreditations, endorsements by other credible entities, and backing by established institutions.

It’s also worth talking to recent grads and trusted colleagues. What lender do they use? What has their experience been? While anecdotal advice adds color, though, it shouldn’t be the bulk of research.

2. What Rates Are Offered?

Another factor to consider is a lender’s interest rate. The higher the interest rate, the more money the borrower will pay on top of the loan amount — it’s how the lender makes money. For example, private student loans can be fixed vs. variable and have a wide range of interest rates.

Variable Rate

A loan with a variable interest rate — also known as a floating rate — changes interest rates over time. When and how the interest rate changes depend on the terms of the loan and will vary from lender to lender. Typically, the rate is tied to a specific index and will impact monthly loan payment amounts. A rate cap is generally outlined in the terms of your loan. This is the highest the interest rate may rise.

Fixed Rate

A fixed-interest-rate loan carries an interest percentage that does not change over the life of the loan. The interest rate at the start of the loan stays the same until the loan is repaid.

Choosing Between Variable or Fixed Interest

Variable rate loans may seem attractive because the initial rates are often lower than fixed-rate loans. However, since rates will fluctuate, variable rate loans can be more costly in the long run, especially if a borrower has the loan for a lengthy period of time.

Borrowers who wish to lock in one rate and the same monthly payment each month are generally better served with fixed-rate loans. Because the interest rate doesn’t change, monthly payments will stay the same, which can help with budget planning and financial management.

3. What Are the Loan Terms?

The term refers to the length of time a borrower has to repay the loan. In general, the longer the loan term, the more interest a borrower will pay.

Shorter term lengths usually have higher monthly payments than longer term loans, as the loan has to be repaid at an accelerated schedule. Some lenders may offer flexible repayment options. Other lenders may have fixed term lengths and monthly payments.

When deciding between lenders, verifying available term lengths and options can help borrowers select a lender that offers terms that fit their budget and repayment timeline.

4. In-School Repayment Options

Will you be required to make payments on the loan while you are actively enrolled in school? Be sure to find out what the lender’s policies are. Some private lenders will allow borrowers to defer their payments while they are enrolled in school. Using in-school deferment can be helpful if you are tight on money as a college student. But, during this time interest will likely continue to accrue on the loan, which may increase the cost of borrowing over the life of the loan.

Other in-school payment options include making interest-only payments or making flat-fee payments each month. Understanding whether or not you’ll be required to make payments while you are in school is important as it can have an impact on how you manage your money as a student. Review the options offered by your chosen lender closely. For more information on college budgeting ideas and more, check out SoFi’s Ca$h Course: A Student’s Guide to Money.

5. Have You Exhausted Your Federal Loan Options?

A quick check before applying for private student loans: Did you take advantage of any available federal student loans? They offer several benefits not found with private student loans. Here’s a brief overview of some of the benefits and protections offered for federal student loans, but not private student loans:

•   Interest Rates. Federal student loans generally have a lower interest rate than private student loans. Interest rates on federal student loans are fixed and are set annually by Congress.

•   Repayment Plans. Federal student loan borrowers have a few different repayment options to choose from, including income-driven repayment plans that can help make loan payments more manageable.

•   Loan Forgiveness. Borrowers who work in public service or other qualified professions may qualify for loan forgiveness through programs like Public Service Loan forgiveness or Teacher Loan Forgiveness.

•   Loan Deferment and Forbearance Options. Loan deferment and forbearance options may be available as a temporary relief if a borrower is having trouble making payments.

•   Subsidized Loans. Undergraduate students who exhibit financial need may qualify for Direct Subsidized Loans. The government covers interest charges on this type of loan while the borrower is enrolled in school, during the loan’s grace period and during other qualified periods of deferment.

For these reasons, borrowers are encouraged to consider federal student loan options before opting for a private student loan. But, as mentioned, there are borrowing limits associated with federal student loans. And in some situations, private student loans can be a helpful tool to help borrowers pay for their college education.

