Understanding the Parent Plus Loan Forgiveness Program

Parent PLUS loan forgiveness provides financial relief to parents who borrowed money to cover the cost of their children’s college or career school. It isn’t always a quick fix, but there are certain federal and private programs that might offer the financial assistance needed to help them get on track.

To receive federal relief for Parent PLUS loans, parent borrowers have a few options.

They can consolidate the loan in order to enroll in an Income-Contingent Repayment plan after 25 years, pursue Public Service Loan Forgiveness after 10 years, or choose from a number of private student loan assistance programs or refinancing options.

Keep reading to learn more about what the available student loan forgiveness possibilities are for Parent PLUS loans.

Will Parent Plus Loans Be Included in Student Loan Forgiveness?

Parent PLUS loans are eligible for several of the same student loan forgiveness programs as federal student loans for students, including:

•   Borrower Defense Loan Discharge

•   Total and Permanent Disability (TPD) Discharge

•   Public Service Loan Forgiveness (PSLF)

That said, Parent PLUS loans generally have fewer repayment options in the first place and the eligibility requirements for these forgiveness programs can be strict and may require borrowers to consolidate their PLUS loan, such as with PSLF. This can make it tricky for borrowers to navigate how to use these federal relief programs to their advantage.

Refinancing is another option for Parent PLUS loan borrowers — applying for a new private student loan with an, ideally, lower interest rate. That said, some lenders offer less flexibility for repayment and the fine print can be lengthy, so there’s an inherent risk associated with refinancing Parent PLUS loans. It’s also worth noting that refinancing a PLUS loan will eliminate it from any federal repayment plans or forgiveness options.

Recommended: What Is a Parent PLUS Loan?

Parent Student Loan Forgiveness Program

When it comes to student loan forgiveness, the programs aren’t just available for the students. Parents who are on the hook for student loan debt can also qualify for student loan forgiveness.

As previously mentioned, a Parent PLUS loan may be eligible for Parent Student Loan Forgiveness through two specific federal programs:

•   Income-Contingent Repayment

•   The Public Service Loan Forgiveness (PSLF) Program

There are also a few private student loan forgiveness options, which we’ll get into below.

Income-Contingent Repayment (ICR)

An Income-Contingent Repayment plan, or ICR plan, is the only income-driven repayment plan that’s available for Parent PLUS borrowers. In order to qualify, parent borrowers must first consolidate their loans into a Direct Consolidation Loan, then repay that loan under the ICR plan.

•   A Parent PLUS loan that’s included in a Direct Consolidation Loan could be eligible for Income-Contingent Repayment, but only if the borrower entered their repayment period on or after July 1, 2006.

•   A Parent PLUS loan that’s included in the Federal Direct Loan Program or the Federal Family Education Loan Program (FFELP) is also eligible for ICR if it’s included in the Federal Direct Consolidation Loan.

ICR determines a borrower’s monthly payment based on 20% of their discretionary income or the amount by which their AGI exceeds 100% of the poverty line. After a 25-year repayment term, or 300 payments, the remaining loan balance will be forgiven.

Typically, the IRS considers canceled debt a form of taxable income, but the American Rescue Plan Act of 2021 made all student loan forgiveness tax-free through 2025.

Public Service Loan Forgiveness (PSLF)

Borrowers with Parent PLUS loans may be eligible for Public Service Loan Forgiveness Program, but in order to pursue that option must first consolidate the Parent PLUS loan into a Direct Consolidation Loan.

Then, after they’ve made 120 qualifying payments (ten year’s worth), borrowers become eligible for the Public Service Loan Forgiveness Program (PSLF). The parent borrower (not the student) must be employed full-time in a qualifying public service job. PSLF also has strict requirements such as certifying employment so it’s important to follow instructions closely if pursuing this option.

The Temporary Expanded Public Service Loan Forgiveness (TEPSLF) is another option for Parent PLUS borrowers if some or all of their 120 qualifying payments were made under either a graduated repayment plan or an extended repayment plan. The catch here is that the last year of their payments must have been at least as much as they would if they had paid under an ICR plan.

Refinance Parent Plus Loans

Refinancing a Parent PLUS loan is another option that could provide some financial relief.

For borrowers who don’t qualify for any of the loan forgiveness options above, it may be possible to lower their monthly payments by refinancing Parent PLUS student loans with a private lender.

In doing so, you’ll lose the government benefits associated with your federal loans, as briefly mentioned above, such as:

•   Student loan forgiveness

•   Forbearance options or options to defer your student loans

•   Choice of repayment options

Refinancing a Parent PLUS loan into the dependent’s name is another option, which some borrowers opt for once their child has graduated and started working. Not all loan servicers are willing to offer this type of refinancing option, though.

Transfer Parent Plus Student Loan to Student

Transferring Parent PLUS loans to a student can be complicated. There isn’t a federal loan program available that will conduct this exchange, and, as mentioned above, some private lenders won’t offer this option.

That said, some private lenders, like SoFi, allow dependents to take out a refinanced student loan and use it to pay off the PLUS loan of their parent.

Alternatives to Student Loan Forgiveness Parent Plus

When it comes to Parent PLUS loans, there are a few ways to get out of student loan debt legally, including the scenarios outlined below.

Student Loan Forgiveness Death of Parent

Federal student loans qualify for loan discharge when the borrower passes away. In the case of Parent PLUS loans, they are also discharged if the student who received the borrowed funds passes away.

In order to qualify for federal loan discharge due to death, borrowers must provide a copy of a death certificate to either the U.S. Department of Education or the loan servicer.

Recommended: Can Student Loans Be Discharged?

State Parent PLUS Student Loan Forgiveness Programs

Many individual states offer some sort of student loan repayment assistance or student loan forgiveness programs for Parent PLUS loan borrowers.

