Understanding How Income Based Repayment Works

If you graduated recently, you’re gearing up to launch your career and start a new chapter of your life. But graduating may also mean it’s time to start paying back your student loans, which is less exciting.

If you have unconsolidated federal student loans, you are likely signed up for the standard 10-year repayment plan. Upon graduation or once your grace period ends, you begin making payments in order to pay back your loans in 10 years.

Many grads will not make tons of money right out of the gate, of course, and that can make paying off student loans at the beginning of a career challenging. If your loan payments with the standard plan are high in proportion to your income, an income-based repayment plan might be an option.

apply and submit information to have your income certified. Your monthly payment will then be calculated.

If you qualify, you’ll simply make your monthly payments to your loan servicer under your new income-based repayment plan.

You’ll have to recertify your income and family size yearly. Your calculated payment may change as your income changes.

What Might My Payment Be?

Qualifying for income-driven repayment depends on your income—specifically how much of your discretionary income goes toward student loan payments.

For the IBR, PAYE, and REPAYE plans, the required monthly payment is generally a percentage of your discretionary income. (Discretionary income is the difference between your adjusted gross income and 150% of the poverty guideline for your family size and state of residence.)

For the IBR plan, the monthly payment is 10% of discretionary income for someone who borrowed on or after July 1, 2014. If a student took out loans before that date, the monthly payment is 15% of discretionary income.

Under the PAYE and REPAYE plans, the monthly payment is 10% of discretionary income.

An example:

•   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.
•   You have $45,000 in eligible federal student loan debt.
•   The 2021 HHS Poverty Guideline amount for a family of one in the 48 contiguous states and the District of Columbia is $12,880, and 150% of that is $19,320. The difference between $40,000 and $19,320 is $20,680. This is your discretionary income.
•   If you’re repaying under the PAYE or REPAYE plan or if you’re a newer borrower with the IBR plan, 10% of your discretionary income is $2,068. Dividing that amount by 12 results in a monthly payment of $172.33.

Under the ICR plan, the monthly payment will be the lesser of 20% of discretionary income or the amount a borrower would pay under a standard repayment plan with a 12-year repayment period, adjusted using a formula that takes income into account.

For the ICR plan, discretionary income is the difference between adjusted gross income and 100% of the federal poverty guideline amount for your family size and state.

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

Which Loans Pertain to Which Plan?

Most federal student loans are eligible for at least one of the plans. For the details, see this Federal Student Aid chart .

Private loans are not eligible for any federal income-driven repayment plans—though some private loan lenders will negotiate new payment schedules if needed.

Potential Drawbacks of Income-Driven Repayment

Income-based repayment usually lowers your monthly payment, but stretching payments over a longer period means probably paying more in interest over time. In some cases, your minimum payment might not even cover all the interest on your loan.

Even if income-based repayment makes sense for you, you’ll need to recertify your income and family size every year.

consider refinancing instead. With refinancing, a private lender pays off loans with a new one, hopefully with a lower interest rate.

You can calculate how much you might save by refinancing your student loans with SoFi’s student loan calculator.

Maybe your income doesn’t qualify you for an income-driven repayment plan. If not, consider refinancing with SoFi.

You can refinance both private and federal student loans. Just realize that refinancing federal student loans with a private lender renders them ineligible for federal repayment plans, but if you don’t plan to use those benefits, refinancing might be a good option.

Check your rate in a snap.



IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF SEPTEMBER DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
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.
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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Source: sofi.com

What To Do the Summer Before College

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, to wrap up loose ends, and to spend quality time with the people you love at the places you love one last time before heading off on your own. But figuring out just what to do in the summer before college can be a challenge.

However, there’s no need to get overwhelmed. Instead, all you need to do is make a game plan. Here are nine things to check off your before-college to-do list to ensure you have the best summer ever and feel wholly prepared for your brand-new life as a freshman in the fall.

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 can be a good organizational method. 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 —may allow you to enter college with a clean binder and a few extra gigabytes of storage.

Start packing: To make the moving process a little smoother, try organizing your items and pack 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.

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 internships or future jobs, so presenting yourself as a professional might pay off in the long run.

Spending Quality Time With Your Family

Even though your parents may have 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.

Connecting With Your New Roommate

If you’re living in a dorm in the fall, your college will likely connect you with your new roommate via email or snail mail. Use the few weeks before school begins to connect with him or her.

Get to know one another , make 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.

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 ever setting foot in it by checking out local publications including local news sites and your school’s newspaper. 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.

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.

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.

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. Ask a parent or guardian to help you open a bank account if you don’t have one already, and ensure you have access to it from anywhere.

Now is also an excellent time to create a plan on how you’re going to finance your college education. Include any savings, scholarship money, or other financial aid that has been offered and accepted. If you need a little more assistance with financing your college education, a private student loan may help cover the gap.

A no-fee private student loan with SoFi means no origination fees, no late fees, and no insufficient fund fees. Ever. And, a private student loan with SoFi even offers flexible repayment plans to fit your individual budget. Getting this out of the way means you can sit back and relax. Just a few more weeks until the homework starts again.

Looking for financing options for your college education? Applying for a private student loan from SoFi is a great place to start.



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.
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SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

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7 Tips for Acing a Video Interview

Whether you just graduated school or are just seeking a new job, work interviews have modernized. Video interviews —conducted online— are increasingly common. In some industries, IRL interviews are (for now) a thing of the past—as more companies take on remote hires and millions are working from home.

And, with the rapid rise in digital job interviews, what are some ways to ace the video interview?

Here are seven tips for giving an impactful and memorable video interview—from practicing potential answers out loud ahead of time to tweaking the lighting for your camera.

There are various ways to get a first job after college. Being prepared for video interviews is one way to make a positive first impression.

Dressing for the Video Interview

For remote jobs, it’s quite possible that applicants may do a video interview through their tablets or computers. And, while the job interview location may now be a digital platform (and your couch), certain interview expectations stay the same—namely presenting yourself with professionalism and dressing for the job. Even when (especially when) you’re interviewing from home.