6. What Fees Are Associated with the Loan?

No one likes additional fees, especially when they’re associated with a loan. Unfortunately, lender fees are not uncommon. Reading the fine print and speaking with loan representatives to understand the fees each lender charges is an important part of the search process.

Charges may include application fees, late fees, insufficient fund fees, and origination fees. Understanding which lenders charge fees can help if you are interested in avoiding student loan fees. When comparing loans from different lenders, be sure to review the APR, or annual percentage rate, associated with the loan. The APR is a reflection of the interest rate and any additional fees, so it is more representative of the total cost of the loan than comparing interest rates alone.

7. What Happens if Your Financial Situation Changes?

Unpredictable circumstances happen all the time. In recent years, recessions, pandemics, and natural disasters count among the various catastrophes impacting people all over the world. Circumstances like these — along with many others — can put a dent in your finances.

For borrowers, a change such as a job loss might mean the difference between paying their student loan bill for the month — or not. Because financial circumstances are prone to change, a borrower may want to compare private student loan lenders.

How flexible are the lenders with monthly payments? Do steep late fees pile on if a borrower can’t make a monthly payment? What happens if a borrower needs to refinance or decrease monthly payments? These are all questions to consider and discuss with potential lenders.

Lenders that lack flexibility can mean the difference between thousands of extra dollars of debt if unforeseen circumstances change your finances and you’re unable to make your payments.

8. Does the Lender Offer any Incentives or Perks?

Once the serious stuff is considered, such as reputation, interest rates, term, and fees, there’s room to evaluate lenders on what else they can offer. Some lenders, like SoFi, offer career services and rate discounts.

Others may offer bundled banking so borrowers can have all financial services in one place. There also may be referral fees a borrower can earn for recommending the lender to others.

While the perk factor probably shouldn’t carry the heaviest weight in your comparison, it still might be worthwhile to evaluate.

9. Customer Service Quality

Finally, consider the company’s customer service quality and reputation. Should you run into any issues during repayment, a company with excellent customer service can make a difference.

The Consumer Financial Protection Bureau operates an online complaint database. Here, you’re able to read any online complaints associated with a particular company in order to make a more educated decision concerning their customer service reputation.

The Takeaway

Once you complete your research and comparison shopping, you may be ready to apply for a loan to pay for your education. With SoFi private student loans, undergrads and grad students can apply for a no-fee loan. That includes no application fee, no origination fees, no insufficient fund fees, or late fees.

For further savings, SoFi also offers an interest rate deduction if you enroll in automated payments from your checking or savings account.

FAQ

What are typical private student loan interest rates?

As of August 2022, interest rates on private student loans may range from 3.22% to 13.95% fixed and 0.94% to 12.99% variable. Keep in mind that interest rates can vary from lender to lender and are based on the individual applicant’s financial history, income, and credit score, among other factors.

Can you start repaying student loans while still enrolled in school?

Yes, you can start repaying student loans while you are enrolled in school. For most federal student loans, students enrolled in school at least half-time are not required to make payments on their loan but have the option to do so.

For private student loans, the policy will depend on the loan terms and conditions. Some private lenders offer in-school deferment options while others may require in-school loan payments.

Do student loans have prepayment penalties?

Do student loans have prepayment penalties?

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.

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

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

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If you’re thinking about buying a car, it’s important to consider how the purchase will fit into your overall financial responsibilities, including student debt. You’ll want to be sure you can afford both the cost of the car and the ongoing expense of driving and maintaining it.

Refinancing student loans to buy a car is one option that may allow you to free up money to put toward the cost of a car or monthly car payments. Here’s what to know about refinancing student loans to buy a car, if you can use student loans to buy a car, and how to make the choice that’s right for you.

Can I Use Student Loans to Buy a Car?

Federal student loans (and many private ones) are for “qualified” educational expenses, such as tuition, room and board, and books and supplies. And while the cost of transportation (for example, commuting to school) is considered a qualified expense, purchasing a car is not.

So can you use student loans to buy a car if you’re using the car to drive to class? No – only an allowance for the cost of driving the car to school would be an eligible expense. It’s an important distinction: A borrower caught misusing student loan funds can face serious repercussions, including having their loan revoked and the balance becoming immediately due.