For an overview of options available in different states, you can take a look at The College Investor’s State-by-State Guide to Student Loan Forgiveness . For information on student loan and aid available take a look at the SoFi guide on state-by-state student aid available for borrowers.

Disability

In the event of the borrower becoming totally and permanently disabled, a Parent PLUS loan may be discharged. To qualify for a Total and Permanent Disability (TPD) discharge , borrowers must complete and submit a TPD discharge application, as well as documentation showing that they meet the requirements for being considered totally and permanently disabled. Note that in order to qualify for TPD, the parent borrower must be considered disabled. This type of forgiveness does not apply to Parent PLUS loans in the event that the student becomes disabled.

Bankruptcy

If a borrower can demonstrate undue financial hardship upon repaying the student loan, they might be able to discharge their Parent PLUS loan. Note having student loans discharged in bankruptcy is extremely rare. Proving “undue hardship” varies depending on the court that’s granting it, but most rulings abide by the Brunner test, which requires the debtor to meet all three of these criteria in order to discharge the student loan:

•   Poverty – Maintaining a minimal standard of living for the borrower and their dependents is deemed impossible if they’re forced to repay their student loans.

•   Persistence – The borrower’s current financial situation will likely continue for the majority of the repayment period.

•   Good faith – The borrower has made a “good faith” effort to repay their student loans.

Closed School Discharge

For parent borrowers whose children attended a school that closed while they were enrolled or who withdrew from the school during a “lookback period” of 120 days before its closure, a Closed School Discharge is another available form of student loan forgiveness.

In some circumstances, the government may extend the lookback period even further. For example, The Department of Education has changed the lookback period to 180 days for loans that were issued after July 1, 2020.

Borrower Defense

Borrower Defense Loan Discharge is available to Parent PLUS borrowers whose children were misled by their college or university or whose college or university engaged in certain forms of misconduct or violation of state laws.

To make a case for borrower defense, the Parent PLUS borrower must be able to demonstrate that their school violated a state law directly related to their federal student loan.

Explore Private Student Loan Options for Parents

Banks, credit unions, state loan agencies and other lenders typically offer private student loans for parents who want to help their children pay for college and refinancing options for parents and students.

Refinancing options will vary by lenders and some may be willing to refinance a Parent PLUS loan into a private refinanced loan in the student’s name. In addition to competitive interest rates and member benefits, SoFi does allow students to take over their parent’s loan during the refinancing process. Interest rates and terms may vary based on individual criteria such as income, credit score, and history.

If you decide refinancing a Parent PLUS loan makes sense for you, SoFi makes it simple. The application process is entirely online and SoFi offers flexible repayment options to help you land a loan that fits your budget. You can find your rate in a few minutes and checking if you prequalify won’t affect your credit score.*

The Takeaway

Parent PLUS Loan forgiveness offers financial relief to parents who borrowed money to help their child pay for college.

To receive federal relief for Parent PLUS loans, parent borrowers can enroll in an Income-Contingent Repayment plan, pursue Public Service Loan Forgiveness, transfer their student loan to another student, take advantage of a state Parent PLUS student loan forgiveness program, or opt for private student loan assistance or refinancing.

Learn more about refinancing a Parent PLUS loan with SoFi.


*Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC), and by SoFi Lending Corp. NMLS #1121636 , a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law (License # 6054612) and by other states. For additional product-specific legal and licensing information, see SoFi.com/legal.

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 SEPTEMBER 1, 2022 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.

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.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’swebsite .
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 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.
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.

Photo credit: iStock/DragonImages
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Source: sofi.com

Guide to Refinancing Your Student Loans After Marriage

After getting married, you’ll start to merge your life, your home, and possibly your finances with your partner. As you plan for the future, it’s helpful to consider the implications of student loans and marriage—which can affect your credit, your ability to get a home mortgage, and even the repayment of your student debt.

Consolidating your federal loans or refinancing student loans after marriage may be options to consider as you begin handling finances in your marriage and working together to reach your financial goals

Student Loans and Marriage

There are currently over 45 million borrowers in the U.S. and the total amount of student loan debt is $1.7 trillion. So the odds are high that either you or your partner may have student loans. As you begin planning for your financial future together, it’s helpful to look at how marriage can affect student loan payments.

Recommended: What is the Average Student Loan Debt?

What Happens to Student Loans When You Get Married?

If you haven’t already had a conversation about student loans and marriage before tying the knot, you and your partner should sit down and discuss your individual student loan debt: how much you have, whether you have federal or private student loans, as well as what your balances, payment status, and monthly payments are. It’s important to share this information since getting married may change your debt repayment plans.

If someone has federal student loans and is on an income-based repayment (IBR) plan when they get married, for example, their monthly payments may increase post-marriage as income-based repayment plans are determined by household income and size. Depending on how a couple chooses to file their taxes, the government may take a new spouse’s salary into account when determining what the borrower’s monthly payments should be.

Because federal student loan borrowers on an income-based repayment plan have to recertify each year, the current year’s income is taken into account which may be higher after marriage if both spouses work. If the borrower’s new spouse doesn’t earn income then they may actually see their monthly payment requirements drop as their household size went up, but their household income remained the same.

Household income also affects how much student loan interest a borrower can deduct on their federal taxes. It’s worth consulting an accountant if a newly married couple needs help figuring out where they stand financially post-marriage.

It’s also important to be aware of how marriage affects your credit score as how someone manages their student loan debt is a factor. Since spouses don’t share credit reports, marrying someone with bad credit won’t hurt your credit score. That said, when it comes time to apply for a loan together, a bad credit score can make getting approved harder—which is another reason it’s key to get on the same page about repaying any debt on time.