It may be helpful to ask about the expected dress code for a remote position. Asking questions like this may show a hirer that you’re aware that businesses have diverse expectations for professionalism. Even if they say you can wear whatever you want, you’ve shown that you’re unafraid of asking questions to grasp what’s expected of that role.

There’s an old adage— dress for the job you want, not the role you have. In a video interview, this could mean opting to dress a touch more formally—even if HR said the employees usually go for business-casual. (And, yes, you should wear pants during video interviews.)

It’s hard to feel like you’re going to shine if you’re in coffee-stained PJs.

It’s also not a bad idea to confirm the logistics of the video interview (in addition to outfit- planning). Some video interview logistics questions could include:

•   Will you get a calendar invite or event link for the interview?
•   What time zone will the interviewer be calling in from?
•   Which video conferencing platform will be used?
•   Will you need to download software to be able join the interview?

Knowing the answers to logistics can help bring more confidence to the video interview.

1. Practicing to Make Perfect

Different companies or organizations may use different platforms to host the interview—from Zoom to Google Hangouts to other programs. Don’t worry: You don’t need to become a pro at all the expert features. Still, it’s a good idea to become comfortable at:

•   Dialing in to scheduled calls
•   Checking the audio and the camera
•   Understanding what the interviewer can see
•   Ensuring the WiFi signal is strong enough for the video interview

If an interviewer mentions a program you’ve never used, it’s advisable to download and try it out well before the actual call. Opening up an unfamiliar program just before the interview only to realize it’s not compatible with your technology might create a positive first impression. So, make sure you double-check that you have all logins or passwords for the call. It’s best not to keep interviewers waiting because you failed to check the video interview details.

Try to make a mental checklist of digital distractions you’ve run across, as well. Then, see what you can do to minimize (if not outright eliminate) those common distractions before the live video interview. For example, you could turn off notifications or sounds for texts and emails during the interview time slot.

2. Setting the Surroundings

Generally, it’s a good idea to do a test call on the planned video-interview platform. This could help you assess how you and your surroundings appear via video. You may even want an extra set of eyes and ears–asking a friend or family member to do a “mock” call to ensure the audio and visuals are clear.

When prepping for a video interview, put yourself in the position of whoever will be interviewing you. Some questions to chew on:

•   What can the interviewer see of your space?
•   Are you easily visible or is more light needed?
•   Are there any distractions in the camera frame?

Some digital platforms allow users to record sessions. So, interviewees may want to record themselves talking and then watch and listen. You could run through the main things you want to say in the real video interview. Talking aloud on camera can help some people to become more aware of their own nervous tics and body language.

3. Taking Notes Beforehand

With job interviews, researching the company beforehand could give you ideas of how to connect previous work experience with the brand’s values or role’s job. One of the benefits of a video interview is that you can make these research notes quite literal.

Write out key points on a big piece of paper near your computer. Or, jot down some ideas or accomplishments on a sticky note next to your camera. It’s likely that the employer conducting the video interview will have no idea you’re looking at those pre-prepared notes—just make sure you keep your notes short, so you can naturally weave in keywords.

Talking points are a good idea. You may want to skip long sentences that sound like you’re reading.

4. Minimizing Off-Screen Distractions

Above all else, keep your on-screen image distraction-free. It’s worth remembering that the only person the interviewer wants to interact with is you–not your adorable pets, lovely roommates, or kid sister. You ask the folks you share a living space with to keep quiet or stay in their rooms during your interview. Plan ahead so the conversation isn’t distractingly interrupted by unexpected visitors.

5. Wearing Headphones

It would be a shame to have the audio cut out mid interview. Nothing can derail a smooth interview back-and-forth than the inability to hear the other person. It’s likely neither the interviewer or the job applicant wants to say, “What?” or “Can you repeat that?” during the video call.

There’s no need to invest in fancy, studio-quality headphones, thankfully—if you’re comfortable with earbuds, those should work fine. They also have the added benefit of not being visually intrusive.

6. Going Outside for a Breather

It’s hard to feel energetic and friendly if you’re cooped inside all day. A good way to minimize nerves is to get fresh air. Don’t just open up a window—put on sunscreen, maintain social distancing, and go outside. Even if it’s just for 15 minutes, a jolt of sunlight and breeze can reset the mind.

7. Remembering to Be Yourself

After preparing for the logistics of a video interview, it can be easy to forget one simple thing: Be yourself. While a strong WiFi signal and well-lit space won’t hurt your chances during a video interview, it’s helpful to recall that interviews are conversations between two or more people. Be prepared and share who you are.

Getting to Work

Acing a job interview—video interview or otherwise—is just one part of navigating life after college. Being ready for a video interview is just one new way to get noticed these days.

On top of looking for a full-time or better-paying job, some grads also want to find ways to reduce their outstanding debt balances—including long-term bills, like student loan repayments.

After exhausting federal options (like income-driven repayment or loan forgiveness programs), some borrowers decide to refinance their student loans with a private lender.
Refinancing student loans could reduce monthly bill payments or the amount paid in interest during the duration of the loan.

Learn more about refinancing your student loans with SoFi.



SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF SEPTEMBER DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF SEPTEMBER DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

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Source: sofi.com

MintFamily with Beth Kobliner: 3 Ways Your Kids Will Redefine the American Dream

A friend’s 20-something son shocked his parents with his post-graduation plans: He was moving to Southeast Asia to sell selfie sticks.

Millennials in a nutshell, #amiright?

But who can blame them for taking non-traditional paths, given the poor financial hand they’ve been dealt: record levels of college debt, uncertain job prospects, stagnant wages, and more. It’s why one in three Millennials is deeply dissatisfied with their financial situation, according to a much-quoted new study from George Washington University and PwC.

Findings from a recent Harvard survey cut even deeper: half of Millennials say the American Dream is dead. Yep, that cornerstone of post-war America—the house, the car, the upwardly mobile career track—is about as relevant to them as black & white TV. To parents raised on the mythology of the American Dream, that’s grim news.

But the situation may not be as dire as it appears.

As they’ve done with everything from communications to careers, Millennials are redefining what it means to lead a “better life” (something parents see as key to the American Dream, according to a 2015 60 Minutes/Vanity Fair poll). This new paradigm is rooted in the experiences of people who came of age after the financial crisis of 2008, and reflects how they see the world. It offers a flexible lifestyle (one that some might see as transient) and a reworking of the traditional measures of success.