Some private loans may have broader criteria for what constitutes an educational expense, and fewer penalties for how you use the loans. Still, using a private student loan to buy a car may not be the most efficient or smartest use of funds. You may end up paying more interest than you would on a typical car loan, and then have fewer funds to go toward the educational expenses you need.

So what do you do if you have student debt and need to buy a car? Refinancing may be an option, and can free up money in your budget to open a car loan. Here’s what to consider before refinancing student loans to buy a car.

Recommended: Should I Buy a New or Used Car?

Refinancing Student Loans to Buy a Car

When you refinance a student loan, you pay off all or some of your loans with a new loan with new terms from a private lender. The primary benefit of refinancing is that you can save money over the life of the loan if you’re able to lower your interest rate.

You can also change the terms of your payment, potentially spreading your payment over a longer period of time, and paying less each month. If you go this route, however, you may end up paying more in interest over the life of your loan.

Refinancing student loans can help lower your monthly payments and have more room in your budget to cover the costs of a car. However, it’s important to understand that if you refinance federal student loans, you’ll lose access to federal benefits and protections, such as income-driven repayment plans and forgiveness. If you’re planning to take advantage of any of these federal programs, refinancing is likely not a good option for you.

Pros of Refinancing Student Loans to Buy a Car

Considering the pros and cons of refinancing student loans to buy a car can help you decide if this choice is right for you. You’ll want to be able to cover the costs of the car as you continue to pay your student loans back. Some of the pros of refinancing a student loan to buy a car include:

Lower Monthly Student Loan Payments Can Offset Car Costs

Refinancing your student loans can lower your monthly student loan payment if you’re able to secure a lower interest rate or extend your loan term. A lower monthly student loan payment can mean that you have more funds to cover the costs of buying or maintaining a new car.

Recommended: Guide to Student Loan Refunds

As mentioned, lowering your interest rate can save you money over the life of a loan. Extending your loan term may not save you money, but it can free up cash to have more funds to put toward the costs of a car.

Simplified Payments Can Make Tracking Car Expenses Easier

When you refinance multiple loans into a single new loan, you’ll have one new monthly payment. This can make it easier to keep track of your student loan payments and be sure you’re making them on time.

And if you’re looking for ways to get a car loan, having a simplified student loan payment can make budgeting easier as you add a new loan to the mix. As mentioned earlier, you may find lower interest rates on car loans than what you’re paying on your student loans — another reason using student loans funds toward car expenses may not be the best choice even if they’re allowed according to your loan terms.

Saving Money on Student Loans Can Help Pay for a Car

Many people explore refinancing even when they don’t need to make an immediate purchase like a car. That’s because refinancing may help save money over the life of the loan if you can lower your interest rate.

And while applying for student loans can be arduous, applying to refinance student loans is relatively straightforward. You can check your rate and get an estimate of loan terms before you officially apply, and an application can generally be completed online. You can also compare refinancing rates without triggering a hard credit check—a credit check is only done once a formal loan application is submitted.

Cons of Refinancing Student Loans to Buy a Car

While refinancing student loans to buy a car can be one way to cover car payments when you have existing student debt, there are cons to this option as well. Here are some of the cons of refinancing a student loan to buy a car.

Recommended: How To Save Up For a Car

Losing Access to Original Loan Terms

If you refinance your loans, you lose access to the terms of the original loan. This may be important to consider if you’re refinancing federal loans.

Refinancing federal loans not only means potentially missing out on federal forgiveness or repayment programs, but also the opportunity for deferment or forbearance if you qualify.

As mentioned earlier, if you plan to take advantage of federal programs, refinancing is likely not a good option for you. Some people may choose only to refinance private loans.

Repayment May Take Longer

If you extend the length of your student loan term when you refinance to lower your monthly payments to offset the costs of a new car, it will take longer to repay your loan and you may end up paying more in interest over the life of the loan.

Overstretching Your Budget

It’s important to make sure that you can afford any car loan that you take out. If you’re planning on getting a car loan or leasing a car, will you be able to comfortably cover your student loans, the car payment, and other bills? What would happen if you were to lose a job or source of income? Those questions can help you assess whether a car payment would stretch you financially.