Recommended: Types of Federal Student Loans

Refinancing Student Loans After Marriage

Refinancing student loans gives borrowers the chance to take out a new student loan with ideally better interest rates and terms than their original student loan or loans. Some borrowers may choose to consolidate multiple student loans into one newly refinanced loan to streamline their debt repayment process.

The result? One convenient monthly payment to make with the same interest rate and the same loan servicer instead of multiple ones.

As tempting as it may be to combine debt with a spouse and work toward paying it off together, married couples typically cannot refinance their loans together and each spouse would need to refinance their student loans separately. But even though a couple can’t refinance their student loan debt together, they’ll still want to be aware of what’s going on with their partner’s student loans.

Recommended: Top 5 Tips for Refinancing Student Loans in 2022

How to Refinance Student Loans After Marriage

Refinancing student loans after marriage looks the same as it does before marriage and is pretty straightforward. The student loan borrower will take out a new loan, which is used to repay the original student loan.

Ideally, this results in a better interest rate which will help borrowers save money on interest payments, but this isn’t a guarantee. Before refinancing, it’s important that borrowers shop around to find the best rates possible as factors like their credit score and income can qualify them for different rates.

Borrowers have the option of refinancing both federal and private student loans, but it’s worth noting that refinancing a federal student loan into a private one removes access to valuable federal benefits like income-driven repayment plans and loan forgiveness for public service employees.

Refinancing vs. Consolidating Student Loans After Marriage

Borrowers can choose to refinance or consolidate their student loans before or after marriage.

If a borrower has multiple federal student loans, then they can choose to consolidate their different loans into one Direct Consolidation Loan. This type of loan only applies to federal student loans and is offered through the U.S. Department of Education.

This type of loan takes a weighted average of all of the loans consolidated to determine the new interest rate, so generally this is an option designed to simplify debt repayment, not to save money. If a borrower chooses to consolidate through a private lender, they will be issued new rates and terms, which may be more financially beneficial.

Consolidating through a private lender is a form of refinancing that allows borrowers to take out one new loan that covers all of their different sources of student loan debt. While some private lenders will only refinance private student loans, there are plenty of private lenders that refinance both private and federal loans. As mentioned earlier, refinancing a federal loan means losing access to federal protections and benefits.

Refinancing can be advantageous if the borrower is in a better financial place than they were when they originally took out private student loans. If they’ve improved their credit score, paid down debt, and taken other steps to improve their financial picture, they may qualify for a better interest rate that can save them a lot of money over the life of their loan.

Another option in refinancing student loans after marriage is co-signing a partner’s loan. Doing so may mean that you can leverage greater earning power and possibly better credit, but it also means both partners are responsible for the loan, and can put one partner at risk in the event of death or divorce.

Student Loan Refinancing With SoFi

SoFi refinances both federal and private student loans, which can help borrowers save because of our flexible terms and low fixed or variable rates. Borrowers won’t ever have to worry about any fees and can apply quickly online today.

Learn more about refinancing student loans with SoFi.

FAQ

What happens when you marry someone with student loan debt?

If someone’s new spouse has student loan debt, this indirectly affects them. While the debt won’t be under their name or affect their credit score when it comes time to apply for credit products with their spouse (such as a mortgage loan) their credit score and current sources of debt will likely be taken into account.

Is one spouse responsible for the other’s student loans?

No one spouse is directly responsible for their spouse’s student loans, but it’s important to work together to pay off student loan debt. Again, once it comes time to apply for a joint loan, any student loan debt can have an effect on eligibility.

Does getting married affect student loan repayment?

Getting married can affect student loan repayment if a borrower is on an income-based repayment plan for their federal student loans. This type of repayment plan takes household size and income into account when determining what the borrower’s monthly payment should be. If their spouse brings in an income they may find their monthly payments are higher, but if their spouse doesn’t have an income their payments may become smaller.


Photo credit: iStock/South_agency

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 SEPTEMBER 1, 2022 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.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC), and by SoFi Lending Corp. NMLS #1121636 , a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law (License # 6054612) and by other states. For additional product-specific legal and licensing information, see SoFi.com/legal.

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.
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Source: sofi.com

Guide to Extending Student Loan Repayment Terms

Did you know that you may be able to draw out student loan repayment for 20 or 30 years? That means lower monthly payments (cool!) but more total interest paid (less cool).

But if your payments are a strain, consolidating and refinancing student loans are two ways to stretch out repayment terms and tame those monthly bills.

Federal student loans may be consolidated into one. Both federal and private student loans can be refinanced into one new loan, preferably with a lower rate. A guide of student loan refinancing could be a helpful read.

How Long Are Student Loan Repayment Terms Usually?

Federal student loan borrowers are placed on the standard repayment plan of 10 years unless they choose a different plan. They enjoy a six-month grace period after graduating, leaving school, or dropping below half-time enrollment before repayment begins.

You won’t see a standard repayment plan for private student loans, but the general repayment term for private student loans is also ​10 years.

In the case of both private and federal student loans, you may be able to extend your student loan payments.

For example, if you have federal student loans, you can explore the following options:

•   Graduated repayment plan: You’d start with lower payments, and payments would increase every two years for up to 10 years, or up to 30 years for Direct Consolidation Loans. Consolidation combines all of your current federal student loans into one, with a weighted average of the loan interest rates, and often extends your repayment time frame.

•   Extended repayment plan: With this plan, you can repay loans for up to 25 years, though you must have $30,000 or more in Direct or Federal Family Education Loan Program loans.

•   Income-driven repayment plan: The four income-based repayment plans allow you to make payments based on your income, particularly if your income is low compared with your loan payments. You can become eligible for forgiveness of any remaining loan balance after 20 or 25 years of qualifying payments or as few as 10 years if you work in public service.