Here are three ways that our kids will make their own American Dream—and thrive.

1.  They’ll rethink what college means—and how to pay for it.

Two-thirds of parents say the American Dream includes sending their kids to college, according to a September poll from the youth media company Fusion. These moms and dads are right to think this, as college grads earn about $1 million more over their lifetimes.

For Millennials, cost and career aspirations are informing this major life decision more than ever (call it pragmatism if you want). Gone are the days of selecting a school based on its bucolic campus or dominant football program. Kids (and parents) want more value—and less debt.

That’s why it’s so critical to start the college cost conversation early—like 9th grade-early. Want an incentive? A start-up called Raise.me allows high schoolers—as early as freshman year—to earn “micro-scholarships” from over 100 colleges. Got an A in chemistry? Won the lacrosse playoffs? Volunteered at your local animal shelter? Each awesome achievement can earn your kid $500 to over $1,000 from various colleges. Even “mayor” of Millennials Mark Zuckerberg backs it: Facebook is one of Raise.me’s main supporters.

Best way to avoid the college cost guessing game? Fill out the FAFSA (Free Application for Federal Student Aid)—the key to scholarships, grants, work-study, and low-rate federal loans. The form is notoriously long and complicated, but it’s getting better! Starting this year, you can access the FAFSA on October 1, 2016 (up from January 1, 2017). Why the new, early start? It means you’ll be able to auto-fill the form for the 2017-18 school year using your 2015 tax return data. (More details here.)

Parents of kids who excel in hands-on environments can encourage them to consider the growing trend of apprenticeships (a traditionally European idea that’s catching on here in the U.S.), particularly programs offered in tandem with a community college degree.

2.  They’ll understand that owning your own “home sweet home” is only sweet when you can afford it.

In 1986 (back when I was graduating from college!), 76% of young people saw owning a home as essential to the American Dream. Today that’s down to 59%, according to the Fusion poll.

That means your kid is more likely to bunk with you—or rent—than take on a mortgage she can’t afford (so don’t turn her bedroom into a home office just yet). If she does move in with you, make sure she uses this time as an opportunity to save! (And work out any financial details in advance with this helpful guide from eHow.com.)

Renting has traditionally gotten a bad rap, but it lets your kid explore—new towns, new jobs, new people!—without being stuck in one place. Take our selfie-stick seller: his Southeast Asia stint lasted less than a year before he was back in the states and settling into a new city and new gig. Like his fellow Millennials, he’ll probably rent for several years. Buying may not even cross his mind until his early 30s. A Zillow study shows the average first-time homebuyer is now 33, up from 29 in the 1970s. Of course, you’ll want to talk to your kid about the realities of owning a home, including how to sock away a chunk of money for a down payment once she’s ready.

3.  They’ll value happiness and independence over a huge paycheck.

The entrepreneurial goals of Millennials can sometimes seem a little, er, lofty (like the selfie stick plan that didn’t exactly take off), but thankfully, many are starting to pace themselves.

A study from Upwork, a company that helps businesses find freelance workers, showed that 62% (mostly Millennial) freelancers planned to work a full-time job and moonlight on the side for two years before quitting to follow their dreams. Two years may not be a magic number (a specific financial goal would be safer), but at least they’re earning—and learning—prior to taking the leap.

Today’s young people aren’t all work and no play, either. Millennials’ drive for success, salary, and even entrepreneurial goals pales in comparison to their desire to spend time with family and friends, which they rank as “one of the most important things” in their lives, according to the Harvard survey.

The takeaway? We’re raising a generation that demands independence, flexibility, and a true work/life balance. Perhaps that’s the new American Dream.

Sounds like something we can all believe in.

How do you define the American Dream for your kids? Tell me on Twitter using #NewAmericanDream.

© 2016 Beth Kobliner, All Rights Reserved

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Beth Kobliner is the author of the New York Times bestseller Get a Financial Life, and is currently writing a new book, Make Your Kid a Money Genius (Even If You’re Not), to be published by Simon & Schuster. Visit her at bethkobliner.com, follow her on Twitter, and like her on Facebook.

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A Look into the Public Service Loan Forgiveness Program

The Public Service Loan Forgiveness Program is a government program that was created with the College Cost Reduction and Access Act of 2007 .

The goal was to help professionals working in public service who have more federal student loans than their public sector salaries allow them to easily repay.

It’s aim is to ensure that the best and the brightest don’t feel as though they have to leave these important jobs to join corporate America just so they can pay down their student debt.

an income-driven repayment plan .

There are four income-driven repayment plans to choose from; There’s Pay As You Earn, income-based repayment, income-contingent repayment, or Revised Pay as You Earn. This will likely allow you to pay less per month toward your loans than you would on the standard plan.

There are separate eligibility requirements for these plans, so be sure to check if you qualify.

3. Certifying your employment. To do this, print out an Employment Certification form and get your employer to fill it out and send it in for approval. The Federal Student Aid website suggests filling this form out annually or at least every time you switch jobs.

You can also use the Public Service Loan Forgiveness Help Tool to find qualifying employers and get the forms that you’ll need to fill out.

4. Making 120 qualifying monthly payments on your student loans while you’re employed by a qualified public service employer. What if you switch employers? So long as you are still working for a qualifying employer, you’ll still qualify.

5. After you make the final payment, you can apply for forgiveness. You fill out an application , send it in, and wait. Then (hopefully!) you can celebrate your loan forgiveness.

The Current State of the Program

Because the program was created in 2007, the first people to qualify to have their loans forgiven applied for forgiveness in September 2017. But while the Congressional Budget Office estimates that the program could cost just under $24 billion in the next 10 years , and the U.S. Government Accountability Office believes that more than four million student loan borrowers qualify for the program, some aren’t aware that it exists. And even more graduates have gotten bad information from loan servicers that rendered them ineligible.

In 2018, just 1% of applicants were approved for loan forgiveness through PSLF. In November 2020, the US Department of Education released updated information indicating that 2.4% of applicants have been approved for PSLF.