A borrower who can’t make the payments risks having the car repossessed and damaging their credit. If you ever think you’ll miss a monthly car payment, reach out to your lender to find out what your options are. Down the road, refinancing your car loan is also an option if you’re able to secure better terms.

Recommended: Passive Income Ideas

Refinancing Your Student Loans With SoFi

When you need a new car, you may need to rethink your finances in order to cover the costs. Refinancing student loans to buy a car is one option that can help you free up funds. You may be able to lower your monthly payments and save money over the life of the loan if you qualify for a lower interest rate. You can calculate your potential savings using a student loan refinance calculator.

Refinancing can be a good option if you’re able to qualify for a lower interest rate and are not planning to use any federal programs. When you refinance a federal loan, you lose access to federal benefits and protections.

If you’re considering refinancing your student loans, SoFi offers flexible terms, competitive rates, and no fees.

Learn more about whether refinancing student loans with SoFi is right for you.

FAQ

Do car dealerships look at student loans?

Your student loans appear on your credit report. If you apply for a car loan from a dealership, then they may be able to see your payment history and your credit score on your credit report. Student loans also count toward your debt-to-income ratio which may affect your ability to secure a car loan.

Does financing a car affect student loans?

Financing a car won’t affect your current student loans, but consider how taking on another loan will impact your finances. It’s important to be certain that you’ll be able to pay both your student loan payments and any new car loan payments on time. Refinancing a student loan can help offset the costs of a new car if you can save money by qualifying for a lower interest rate. It can be a good option if you’re refinancing private loans or not planning to take advantage of any federal programs.

Is it smart to buy a car after college?

Buying a car after college is a personal decision. But keep in mind that a lot can change in a few years, and a new car or a lease may be a liability if your plans change. It may make sense to consider buying a used car or holding off on buying a car until you have a sense of what your commute and lifestyle will look like.

Photo credit: iStock/LeoPatrizi

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.

Plastic credit cards are easily destroyed by simply cutting them up with a household pair of scissors. But in recent years, some credit card issuers have started issuing metal credit cards. While these have become somewhat of a status symbol, the problem comes in trying to figure out how to dispose of metal credit cards.

It’s good practice to destroy a metal credit card once you’re done using it so that nobody can access your personal information. However, disposing of a metal credit card is not as easy as using a pair of regular household scissors. Thankfully, there are a few options to consider if you want to know how to destroy a metal credit card.

Why Should You Destroy a Metal Credit Card?

The biggest reason to destroy a metal credit card is to make sure that nobody uses your credit card information.

Even though most credit card companies have a $0 fraud liability policy, you don’t want to deal with the hassle of unauthorized purchases. And even if you’ve canceled your credit card or it’s expired, you’ll still want to destroy it, since it has personal information that might be used in different types of identity theft.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

Factors to Consider Before Destroying a Credit Card

Before destroying a metal credit card, you’ll want to make sure that it makes sense to cancel your account.

If you’re still using a credit card through automatic payments or recurring purchases, make sure to cancel those or move them to other cards. Once you close your account and dispose of your metal credit card, any such purchases will be declined.

Also take into account any potential impacts on your credit score that closing your account may have. Closing an account could increase your credit utilization ratio since you’ll have less available overall credit, and it could also lower the age of your accounts, depending on how long you’ve had your account. Both factors could lead to a dip in your credit score.

Before moving forward with closing your account, you’ll also want to take a look at your rewards to ensure you wouldn’t lose what you’ve already earned. Also remember that you’ll still need to pay off your card’s balance in full. Keep an eye out for any final payments that might roll in after your account is closed.

Recommended: When Are Credit Card Payments Due

Ways to Get Rid of a Metal Credit Card

If you’re confident you want to move forward, here are some options for how to dispose of a metal credit card.

Sending It Back to Your Credit Card Issuer

One of the best ways to dispose of a metal credit card is to return it directly to your credit card issuer. Most credit card issuers will provide you with a postage-paid envelope to return your metal credit card, if you ask. This can be a great (and relatively secure) way to dispose of your metal credit card.