Private student loans and federal student loans may be refinanced by a private lender to a long term.

What Are the Pros and Cons of Extending Repayment Terms?

Let’s take a look at three pros and three cons of extending your student loan repayment terms:

Pros Cons
Allows for lower monthly payments You’ll pay more total interest
Gives you more flexibility Takes more time to pay off loans
Frees up cash for other things May have to pay a higher interest rate

Lower monthly payments can give you more flexibility and free up your money to go toward other things. However, you could pay considerably more interest over time. You’ll also spend more time paying off your loans.

Here’s an example of what extending student loan repayment can look like, using a student loan calculator:

Let’s say you have $50,000 of federal student loan debt at 6.28% on a standard repayment plan. Your estimated monthly payments are $562.16, the total amount you’ll pay in interest will be $17,459, and your total repayment amount will be $67,459.

•   Term: 10 years

•   Monthly payments: $562

•   Total interest amount: $17,459

•   Total repayment amount: $67,459

Now let’s say you choose to refinance. Refinancing means a private lender pays off your student loans with a new loan with a new interest rate and/or term. In this case, let’s say you opt to refinance to a 20-year term and qualify for a 5% rate. Your estimated monthly payments would be $329.98. You’d pay $29,195 in total interest, and the total repayment would be $79,195 over the course of 20 years.

•   Term: 20 years

•   Monthly payments: $330

•   Total interest amount: $29,195

•   Total repayment amount: $79,195

In this example, doubling the term but reducing the interest rate results in lower monthly payments — a relief for many borrowers — but a higher total repayment sum.

Can you achieve a 25- or 30-year student loan refinance with private lenders? Yes. It’s called consecutive refinances.

How Long Can You Extend Your Student Loans For?

You can extend your federal student loan repayment to 30 years on a graduated repayment plan if you consolidate your loans.

Most private lenders limit refinancing to a 20-year loan term, but borrowers who are serial refinancers may go beyond that.

Consecutive Refinances

You can refinance private or federal student loans as often as you’d like, as long as you qualify, for no cost. Doing so can benefit you when you find a lower rate on your student loans, but be aware of the total picture:

Pros Cons
May save money every time you refinance Will lose access to federal programs like loan forgiveness, income-driven repayment, and generous forbearance and deferment if federal student loans are refinanced
May allow for a lower interest rate and lower monthly payments
No fees are required (such as origination fees or prepayment penalties)

How do you know when to refinance student debt? If you find a lower interest rate, you could save money over the life of the new loan.

You can use a student loan refinancing calculation tool to estimate monthly savings and total savings over the life of the loan.

Refinancing Your Student Loans to a 30-Year Term

You cannot directly refinance your student loans into a 30-year term because almost all refinance lenders offer a maximum of 15 or 20 years. But you could take advantage of consecutive refinances to draw out payments for 30 years.

Or you could opt for consolidation of federal student loans for up to 30 years.

Consecutive Refinance Approach

Since there’s no limit on the number of times you can refinance your federal and private student loans, as long as you qualify or have a solid cosigner, you can refinance as many times as you need to in order to lengthen your loan term.

Direct Consolidation Approach

If you have multiple federal student loans, you can consolidate them into a Direct Consolidation Loan with a term up to 30 years. Because the loan remains a government loan, you would keep federal student loan benefits.

You’d apply on the Federal Student Aid website or print and mail a paper application form.

Other Ways to Reduce Your Monthly Student Loan Payments

One of the best ways to reduce your monthly student loan payments is to talk with your loan servicer to determine your options.

Some student loan servicers shave a little off your interest rate if you make automatic payments.

More employers are considering offering help with student loan payments as an employee perk.

And through 2025, employers can contribute up to $5,250 per worker annually in student loan help without raising the employee’s gross taxable income.

Ready to Refinance Your Student Loans?

Is a 30-year student loan refinance a thing? It can be, for serial refinancers. Then there’s the 30-year federal student loan consolidation option. The point of a long term is to shrink monthly payments.

SoFi refinances both federal and private student loans. Find out if one new loan with a new rate and term could help, again paying heed to the fact that refinancing federal student loans will remove access to federal programs like income-driven repayment plans.

It might be the right time right now to refinance student loans with SoFi.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC), and by SoFi Lending Corp. NMLS #1121636 , a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law (License # 6054612) and by other states. For additional product-specific legal and licensing information, see SoFi.com/legal.

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 SEPTEMBER 1, 2022 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.

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.

Photo credit: iStock/blackCAT
SOSL1121001

Source: sofi.com

Great Lakes Student Loan Services Review 2022: Pros & Cons

Repayment options on private loans depend almost entirely on the lender — and remember, Great Lakes is not the lender, they only collect. That said, if you’re having trouble making your payments or otherwise need to alter the terms of your student loan payments or want to try to get a lower interest rate, it’s worth contacting your lender.
Are Student Loans Forgiven After 20 Years?
You can use a debit card to make your loan payments, but not a credit card. It’s also possible to set up auto-pay so that you don’t have to worry about remembering to make payments (you might even be able to shave a little off your interest rate by doing so).
Loan servicing can be a confusing topic. Put simply, the lender funds your loan and then hands it off to a loan servicer, which then handles the repayment and day-to-day administrative tasks involved. It’s somewhat analogous to a billing service.

How Do Great Lakes Student Loans Work?

We’ve answered some of the most common questions about Great Lakes Education Loan Services.
IBR plans are intended for people with high debt-to-income ratios. These plans always offer payments that are lower than the standard 10-year repayment terms. However, they can be more than with PAYE and REPAYE — between 10 and 15 percent of your discretionary income.
Beyond federal loans, Great Lakes partners with 6,000 schools and over 1,000 private lenders around the country to service non-federal loans. The company also has a philanthropic arm that offers scholarships, grants and advising services to students.