Pros and Cons of the Public Service Loan Forgiveness Program

The Advantages of the Program Are Pretty Straightforward:

1. Your balance of student loans are forgiven after a set time, which can be a relief. This works as a kind of bonus to make up for the low pay people working in the public sector may earn.

2. The amount forgiven usually isn’t considered income, so you aren’t taxed on it (that means you don’t have to save additional money to account for the IRS bill). There are other loan forgiveness programs that will forgive your loans, but you might see a big tax bill when they do.

3. You get rewarded for being a do-gooder (just like your mom promised you would). It will feel great to know that you’re making a difference, and your government appreciates it enough to give you a break on your federal student loans.

4. You may pay less monthly because you’re on an income-driven plan. This means paying out less of your hard-earned cash every month.

The Disadvantages of the Program Are That:

1. The program is only open to those with certain types of employers. And it’s contingent on you staying with a qualifying public service employer for 10 years, which might not be a guarantee.

2. Some people aren’t aware of the program, which is partly because of a lack of education by employers, loan servicers, and schools.

3. There are a lot of hoops to jump through to get your loans forgiven. Sounds fun, right? Plus, if you don’t jump through a hoop properly, you could jeopardize your forgiveness.

Teacher Loan Forgiveness program. This program is available to full-time teachers who have completed five consecutive years of teaching in a low-income school. This program also has strict eligibility requirements that must be met in order to receive forgiveness.

These federal forgiveness programs do not apply to private student loans. If you are looking for ways to reduce your interest rate or monthly payments on private student loans, refinancing with a private lender could be an option.

It is important to mention that refinancing your federal student loans with a private lender may make you ineligible for the Public Service Loan Forgiveness program should you choose that route.

The Takeaway

The Public Service Loan Forgiveness program can be one way for eligible borrowers to have their federal student loans forgiven. The program has stringent requirements that cna make successfully receiving forgiveness through PSLF challenging.

Refinancing is another option that can allow borrowers to secure a competitive interest rate on student loans. Refinancing federal loans eliminates them from borrower protections.

Interested in seeing if you qualify for a lower interest rate? Check out SoFi’s student loan refinancing to find out.



IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF SEPTEMBER DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

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.
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
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF SEPTEMBER DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

SLR18111

Source: sofi.com

Important Things to Know as a First-Generation College Student

It’s a common cliche that parents want their kids to walk in their shoes and end up in the same career as they did. But a lot of parents may want more for their kids than this—they want their kids to achieve more, aim higher.

Being a first-generation college student is something to be proud of, but it can also be nerve wracking. There might be high expectations that come with being the first in the family to attend school that add to the normal stress of attending college.

On top of that, there’s the fact that if nobody else in the family has done it yet, there are no family members to give advice, none to provide guidance. But there are ways to thrive as a first-generation college student. It’s a big deal to be the first one in a family to attend college, and getting prepared can help lessen the stress and pressure.

Challenges of Being a First-Generation Student

So, what is a first-generation college student? Being a first-generation college student means the student’s parents either did not earn a college degree or did not go to college at all. Since their parents may not understand much of the college experience, these students are embarking on a somewhat unknown path, which can lead to challenges that other students don’t face.

Lacking this direct source of advice can affect the student’s ability to complete school. It may be more difficult for a first-generation student to adequately prepare for college, both financially and socially. College can be stressful, and without a support system that understands these experiences the student may find it difficult to continue with school.

Some first-generation students may have other demographic characteristics, such as low economic status or low enrollment intensity (generally, being enrolled in a less than full-time course load), that also increase their risk of not finishing college. The usual stressors of college are enough to make it a challenging experience for anybody, but first-gen students may find these factors make it even more difficult.

grants, loans, and scholarships available to eligible students.

The first step to financing your college education is filling out the FAFSA® (Free Application for Federal Student Aid). This application will determine a student’s eligibility to receive federal aid for college. Federal aid can be both grants or loans. Federal grants usually don’t need to be repaid, but federal loans do.

other eligibility requirements .

If students are not eligible for federal aid, or if the federal aid they receive isn’t enough to cover all their costs, they might also consider applying for scholarships, which are available through different sources such as a student’s school, community organizations, or corporations. Eligibility varies for each one. Some scholarships are need-based, whereas some are merit-based. There are also scholarships available specifically for first-generation college students .

Another option available for financing college is private student loans. The eligibility for private student loans is based on a student’s credit history, income, and other factors. Federal loans come with benefits that are not usually available with private loans, so it’s recommended that students exhaust all federal aid options before considering a private loan.

The terms of private student loans will vary at each financial institution, so students are encouraged to do thorough research before choosing a lender.

Students just beginning their college journey, those on the graduate or professional school path, or parents of a college student may want to consider looking into private student loan options available through SoFi.

Checking to see what rates you might qualify for takes only a few minutes and is done completely online. SoFi’s private student loans offer flexible repayment options and have no fees.

Interested in a private student loan? Apply for one with SoFi today.



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 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.

SOPS20054

Source: sofi.com

Do I Need Life Insurance?

Do you remember what it’s like being a kid with no financial responsibilities? Neither do I. It seems like we have been adulting forever. If life insurance isn’t quintessential adulthood, I don’t know what is. As you are reading and researching life insurance, one of the biggest questions you ask yourself is “Do I even need life insurance?”

Ask yourself this question: Does someone rely on me financially? If the answer is yes, then you likely need life insurance. Let’s discuss a few different types of people and their need for life insurance.

Single? You probably don’t need it.

If you are single and have no children, you probably don’t need life insurance. However, if you’re an ultra-planner or want to have a family sooner rather than later, locking in those low rates while you’re young and healthy can be a wise move.

Here are a few situations in which buying life insurance would be recommended even if you’re single:

  • Co-signed loans

Maybe your grandparents are co-signers on your private student loans or your parents co-signed on your mortgage. If you die before the balance is paid, the creditors can go after your co-signers. Life insurance can pay for these debts.

  • Caring for relatives

If you are caring for siblings or aging relatives you should consider life insurance to ensure that your loved ones are still provided for even if you are no longer around.

Have dependent children? You definitely need it.