Returning It to a Physical Bank Branch

Another option for returning your metal credit card to your credit card issuer is by bringing it to a physical bank branch. Of course, this is only a viable option if your issuer has physical branches near you. If your card has reached its credit card expiration date and you want to get rid of it, this can be a reasonable option.

Stowing It Away

Another option for disposing of a metal credit card is to simply stow it away somewhere safe in your house. This could be a filing cabinet, sock drawer, or anywhere else in your home. While this isn’t a great long-term solution, since there is some risk, it may work in the short-term.

Destroying It on Your Own

The final option for disposing of a metal credit card that you’re no longer using is destroying it on your own. After all, this is the preferred solution for most non-metal credit cards. And it is still possible with a metal credit card, though it is a bit trickier, as you’ll see in the next section.

Guide to Disposing a Metal Credit Card on Your Own

For those who want to DIY the destruction of their metal card, here’s how you destroy metal credit cards.

Using Tin Snips

If you have a pair of tin snips, that’s probably the easiest way to destroy a metal credit card on your own. Tin snips should make quick work of most metal credit cards. If you don’t have a pair of tin snips yourself, check with friends and family to see if you can borrow a pair.

Using Heavy-Duty Scissors

While most traditional or kitchen scissors will not do much to a metal credit card, if you have a heavy-duty pair of scissors, you may be in luck. Heavy-duty scissors made of stainless steel or titanium may be able to help you destroy and dispose of a metal credit card.

Mangling It With Pliers

If you don’t have heavy-duty scissors or tin snips, another option is to use a regular pair of pliers. While this may not be the most practical way to dispose of a metal credit card, it could be worth a try.

Drilling Holes Into It

If you have a power drill with metal-cutting bits, you might be able to dispose of your metal credit card by drilling holes into it. You’d just need to drill enough holes in your card to remove any of your personal information as well as the EMV chip. Keep in mind that you’ll need a powerful drill with special bits — it’s unlikely that a regular drill will do the job.

Using a Blow Torch

If you have access to a blow torch, and are knowledgeable enough about it to be able to use it safely, you may have luck using it to destroy your metal credit card. Of course, if you have a big enough shop to have a blow torch, you probably also have a pair of tin snips. That will be much easier, but maybe not as fun!

Throwing It in Your Fire Pit

While you may be able to destroy your metal credit card by simply throwing it in your fire pit, this may not be the most environmentally-conscious way to dispose of your metal credit card. Many metal credit cards have different kinds of metals in them that may not be safe to burn.

Avoid These Methods for Discarding a Metal Credit Card

Out of the many ways you can dispose of your metal credit card, here are the methods to steer clear of.

Giving It to Third-Party Services

One of the top credit card rules is that you should not give your personal information out to anyone. This still holds true, even if your credit card account is closed. Your personal information can still be used for identity theft or other nefarious purposes. Either destroy your metal credit card yourself, or deal directly with your credit card issuer.

Throwing It Away or Recycling It

You’ll also want to avoid simply throwing your metal credit card away or recycling it. You may be trying to take advantage of “security by obscurity,” hoping that nobody will find it. But because of how a credit card works, it’s easy for anybody that has your card to access your account and your personal information. Don’t take that risk — make sure to destroy your card responsibly.

Recommended: Tips for Using a Credit Card Responsibly

Using a Paper Shredder

While most paper shredders do have the capacity to shred a non-metal credit card, it is unlikely that your typical paper shredder can handle a metal credit card. You are more likely to damage your paper shredder and still have an intact metal credit card.

Using Traditional Scissors

Traditional kitchen scissors will not be able to destroy most metal credit cards. While you’re unlikely to damage your scissors, you’re also quite unlikely to make any progress trying to destroy your metal card with a traditional pair of scissors.

Recommended: Can You Buy Crypto With a Credit Card

The Takeaway

While it may be trickier to destroy a metal credit card than it is to get rid of a plastic credit card, it’s still important to do. You don’t want your personal information floating around for anyone to possibly use. Even if your credit card account is closed, you still run the risk of someone using the card to steal your identity. The easiest way to destroy a metal credit card is securely sending it back to your credit card issuer.