It’s worth noting that if your income is high, your payment can end up higher than with the Standard Repayment Plan. However, if your paychecks are on the lower side, you can end up saving significantly. Finally, any remaining loan balance is forgiven after 20 to 25 years of repayment (although you may be liable for paying income tax on the forgiven amount).

  • Check or money order, paid through good old-fashioned snail mail.
  • Over the phone, either using an automated system or by speaking directly to a real human being.
  • Online at the Great Lakes website.
  • Using the Great Lakes mobile app, available for iOS and Android.


Cons

What Repayment Options Does Great Lakes Offer?

Penny Hoarder contributor Dave Schafer has been writing professionally for nearly a decade, covering topics ranging from personal finance to software and consumer tech.

Private Student Loans

Are Great Lakes Loans Private or Federal?
Great Lakes is a nonprofit organization that handles over 0 billion in student loans. That makes it one of the largest loan servicers in the country. And as one of the few companies contracted by the government to service federal student loans, it handles up to 40% of all outstanding federal loans.

Federal Student Loans

Neither. Since Great Lakes doesn’t provide the loan, it also doesn’t impact the private or federal status of any loans you’re paying through it. 
Technically, private lenders don’t need to offer any special terms for anyone, regardless of financial status. That said, some will allow repayment terms similar to the federal options, so it never hurts to ask.

Revised Pay As You Earn (REPAYE)

The tradeoff for that protection is the fact that you’ll ultimately pay more on the loan. Lower monthly payments mean loans take longer to pay off with the PAYE program, which in turn means more interest accrued over the life of the loan, even with a low-interest rate.
Your monthly payments on ICR plans can end up being above the Standard Repayment Plan rate. As a tradeoff, the outstanding balance is forgiven after 25 years.

Pay As You Earn (PAYE)

To find out if you’re on one of these plans, your best bet is to contact your loan servicer — if you’re reading this, that’s likely Great Lakes.
IBR payments can change from year to year based on family size and income. The goal of this program is to help keep monthly payments manageable, with the caveat that you can end up paying more interest over the life of the loan (because of the lower payments). Any outstanding balance is forgiven after 20-25 years of repayment.

Income-Based Repayment (IBR)

The Standard Repayment Plan for federal student loans is fixed payments over a 10-year term. If that doesn’t work with your circumstances, there are several types of federal student aid available, including income-based student loan repayment options:
If you’re not sure who your loan servicer is, you can contact the Federal Student Aid Information Center at 1-800-433-3243 to find out. You can also look up your information in the National Student Loan Data System.

Income-Contingent Repayment (ICR)

Choosing one of these options can be a significant help in making your payments and ensuring that you remain in good standing.
How Do I Know If I Have a Great Lakes Loan?
We’ve rounded up the pros and cons of Great Lakes. Though you don’t get to pick a loan servicer, it’s good to know as much about them as possible, including your payment options.

Great Lakes Review: The Pros and Cons

In practice, that means you deal with Great Lakes (and make your payments to it) but the loan itself is through another provider. You apply through that provider and then pay Great Lakes. Yes, it can be a little confusing, which is why some people are (understandably) skeptical when they receive paperwork from the company in the mail.


Pros

  • Federal repayment options: Since Great Lakes is a federal student loan servicer, you’ll have access to all the standard federal options, such as income-based student loan repayment and the REPA
  • Lots of payment methods available: Great Lakes customers can pay using a variety of methods, including check, money order, debit card, and automated withdrawal.
  • Long track record: Great Lakes has been in business for a long time and is a loan servicer specifically selected by the federal government as a provider.
Are Great Lakes Loans Bad?

  • Lawsuit: Great Lakes was one of the companies in a class-action lawsuit alleging that it mishandled CARES pandemic relief funds. This won’t necessarily impact your student loan repayment.

Frequently Asked Questions (FAQs) About Great Lakes Educational Loan Services

Great Lakes student loans can be repaid in a variety of ways, depending on your individual needs and whether you have a federal student loan or a private student loan. Let’s break it down:

This means that the loan you’re paying through Great Lakes could be either private or federal, but that status is determined by the financial institution that provided the loan in the first place.
Some federal loans may have the remaining balance forgiven after a repayment period of 20 to 25 years. It’s important to note that this only applies to loans on one of the income-based repayment plans (REPAYE, PAYE, IBR, and ICR) mentioned above. You still have to make loan payments for those 20 years, as well — you can’t just ignore the loan and have it be forgiven in a couple of decades. 
Yes, Great Lakes is legit. It’s one of the largest federal loan servicers in the country, and the federal government trusts it enough to contract it to service its student loan programs. Although getting unexpected mail from a company claiming you owe money might be jarring, in this case, it’s normal.
Great Lakes Educational Loan Services is a student loan servicer that handles both private and federal student loans. A loan servicer doesn’t lend the money. Instead, these organizations handle the administrative aspects of the loan for the lender.
The Income-Contingent Repayment plan is designed to help you repay your loans faster over time, as your income increases. As such, it has higher monthly payments — the lower of either 20% of discretionary income or the income-adjusted amount you would pay for a fixed loan term of 12 years.
If you’re repaying a federal loan through Great Lakes, you have a lot more freedom. That’s because you’ll get access to the full spectrum of federal repayment options.
How Do I Get Rid of a Great Lakes Loan?
You can’t choose your student loan servicer. This is handled by the lender. That means that if you’re unhappy with your servicer, your options are somewhat limited — you can’t just switch to a different provider.
You pay it off! Once your student loans are paid off (or you reach the 25-year forgiveness point for certain federal loans), you’ll be all done with Great Lakes. Until then, the only other way to get rid of them is to consolidate your debt, which may see your student loan handed off from Great Lakes to a different servicer.
Not at all. Great Lakes doesn’t provide loans — it only services federal student loans or loans provided by private organizations. If you’ve ever taken out a student loan, there’s a pretty good chance it ended up in the hands of Great Lakes to collect payment.
However, if you consolidate your loans (such as with a direct consolidation loan) or refinance your debt, you’ll typically get a new provider, so that can be an option. Just note that with the latter you’ll lose any federal repayment benefits, such as the income-based repayment plans discussed in the next section.
The PAYE program is similar to REPAYE but aimed at people with high debt relative to their income. It offers the same terms (10% of discretionary income and forgiveness after 20-25 years), but with PAYE, your monthly payment will never go above what it would be with the Standard Repayment Plan.
Is Great Lakes Loans Legit?