Those with children have the greatest need for life insurance. Children rely on you for food, clothing, shelter, medicine, and everything else. If you die, life insurance can continue to fund these things, and it can also pay for hopes and dreams such as college tuition or a wedding.

Let’s take a closer look at specific parental situations:

  • Dual income families

If your household has two incomes contributing to standard of living, the sudden loss of a parent can cause financial upheaval if there is no life insurance to replace the lost income. One parent is now responsible to provide what two incomes previously did. For example, the proceeds from a life insurance policy can pay off the mortgage ensuring the children do not have to be uprooted from their home or school district.

  • Single parents

Let’s face it, the loss of a single parent to a child would be devastating. When married couples purchase life insurance, they often plan with the possibility that one spouse will remain to care for the children. Single parents do not have this luxury and absolutely need life insurance.

  • Stay-at-home parents

When you think of life insurance, you may only think a breadwinner needs coverage and not a stay-at-home parent – this could not be further from the truth. Imagine everything a stay-at-home parent does: babysits, cleans, cooks, transports, grocery shops… the list goes on. According to Salary.com, a stay-at-home mom is worth approximately $112,962. If the stay-at-home parent were to die unexpectedly, life insurance can pay for someone to help with these tasks.

Married? You most likely need it.

You don’t need to have children to rely on your significant other’s income. You’re building a life together and doing so requires money. You are likely both contributing to rent or a mortgage, car payments, utilities, and credit card bills. What happens if one of you were to die prematurely? The death benefit from a term life insurance policy can help pay for those expenses and cover the cost of a funeral.

It’s not uncommon today for couples to be in a committed relationship but postpone marriage. While it’s a little easier to own life insurance on your significant other if you are married, non-married couples can still purchase life insurance on one another as long as they can prove insurable interest.

Insurable interest is when a person can expect to suffer financial loss upon the death of another specific person. Having both names on a mortgage loan, both named on a lease, or owning a business together are just a few examples of how you can prove insurable interest.

The two types of life insurance

There are two main types of life insurance: term life insurance and permanent life insurance.

Term insurance:

  • Basic, inexpensive life insurance
  • Temporary – lasts a certain length of time (typically 10, 20, or 30 years)
  • Ideal for most people

Permanent insurance:

  •  Lasts a lifetime
  • Accumulates cash value
  • Much more costly than term insurance
  • Not necessary for most people

For most individuals, term life insurance is suitable coverage. It is designed to last only during the years in which you have the greatest need for it. Permanent life insurance can be beneficial for more complicated situations such as managing wealth for large estates.

The key benefits

Buying life insurance means you hand over some of your hard earned dollars to an insurance company – so what do you get in return?

  • Your life insurance policy will provide significant funds to your loved ones when they need it most, allowing them to grieve without the added financial stress.
  • The death benefit is typically considerably greater than the premiums you paid.
  • The proceeds are generally safe from creditors. Even if you die with debt, creditors cannot go after the life insurance proceeds paid.
  • Life insurance proceeds are typically not taxed by the federal government.
  • Peace of mind in knowing your loved ones will be financially protected if you are taken from them too soon.

Natasha Cornelius is the content manager and editor for Quotacy. She has worked in the life insurance industry since 2010 and has been making life insurance easier to understand with her writing since 2014. A long-time Mint user, Natasha lives in Bozeman, Montana where she loves to garden, DIY anything she can, and explore beautiful Big Sky country. Connect with her on LinkedIn.

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Source: mint.intuit.com

How to Handle Law School Debt

In recent years, law students have faced soaring education costs and an ever-changing job market. Some graduates leaving law school may spend several months searching for a position. Juggling long hours on top of high-interest loans can lead to less dedicated graduates leaving law altogether.

However, there are signs that things are beginning to turn around thanks to a smaller graduating class and a strengthening economy. According to the American Bar Association , 80.6% of the class of 2019 was able to secure full-time work relevant to their degree within 10 months of graduating.

So, how can you better set yourself up for success when dealing with law school loans? One obvious choice is to confront your debt situation directly. Here are some tips to help you get your law school debt in order, so you can focus more on the career portion of your life.

Average Law School Debt

Law school debt balances aren’t exactly conservative. According to the American Bar Association’s 2020 Law School Student Loan Debt report, the average amount of debt borrowed by law students at graduation was around $165,000. This debt may seem crazy, but when you consider the fact that getting a law school degree is now way more expensive it makes a bit more sense.

For example, comparing the cost of a law school degree now versus 30 years prior, it has increased quite a bit. Public law school cost is now over five times as expensive as it was in 1985. Adjusted for inflation, getting a private school law degree is almost three times as expensive as it was 30 years ago.

How Much Does Law School Actually Cost?

The cost of tuition and fees for law school vary dramatically depending on where you choose to go to school. According to U.S. News & World Report , the average annual cost of tuition and fees at a private law school for the 2019 to 2020 academic year was $49,548. Attending a public university costs an average of $28,264 for in-state students and $41,726 for out-of-state students.

Reducing Your Law School Loan Debt

Before we jump into ways to handle your student loan debt, we just want to touch on a couple options for reducing your debt burden.

One way, of course, is to take out fewer loans. If you’ve already finished law school, you aren’t going to retroactively qualify for scholarships, but if you’re reading this before you take out loans for your final year of law school, there’s still time.

Schools typically offer enticing fellowship and scholarship packages in order to recruit top students to their programs. In addition to merit- and need-based scholarships offered by your school, a quick online search could yield many outside scholarships offered by nonprofits and community organizations that you can take advantage of.

You could also look into law school forgiveness options for federal loans after graduation. For those starting jobs in government, public service, or the nonprofit sector, the Public Student Loan Forgiveness program offers federal loan forgiveness after 10 years of eligible payments under a qualifying repayment plan. If you have a steady, eligible career with a relatively low salary, loan forgiveness programs are definitely something to consider.

How Law School Debt Can Snowball

The unfortunate reality of debt is that it can snowball—particularly if you have loans from your undergraduate years.