FAQ

What is the safest way to destroy a credit card?

The safest way to destroy a metal credit card is to securely send it back to your credit card issuer. Most credit card issuers will send you a postage-paid envelope that will allow you to send the metal card back to them. Alternatively, you can return it directly back to a physical branch location.

How do I get rid of a metal credit card at home?

One of the easiest ways to get rid of a metal credit card at home is using tin snips. If you have a pair of tin snips, they will make quick work of a metal credit card. Just make sure to be careful with the rough metal edges once you cut it up.

Can you burn a metal credit card?

It is possible to burn a metal credit card, though it may not be the most environmentally-conscious thing to do. Burning a metal credit card may release toxic gasses into the air.

Can I destroy my metal credit card with tin snips?

Yes, destroying a metal credit card with tin snips is one of the easiest ways to dispose of a metal credit card. Of all the different options for destroying a metal credit card at home, tin snips are the tool that is most likely to be found in the homes of most credit card consumers.

Photo credit: iStock/Katya_Havok

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Do you know who oversees your student loans? If you’ve taken out loans from a variety of lenders, it can be hard to keep track. But it’s important to know who your student loan servicers and/or lenders are so you can make payments on time and reach out with any questions.

You’ll also want to contact your loan servicer or lender if you’re having trouble paying back your loan to discuss your options. Falling behind on payments or defaulting on a loan can have serious financial consequences. Here’s what to know about the different types of student loan servicers and lenders—and how to identify your own.

What Is a Student Loan Lender?

A lender is any individual or institution that loans money to someone and expects it to be paid back, usually with interest. In the case of private student loans, your lender is typically a bank or other financial institution.

When it comes to federal student loan providers, your lender is the federal government. But while you’re borrowing funds from the government, several different companies—called loan servicers—handle the administration of the loan and collect payments.

What Are Student Loan Servicers?

The federal government contracts with student loan servicers to take care of billing borrowers, setting up repayment plans, handling loan consolidation, and administering other tasks related to federal student loans.

The government currently works with nine different loan servicers to handle Direct Loans and Federal Family Education Loans (FFEL). If you’ve ever wondered, “who is my student loan servicer?” it’s likely one of the following companies:

•  FedLoan Servicing (PHEAA)

•  Great Lakes Educational Loan Services, Inc.

•  Edfinancial (HESC)

•  MOHELA

•  Aidvantage

•  Nelnet

•  OSLA Servicing

•  ECSI

•  Default Resolution Group

What Do Student Loan Servicers Do?

Loan servicers are the main point of contact for the administration of your loan. Here are some of the main functions of federal student loan servicers:

Collect Payments

The U.S. Department of Education assigns your loan to a loan servicer after it’s disbursed. As mentioned, your student loan servicer handles the billing and customer service for your student loans.

For federal loans, you can reach out to your loan servicer to confirm your balance and interest rate, or check your monthly payment. It’s helpful to register on the loan servicer’s site so you can stay on top of payments and understand what you owe. If you have any questions, it’s worth reaching out to ask.

In some cases, the department may decide to transfer your loans from one loan servicer to another. If this happens, you’ll receive a letter from the new servicer that will include the company’s contact information.

Execute Deferment or Forbearance Requests

If you run into financial hardship, contact your loan servicer to discuss options, such as applying for deferment or forbearance. One of the worst things to do is avoid contacting your lender or loan servicer because you’re embarrassed, confused, or overwhelmed.

These institutions are designed to help you understand your loan and pay it off according to schedule, and that means explaining things you don’t understand or working with you to come up with a more affordable repayment plan.

Handle Repayment Plan Changes

Loan servicers can help you figure out the best repayment plan for you and whether to consolidate your student loans. Federal borrowers can change their repayment plan at any time without any fees.

For example, if you’re hoping to lower your monthly student loan payment, you can extend your loan term. You’ll pay more in interest over the life of the loan, but it’s one way to get relief if you’re struggling to make payments.