Speaking of repayment, if your loan is serviced through Great Lakes, that means you’ll be making your monthly payment to them. You have several payment methods at your disposal:
The REPAYE program offers the potential for lower monthly payments and loan forgiveness. With this program, your payments are based on your monthly income — 10% of your discretionary income, specifically. Payments are recalculated annually based on family size and total income.

Student Loan Forgiveness for Mental Health Workers

Working in mental health can be a challenging, but rewarding, career. But sometimes the rewards of a fulfilling mental health career are not necessarily monetary. And, because many mental health career tracks require a graduate degree as well as an undergrad degree, you may be wondering about options to pay down student loans.

How To Plan For the Future With Student Loan Debt As A Mental Health Professionals

Student loan debt can be challenging to navigate. It can also be challenging to navigate career opportunities when you know that you have student loans to repay. The good news: You’re not alone. And there is no one right path to pay back student loan debt.

It can be helpful to talk to graduates and see how they paid off student loans. One big crossroads can be whether to take a higher paying job in the private sector or work in a nonprofit role that could give you an avenue toward loan forgiveness through a program like the Public Service Loan Forgiveness Program (PSLF). Another option to manage repayment is to use income-driven repayment plans, like Pay as You Earn (PAYE) and Revised Pay as You Earn (REPAYE)

There may also be programs unique to your career. For example, the Health Resources and Services Administration (HRSA), a government branch, offers loan repayment programs for mental health professionals who meet certain criteria, such as serving in a health professional shortage area. Speaking with your supervisor, your colleagues, and keeping abreast of news within professional organizations can help alert you to unique repayment opportunities.

Recommended: REPAYE vs PAYE: What’s the Difference?

What is a Student Loan Forgiveness Program?

A student loan forgiveness program operates the way it sounds: Student loans can be forgiven if certain criteria within the program are met. But each student loan forgiveness program has different criteria. It’s important to completely understand the scope of the forgiveness program. Reading this student loan forgiveness guide can help you understand where the national conversation is regarding loan forgiveness in the future as well as options available for forgiveness now.

When student loans are forgiven, usually after a set amount of payments, the balance is forgiven. But that balance may be taxed, depending on the program. For example, forgiveness received under PSLF is not considered taxable, according to the IRS. But under PAYE and REPAYE programs, any canceled student loan debt is considered taxable.

There may also be loan repayment assistance programs (LRAPs) for your profession or field. There may also be state-sponsored loan forgiveness programs.

Will Student Loans be Forgiven After Ten Years?

Loans are not automatically forgiven after ten years. But one potential avenue for mental health student loan forgiveness is the federal Public Service and Loan Forgiveness (PSLF) program. This program requires eligible candidates to work with a qualifying organization and make 120 qualifying monthly payments. It also requires that the loans you hold be federal Direct Loans (or that the federal loans you currently have are consolidated into a Direct Loan).

Qualifying for PSLF can be challenging and requires borrowers to certify their employment to be sure their payments count toward the program. In addition to making 120 payments while working at a qualifying employer, you have to be working for a qualifying employer when you submit the forgiveness application and when the loan is forgiven.

Consult with your loan servicer if you have any questions and be sure to read all of the details about the program.

Over the years, there has been legislation for student loan forgiveness, including the student loan forgiveness act. But despite bipartisan support for student loan forgiveness, nothing has happened on a national level. While there may be legislation in the future for forgiveness for federal or even private student loans, right now those seeking forgiveness can go through the federal programs already in place.

Typical Requirements for Student Loan Forgiveness

In general, forgiveness programs have criteria. These may include:

•  A history of payments, with no payments skipped

•  Working at a qualifying organization, in a qualifying capacity (ie, full-time instead of part-time)

•  Correctly filling out paperwork for forgiveness

•  Potentially paying taxes on the amount forgiven

Understanding the criteria, reading the fine print, and researching any points of confusion can be helpful in ensuring that your application is processed successfully. The eligibility and forgiveness requirements may vary depending on the forgiveness program, so be sure to fully understand the criteria for the loan forgiveness option you are pursuing.

Difference Between Loan Forgiveness, Loan Cancellation, and Loan Discharge

These three terms are sometimes used interchangeably. Quite simply, all three terms mean you’re no longer required to pay some or all of your loan. But there are no “easy” ways to get out of paying student loans.

Usually, forgiveness and cancellation mean that, due to either a forgiveness application or your current job, you no longer have to pay loans. Discharge refers to a situation beyond your control, such as total and permanent disability or the closure of your school. In very rare cases, student loans are discharged due to bankruptcy. You will likely have to apply for cancellation, forgiveness, or discharge and will likely need to continue making payments while the application is processed.