For example, if you have unsubsidized loans from undergrad that you deferred while in law school, those loans accrued interest while you were becoming a lawyer. When you graduate from law school, the accrued interest is added to the principal amount you owe. That means your undergrad loans could have accrued three year’s worth of interest while you were in law school, which is now compounded on your principal balance.

What Are Some Solutions for Handling Law School Debt?

If you’re passionate about having a career in law and are confident in your abilities, don’t let the costs of your education deter you from pursuing a rewarding profession. Managing law school debt might seem overwhelming, but having a strategy can help you pay off your debt.

Here are several solutions to consider:

Making Interest-Only Payments While in School

While under the federal student loan deferment program, you aren’t required to make any payments while you’re in school, paying at least the amount of interest that is accruing on your loans each month could help keep your student debt from snowballing. And if you are able to pay more than just the interest, it’s a smart idea. The faster you pay down your loans, the less they’ll generally cost you over time.

Picking a Repayment Plan that Fits Your Budget

Once you graduate and start working, you’ll likely have a few financial priorities competing with your student loan repayment. In general, it can be a smart strategy to pay down law school debt as soon as you have a steady income, but paying down your loans too aggressively could leave you without enough in savings.

Building up an emergency fund can provide you with a buffer in case you have unforeseen expenses. It can also make sense to start putting a percentage of your income toward a retirement fund to take advantage of potential long-term gains. You may want to factor your savings goals into your budget and pick a student loan repayment plan that fits your cash flow.

Putting any Extra Funds Toward Your Debt

Alternately, you can make paying down debt your top priority and put any extra income you have toward your highest-interest loans. Of course, if you choose this route, you may want to make sure you have a financial safety net in place first. This law school debt repayment strategy is typically called the avalanche method.

Essentially, while making regularly scheduled payments on all your loans, with the avalanche method you’d make additional payments on your highest interest loans first. This method helps reduce the amount of total interest you’re paying. And by paying your loans down early, you could save on interest payments over the years because the faster you pay off your student loans, the faster you can stop paying interest on your debt.

Cutting Back

Relating to the strategy above, you could try to cut back on your monthly expenses and put that extra money toward your debt payments. While sticking to a budget can be challenging, it is one tool to help you stay on track with your spending.

Can you cut back on certain expenses each month? You may have to make a few sacrifices (within reason), but you probably don’t need to cut back on everything. See what simple changes you can make to your budget to find extra money to put toward your law school debt. Paying more than the minimum monthly payment on your student loans can go a long way towards getting out of debt faster and, therefore, making fewer interest payments.

Making Your Loan Payments Cost Less

What if instead of taking that job at a top law firm, you opt to go into public defense or spend a year traveling? If you find yourself looking for a way to make your federal loan payments more manageable, income-driven repayment plans can also lower your monthly payment by capping the amount you pay based on your discretionary income and household size.

With these plans, you may pay more interest over the life of your loans. But if your monthly payments are too high, income-driven repayment plans can bring them down.

Another option that can potentially reduce the cost of student loans (in one way or another) is to refinance them with a private lender, like SoFi. When you refinance, a private lender gives you one new loan to pay off your existing student loans (including your law school debt and the undergraduate debt you may still have). Your new loan will have new terms and a new (hopefully lower) interest rate.

Instead of paying on multiple student loans, you’ll just have to worry about paying off one loan. If you qualify for a lower interest rate and shorten your loan repayment term, you may pay less in interest over the life of the loan.

Refinancing federal student loans with a private lender means you’ll no longer be able to take advantage of the benefits that come with federal loans, like income-driven repayment plans, deferment, and forbearance.

The Takeaway

Law students can face an extraordinary debt burden when they graduate. Crafting a repayment strategy based on your personal situation can help you to effectively manage your student debt, while embarking on a rewarding career as a lawyer. Some strategies that may make sense, depending on your unique circumstances, include; making interest-only payments while attending law school, crafting a debt repayment plan, and allocating more of your discretionary income toward your law school debt.

Refinancing might be another option to consider, however those with federal loans would lose eligibility for all federal benefits, including PSLF and income-driven repayment plans.

Considering refinancing your law school debt? Learn more about whether SoFi student loan refinancing is right for you.



SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

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.
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
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF SEPTEMBER DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

SLR18147

Source: sofi.com

What You Should Know About the Student Loan Interest Deduction

Let’s be honest: Does anyone actually look forward to doing taxes? The whole process feels like an overly complex homework assignment from a fuddy-duddy teacher.

But the next time you find yourself frantically searching for your W-2 form or trying to figure out where you put the shoebox with your receipts, think about the money you might get back from your deductions.

If you paid on student loans in the prior tax year, you might just qualify for the student loan tax deduction, which allows borrowers to deduct up to $2,500 in interest they paid from their taxable income.

Getting a refund? Whether you’re considering putting it toward skydiving for the first time or you’re planning to use it to pay off more student loan debt, here are some things you should know about the student loan interest deduction and whether you qualify.

How the Student Loan Tax Deduction Works

The student loan tax deduction isn’t a magical discount that’s taken off your monthly student loan payment like a coupon at the grocery store checkout. Instead, you pay the interest out of pocket throughout the tax year and claim the interest you paid when you do your taxes.

The interest applies to qualified student loans that were used for tuition and fees; room and board; coursework-related fees, books, supplies, and equipment; and other necessary expenses like transportation.

education loan—undergrad, graduate, or parent loan—SoFi offers private loans with flexible repayment options, competitive rates, and no fees.

Find your rate in just minutes.



Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
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 for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. SoFi Lending Corp. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

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.

SLR17145

Source: sofi.com

Best Private Student Loans of April 2021

Students aren’t just leaving school with new friends and undergraduate degrees — they’re also bringing the stress of student loan debt along for the ride. In fact, most students now finish post-secondary school owing more than $30,000 and spend anywhere from 10 to 25 years paying back these loans. While there’s no way to make student loan debt disappear, it’s possible to lower interest payments and reduce total term lengths by finding the best student loans for your finances.