On the flip side, you can shorten your loan term if you’d like to pay off your loan sooner. There are also income-driven repayment plans that tie the amount of a borrower’s income to their monthly payments.

Help Process Loan Consolidation Requests

If you’re looking to simplify your payments, your loan servicer can help you consolidate your federal loans through the Direct Loan Program, combining different federal loans into a single new loan with an interest rate that’s a weighted average of all of your existing federal loan rates. Keep in mind you’ll pay more interest over the life of the loan due to the rate change.

Your loan servicer can also help you determine if you’re eligible for Public Service Loan Forgiveness or other types of federal loan forgiveness and help you find out if you’re on the right repayment plan to qualify.

How To Find Your Student Loan Servicer or Lender

Finding your student loan servicer can vary depending on the types of student loans that you have. Here are some of the most common ones:

Private Student Loans

There generally aren’t private student loan servicers; your main point of contact is your lender. You can find contact information for your private student loan lender on the emails or billing statements you should be receiving each month once you enter repayment.

Some private lenders also send a welcome packet or call you once you begin repayment. You can also look for their contact details on the documents you received when you first took out the loan, such as a promissory note.

If you’ve completely lost sight of your private student loan lender, you can confirm who they are by checking your credit report. You can request one free credit report annually from each of the three major credit reporting agencies—Equifax, Experian, and TransUnion. The financial aid office at your school may also be able to help you track down your lender.

Federal Student Loan Lenders

For federal student loans, you can log in to the Federal Student Aid site in order to confirm the name of your loan servicers and retrieve their contact information.

Another option is to check the National Student Loan Data System (NSLDS). This Department of Education database is a centralized repository of information about your student loans, aggregating data from universities, federal loan programs, and more.

Federal Perkins Loans

For federal student loans outside of the Direct Loan and FFEL programs, you can find out information about your loan servicer in other ways.

For a Federal Perkins Loan, contact the school that issued it, which may also be your loan servicer. If your Federal Perkins Loan has been transferred to the Department of Education, contact the ECSI Federal Perkins Loan Servicer at 1-866-313-3797.

If you have a FFEL Program loan owned by a private lender and not the Department of Education, you can find the lender’s details on your credit report as well.

Contacting Your Lender or Loan Servicer

Most lenders and loan servicers make it easy for you to contact them. They want you to be able to get in touch easily to make sure repayment goes as smoothly as possible. You can find phone numbers and website URLs for the nine federal loan servicers on the Department of Education site.

Loan servicers are generally available by phone, mail, and email, and some are also accessible through live online chat. You can find contact information for a private lender by searching online or reviewing mail or email correspondence they have sent you.

Why Might You Need to Contact Your Student Loan Servicer?

As mentioned earlier, you can reach out to your federal loan servicer for payment questions or issues or to adjust your payment plan. You can also apply for deferment or forbearance or look into forgiveness options.

Ignoring payment problems, or neglecting your student loans, can backfire in the long term. If your student loans become delinquent or you default on your student loans, there can be serious financial repercussions, including the unpaid balance of the loan being due immediately.

If you’re having trouble making payments, contact your loan servicer to find out payment options that may be available to you.

Don’t try to reach out to a loan servicer for questions about the status of your loan application or disbursement amounts and timelines—those are queries best left to your financial aid office since they are the ones responsible for ultimately disbursing your loan.

The same goes for questions about the Free Application for Federal Student Aid (FAFSA®) should be directed to the Federal Student Aid Information Center (1-800-4-FED-AID).

Recommended: FAFSA Guide

The Takeaway

While you may borrow money from the federal government, student loan servicers—private companies that work with the Department of Education—oversee the administration of your loan. They collect payments, handle applications for deferment or forbearance, assist with repayment plan changes, and offer customer service and general assistance. When you have a private student loan, the lender generally oversees the administration of the loan.

If you have any questions about your loan or if you’re having trouble making payments on your loan, you should reach out as soon as possible to your student loan servicer or lender. They may be able to help you find solutions that will prevent you from defaulting on your 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.

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