Student Loan Forgiveness Options For Mental Health Workers

Depending on your place of employment, you may have other options for forgiveness through specific mental health worker programs. There also may be scholarships and grants available in your field of study. Also something to consider: Some private employers offer student loan repayment as part of their packages. This can be worth asking potential employers as you look for jobs. There are also other federal programs to know about:

PPACA and HERA Student Loan Programs for Counselors

As part of the Patient Protection and Affordable Care Act, legislation expanded opportunities for student loan forgiveness for healthcare professionals, including mental health counselors. While many of these forgiveness programs are state-run, this act did ensure that any forgiven funds would not be considered taxable income for people seeking forgiveness through programs supporting health care professionals working in underserved areas.

Under the Higher Education Reconciliation Act (HERA) certain federal loans, including Stafford Loans, and Direct Loans (both Subsidized and Unsubsidized Direct Loans) are eligible for a graduated repayment plan. Under this plan, your federal loan repayments start low and gradually increase every two years. This can be an option if you expect your income to increase over the years.

National Health Services Corps Loan Repayment Program

The National Health Services Corps offers loan repayment programs through your state. Each state has different eligibility requirements, including eligible disciplines. These state-run programs also may differ in terms of service commitments but usually, the commitments start at two years for an eligible position. These will generally be at centers funded by the Health Resources and Services Administration.

Mental Health Loan Forgiveness Alternatives

The criteria and requirements for some forgiveness programs can be challenging to fit. But that doesn’t mean there’s no way to pay down loans. Understanding all your options can help you navigate the best potential avenue for you.

Refinance Your Mental Health Student Loan

Refinancing your student loans could help save you money in the long term, and may potentially give you more flexibility in your budget. When you refinance, you take all your loans and consolidate them into one loan. For qualifying borrowers, this loan may have a lower interest rate, which could reduce the amount of money you owe in interest over the life of the loan. It also may have a different payment term, so that you are paying the loan off over a longer (or shorter) period of time. Keep in mind that while a longer loan term may result in lower monthly payments, but might also mean paying more in interest. This type of customization can be helpful in taking control of your finances.

You can check your loan refinance rate without affecting your credit score and choose terms that work for you.

Scholarships and Grants

There may be scholarships and grants, either from your institution or your place of work. This can help pay down student loan debt. It’s also worth remembering that some private-sector employers may offer student loan repayment as a perk. Talking with colleagues, supervisors, and the financial aid office at your school may help you find programs that may be specific to your field or your school.

Pay Off Student loan Debt

In some cases, it may make sense to prioritize paying down student loan debt. This may include considering a personal loan to cover student loan debt, if the interest rate is lower than refinancing options. Other ways to pay off student loan debt include taking on part-time work, decreasing living expenses or otherwise try to carve out opportunities to pay more than the monthly student loan payment.

The Takeaway

Working as a mental health professional can be rewarding, but might require students to borrow student loans to pay for their education. There are options for paying back student loans. Some mental health professionals may qualify for certain types of loan forgiveness, such as Public Service Loan Forgiveness, if they have federal student loans and depending on their profession and employer. Refinancing some or all of your student loans can be another option to help give some monthly leeway in your budget while allowing you to potentially save money on interest over time.

But one thing is a cliche in the mental health field — and in the world of paying back student loans: No one is alone. Talking to colleagues about their student loan pathway, joining professional organizations, and keeping an ear to the ground regarding grants, scholarships, and employers paying back student loans can all be beneficial in finding a payback plan that works for you — and your career goals.

Learn more about how refinancing your student loans with SoFi could help you repay your student loans.

FAQ on Mental Health Forgiveness

How do counselors and mental health professionals plan for the future with student loan debt?

Understanding options for paying back loans can be helpful for mental health professionals. Sometimes, this includes looking into all repayment opportunities, including the opportunity to refinance and save money on interest over time. Sometimes, mental health professionals and counselors may expand their job search into private sector work which may pay more to comfortably cover loan payments.

Do healthcare workers qualify for loan forgiveness?

In some cases, healthcare workers qualify for eligible forgiveness programs. This depends on the state the healthcare worker resides, as well as their place of employment.

What are some student loan forgiveness options for mental health workers?

Mental health workers who work in underserved areas may be able to apply for forgiveness programs run at their state level for healthcare professionals. Eligibility depends on criteria including place of employment. Student loan forgiveness options may also include the federal Public Service Loan Forgiveness program (PSLF) as well as some income-based repayment options.


Photo credit: iStock/Vertigo3d

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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

What to Know About Student Loan Forgiveness Programs

Ever wonder what life would be like if you could make your student loans disappear?

It’s possible, but it isn’t magic.

Or immediate.

Or easy.

Or likely. (Sorry.)

But considering the mounting pile of outstanding student debt in the U.S. — at $1.75 trillion,  student loans were the largest non-mortgage source of household debt in 2021 — you should consider every option for wiping out yours, right?

If your student loans have become more than you can handle, seeking forgiveness or discharge of your debt could be an option. Check out this guide to student loan forgiveness so you’ll know all your options.

What Are Student Loan Forgiveness Programs and How Do They Work?

Student loan forgiveness programs are government-backed avenues for having your loans forgiven, depending on your situation. The programs are only available for borrowers with federal loans who meet certain criteria.

Before we dig into individual programs, let’s cover the ground rules.

First, a word about words: Forgiveness, discharge and cancellation essentially mean the same thing when you’re thinking about your student debt. They mean you no longer have to pay the remaining balance on your federal loans. But the terms are usually applied in different circumstances:

  • Forgiveness is usually used in cases where you qualify because of your job or employer.
  • Discharge typically refers to other reasons for not paying the debt, such as your financial situation.
  • Cancellation is a more general term that often covers both.

Forgiveness programs generally fall into two categories: eligibility based on employment and eligibility unrelated to employment.