Lending Partner

Min. Loan

Fixed APR

Eligible Degrees

  • College Ave

    Min. Loan

    $5,000

    Fixed APR

    Starting at 3.34%

    Eligible Degrees

    Undergraduate & Graduate

    NEXT

    on lender’s secure website

  • Credible

    Min. Loan

    Varies

    Fixed APR

    2.79% – 9.15%

    Eligible Degrees

    Undergraduate & Graduate

    NEXT

    on lender’s secure website

  • Education Loan Finance

    Min. Loan

    $15,000

    Fixed APR

    2.79%

    Eligible Degrees

    Undergraduate, Graduate & Parent Loans

    NEXT

    on lender’s secure website

  • LendKey

    Min. Loan

    Varies

    Fixed APR

    2.95%–7.63%

    Eligible Degrees

    Undergraduate & Graduate

    NEXT

    on lender’s secure website

  • SoFi

    SoFi LogoSoFi Logo

    Min. Loan

    $5,000

    Fixed APR

    2.99%–6.94% (with AutoPay)

    Eligible Degrees

    Undergraduate & Graduate

    NEXT

    on lender’s secure website

Lowest APRs shown for Discover Student Loans are available for the most creditworthy applicants for undergraduate loans, and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments.

In this article

While public student loans are always an option to help pay for schooling, private student loans offer more choice for students looking to get out of debt and get on with their lives. We used our SimpleScore methodology to compare rates, fees, loan amounts, transparency and perks of the best private student loans of 2020.

The best private student loans of 2020

The best private student loans at a glance

Lender Min. Loan Amount APR Terms SimpleScore
Citizens Bank $1,000 as low as 3.99% fixed; as low as 1.18% variable 5, 10 or 15 years 3
Discover $1,000 4.24%–12.99%1 fixed; 1.24%–11.99%1 variable 15 years 4.6
Sallie Mae $1,000 4.25%–12.59% fixed; 1.13%–11.23% variable 5 to 15 years 4
Earnest $1,000 as low as 3.49% fixed; as low as 1.05% variable 5 to 20 years 4.2
SoFi $5,000 4.23%–11.26% fixed; 1.87%–11.66% variable 5, 7, 10, 15 and 20 years 4.6
Ascent $1,000 6.92%–13.91% fixed; 5.84%–12.37% variable 5, 10 and 15 years 3.6

Lowest APRs shown for Discover Student Loans are available for the most creditworthy applicants for undergraduate loans, and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments.

*Rates accurate as of April 2021

Best for multi-year approval – Citizens One

No one loves their student loans — but Citizens Bank makes it easier to like the little things with multi-year approval.

Fixed APR

as low as 3.99%

Loan Amount

$1K–$150K

SimpleScore

3 / 5.0

SimpleScore Citizens One 3

Max Fixed APR 3

Transparency 4

Loan Amount 1

Citizens Bank offers a low-hassle way for students to pay back loans with multi-year approval. Citizens Bank makes the list of best student loans thanks to its multi-year approval process. After successfully applying for your initial student loan, subsequent term years don’t require re-applying. Instead, Citizens Bank performs a soft credit check each year. And while Citizens Bank does require a cosigner for most student loans, the cosigner can be released from their obligation after 36 months of on-time payments. If the student or cosigner already has an account with Citizens Bank, they’re eligible for a 0.25% interest rate reduction on their private student loan.

Read our full Citizens Bank private student loans review.

Best for student rewards – Discover Undergraduate Loan

If you make the grade, Discover will make with the money and pony up 1% of your loan total as a cash reward.

Fixed APR

4.24%–12.99%1

Term

15 years

Loan Amount

N/A

SimpleScore

4.6 / 5.0

SimpleScore Discover Undergraduate Loan 4.6

Max Fixed APR 3

Transparency 5

Loan Amount 5

Discover’s good grades program makes it possible to get a cash reward2 if your GPA is 3.0 or better.

The Discover brand is typically associated with credit cards, but it also offers low-interest student loans. Discover student loans include the benefit of no origination, application or late fees, and students can apply for funding entirely online. What really sets Discover apart from the competition, however, is its good grades program. For each year students maintain a 3.0 GPA, Discover offers a cash reward of 1% of the total loan amount.

2Get a cash reward on each new Discover undergraduate and graduate student loan when you earn at least a 3.0 GPA (or equivalent) in any academic period covered by the loan. Limitations Apply. Visit DiscoverStudentLoans.com/Reward for terms and conditions.

interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments. The interest rate ranges represent the lowest and highest interest rates offered on the Discover Undergraduate Loan. The fixed interest rate is set at the time of application and does not change during the life of the loan. The variable interest rate is calculated based on the 3-Month LIBOR index plus the applicable margin percentage. For variable interest rate loans, the 3-Month LIBOR is 0.250% as of April 1, 2021. Discover Student Loans may adjust the rate quarterly on each January 1, April 1, July 1 and October 1 (the “interest rate change date”), based on the 3-Month LIBOR Index, published in the Money Rates section of the Wall Street Journal 15 days prior to the interest rate change date, rounded up to the nearest one-eighth of one percent (0.125% or 0.00125). This may cause the monthly payments to increase, the number of payments to increase or both. Your APR will be determined after you apply. Learn more about Discover Student Loans interest rates at DiscoverStudentLoans.com/Rates.

Check out our full Discover student loans review.

Best for part-time students – Sallie Mae

Need a part-time partnership? Shake hands with Sallie Mae for full coverage of any courses at a degree-granting institution.

Fixed APR

4.25%–12.59%

Term

5–15 years

Loan Amount

100% of the costs of attendance

SimpleScore

4 / 5.0

SimpleScore Sallie Mae 4

Transparency 4

Loan Amount 5

Sallie Mae earns a spot as one of the best student loan companies because it offers financing for any students.

While many private student loan lenders will cover full- or half-time students at accredited colleges and universities, few lenders offer support for students taking night classes, career certification courses, winter classes or summer courses falling outside typical school structure. Sallie Mae, however, offers up to 100% financing for any student — so long as they’re attending a degree-granting institution. Even better? Interest rates from Sallie Mae slide to the lower end of the scale, making this a cost-effective choice if you’re only taking a few classes.

The Best Student Loans of 2020]

The cost of private student loans varies considerably across providers. Some charge fees for application, origination and even early prepayment, while others streamline the process but have higher interest rates. Some offer perks like cash back, while others make it easy to apply online or offer multi-year approval options to reduce unnecessary paperwork.

How private student loans work

Private student loans are similar to personal loans — applicants will need to provide financial and personal data including their Social Security Number, address and telephone number, current income levels, information about any other debts or loans and the value of any assets.

Next, students need to specify how much money they’re applying to borrow and how it will be used. Then, they’ll need to complete loan application forms — many providers now offer online or mobile options, but some still require paper forms — and then wait for a response from the lender. If approved, students sign all documents, and the funds are disbursed electronically. If rejected, some lenders will provide an opportunity to resubmit documents once specific issues are addressed.

[More: Will Consolidating Your Student Loans Help Your Credit Score?]

Repayment

Most private student loans don’t require repayment until after you’ve completed school. Many offer a grace period during which you won’t be charged interest — six months is the most common, but some providers offer nine or even 12 months depending on the amount of your loan and the program you’ve completed. Private lenders typically offer repayment terms ranging from five to 20 years, but bear in mind the longer your repayment period the more interest you’ll pay over time.

Cosigners

Many students don’t have the income levels, financial history and credit score necessary to qualify for a student loan on their own. As a result, private student loan providers often ask for a cosigner — typically a financially stable parent or guardian — who also provides their personal information and signs the loan documents.

Cosigners are jointly responsible for the repayment of the loan, which means that defaulting on payments could negatively impact their credit score. Some providers do offer no-cosigner loans under specific circumstances, while others allow students to remove cosigners after enough on-time payments are made.

How to choose the best private student loan for you

When it comes to choosing the best student loans, it’s worth approaching the process step-by-step:

  1. Do your research. Evaluate multiple providers and see what specific benefits they offer. Some make it easy to apply and manage your loan online, while others offer cashback rewards for good grades.
  2. Compare interest rates and terms. Check the range of possible interest rates for different private loans for college. If you’re looking for a fixed rate, long term loan with no cosigner, expect higher interest rates. If you’re willing to take on a shorter-term with variable rates, you can often find low-interest student loans.
  3. Calculate the amount you need. Most providers have a minimum lending amount of $1,000 and will cover up to 100% of your school expenses. Others — such as Citizens Bank and Ascent — have maximum amounts of $150,000 and $200,000, respectively.
  4. Consider the grace period. Longer grace periods mean more time to pay back your loan without accruing interest. While six months is the standard, some offer longer (or shorter) grace periods.

Pros and cons of private student loans

Private student loans have a different set of advantages and disadvantages from federal loans. While they can be an effective way to fill a funding gap, even the best private loans don’t come with the same federal protections.

Pros Higher borrowing limits
Lower rates for good credit
Special borrower incentives
Cons Eligibility based on credit history
Ineligible for income-based repayment
No subsidized interest

How to maximize your student financial aid

Before you turn to private loans to help fund your college education, you’ll first want to maximize the financial aid options the federal government offers. The U.S. Department of Education has several grants available to students with financial need. One of the most popular is the Federal Pell Grant, which goes to undergraduate students with exceptional financial need. To be eligible for any federal grant money, you’ll have to fill out a FAFSA (Free Application for Federal Student Aid).

In addition to federal grants, students can apply for scholarships. Like grants, this money doesn’t have to be paid back after you graduate. Scholarships are often based on merit or financial need.

Taking advantage of these other sources of funding can help students reduce the amount of money they have to borrow, and ultimately pay back, from the federal government and private lenders.

[Read: Eight Common Myths About the FAFSA, Busted]

How to get a private student loan

Applying for a private student loan is a fairly quick process. Unlike applying for federal loans, private loan applications don’t require you to fill out a FAFSA. However, you will have to provide financial information so the company can run a credit check.

Here’s what you’ll need to do to apply for a private student loan:

  1. Fill out the application. Providing any necessary personal and financial information. Depending on your credit, the company may either provide you with an instant decision or have someone review your application and get back to you.
  2. Get a cosigner, if needed. Unlike federal loans, private loans require you to meet certain credit qualifications. If the lender doesn’t feel confident you’ll pay back your loan, they may ask you to add a cosigner to your application.
  3. Select your loan terms. Some companies may give you a variety of options for your interest rate (fixed vs variable) and repayment plan.
  4. Sign your loan documents. Once you and the lender have agreed to the loan terms, you’ll have to sign any necessary documents to get the loan money.

FAQ

Your interest rate primarily comes down to two factors: your lender and your creditworthiness. Every lender offers different rates, and you can only get a rate as low as your lender currently offers. Your creditworthiness is the other big factor — the better your credit, the better the rate you can get. Other factors may also include the size of the loan, the repayment plan you choose, and whether you qualify for any rate discounts.

A private student loan can be an effective tool to help you fund your college education. Private loans don’t come with all of the same perks as federal loans. You usually aren’t eligible for income-based repayment plans or federal loan forgiveness. But private loans usually have higher borrowing limits and can help fill the gaps if your federal loans aren’t enough to meet your needs.

1Lowest APRs shown for Discover Student Loans are available for the most creditworthy applicants for undergraduate loans and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments. The interest rate ranges represent the lowest and highest interest rates offered on the Discover Undergraduate Loan. The fixed interest rate is set at the time of application and does not change during the life of the loan. The variable interest rate is calculated based on the 3-Month LIBOR index plus the applicable margin percentage. For variable interest rate loans, the 3-Month LIBOR is 0.250% as of April 1, 2021. Discover Student Loans may adjust the rate quarterly on each January 1, April 1, July 1 and October 1 (the “interest rate change date”), based on the 3-Month LIBOR Index, published in the Money Rates section of the Wall Street Journal 15 days prior to the interest rate change date, rounded up to the nearest one-eighth of one percent (0.125% or 0.00125). This may cause the monthly payments to increase, the number of payments to increase or both. Your APR will be determined after you apply. Learn more about Discover Student Loans interest rates at DiscoverStudentLoans.com/Rates.

We welcome your feedback on this article and would love to hear about your experience with the student loans we recommend. Contact us at inquiries@thesimpledollar.com with comments or questions.

Source: thesimpledollar.com