We’ve broken down the programs by work and non-work qualifications. We’ve also included “scam alerts” throughout because there are plenty of unscrupulous individuals and companies out there who prey on borrowers overwhelmed by student loan debt.

With that in mind, let’s dive in.

Student Loan Forgiveness Based on Your Job

If you’re committed to a life of helping others, whether it’s by working for the government or a non-profit or by choosing a public service profession, you could qualify for student loan forgiveness.

You’ll have to ensure that your loans qualify, stay current on your payments throughout the process and stick with a job that qualifies for loan forgiveness. If you change career tracks and switch to a non-qualifying job, you’ll be responsible for paying the remaining amount you owe.

Pro Tip

Scam alert! It’s illegal for anyone — including companies that offer to “help” you repay your student loans — to ask for your federal student aid user name and ID. Never give out that info.

Here’s a brief rundown of programs that offer forgiveness based on employment:

1. Public Service Loan Forgiveness

The Public Service Loan Forgiveness program is probably the most well known, but for all the wrong reasons.

In the past, the program was poorly managed and only accepted a very small percentage of applicants – as of November 2020, only 2.6% were approved for forgiveness, while 35% had yet to be processed.

The PSLF program got a reboot in 2021, however. Previously ineligible loans and repayment plans became eligible, including FFEL (Federal Family Education Loans). And some overly restrictive rules were done away with.

To qualify for Public Service Loan Forgiveness, you’ll need 10 years worth of qualifying loan payments under your belt. Use the PSLF Help Tool to find out if you meet other requirements to qualify.

Pro Tip

Scam alert! When it comes to federal student loan repayment applications, there’s nothing a company can do for you that you can’t do for free on your own.

2. Teacher Student Loan Forgiveness

No one goes into teaching for the money. But when student loans leave you thousands of dollars in debt, scraping out the payments on a teacher’s salary can be downright overwhelming.

Fortunately, there’s a specific Teacher Student Loan Forgiveness program for those who work in underserved communities and/or subject areas.

To qualify for Teacher Loan Forgiveness, you need to have one of the following loans:

  • Subsidized Federal Stafford Loans (aka Direct Subsidized Loans)
  • Unsubsidized Federal Stafford Loans (aka Direct Unsubsidized Loans)
  • Federal Direct Consolidation Loans

You’ll also need to be employed as a full-time teacher at a low-income school for five complete and consecutive academic years. At least one of those years needs to be after the 1997-1998 school year. You can search the school directory at the Student Financial Aid website to find out if you work at a participating school.

Forgiveness will be dependent upon where you teach, what you teach and how long you teach, and the maximum amount you can receive is $17,500.

3. Nursing Student Loan Forgiveness

Getting a healthcare-related degree isn’t cheap – and the related debt can be quite a burden – so nursing student loan forgiveness offers some help.

In addition to a couple of specific loan-forgiveness programs for nurses, you can also find debt relief through programs at some hospitals. Eligibility requirements can include holding an advanced degree, having a specific loan type or working in a specialized department.

Other medical professionals, including doctors, can find student loan relief at the national and local level through the Association of American Medical Colleges.

A military active member hugs his wife and kids while sitting on their couch at home.
Getty Images

4. Military Student Loan Forgiveness

It won’t be easy, but joining the military after college is another way to have your student debt forgiven.

If you served in a hostile fire or imminent danger pay area, you qualify for the National Defense Student Loan Discharge, which is part of the Perkins loan cancellation program (the Perkins loan program ended in 2017).

Loans are discharged according to the following classifications:

  • Up to 50% for four years for borrowers whose active duty service ended before Aug. 14, 2008.
  • Up to 100% for five years for borrowers whose active duty service includes or began on or after Aug. 14, 2008.

After a year of service, you can also qualify for the Armed Services Education Loan Repayment Program. The benefits vary based on which branch you serve, but they’re all designed to help armed forces members get out of student loan debt much faster. Here’s the list of benefits for each branch. 

Other potential forgiveness options include Public Service Loan Forgiveness Program, outlined above, and the Total and Permanent Disability Discharge.

5. Perkins Loan Forgiveness

The Perkins loan program ended in  2017, but you’re still on the hook for paying off any of the Perkins loans you took out. If you work in public service — including teaching, law enforcement and the military — you could qualify for a partial or total discharge of your Perkins loan.

Depending on your career, you could receive 100% loan cancellation for five years of service, which is distributed in annual increments.

Student Loan Discharge That Isn’t Based on Employment

Not taking the employment path to loan forgiveness? Then you’ll likely be seeking forgiveness based on your economic status or a catastrophic circumstance.

6. Income-Driven Repayment Program Cancellation

Income-driven repayment plans set your monthly student loan payment at an amount meant to be affordable based on how much you earn. At the end of the repayment period, any remaining debt is forgiven.

But it’s not as simple as it sounds.

For one thing, you’ll pay more in interest over the life of your loan on an income-driven repayment plan compared to a standard loan repayment plan. And forgiveness will take a while: Income-driven repayment plans span 20 to 25 years.

Still, these plans can make paying on your student loans more manageable and help you avoid defaulting.

To qualify, you’ll need to apply for one of these plans. Each has its own rules.

  1. Pay As You Earn Plan (PAYE)

    Any borrower with eligible direct federal loans can apply. FFEL Program and Perkins loans are eligible if they’re consolidated. You’ll be eligible for discharge after 20 years of repayment.

  2. Revised Pay As You Earn (REPAYE) Plan

    Any borrower with eligible direct federal loans can apply. FFEL Program and Perkins loans are eligible if they’re consolidated. You’ll be eligible for discharge after 20 years of repayment for undergraduate loans or 25 years if the debt includes graduate loans.

  3. Income-Based Repayment (IBR) Plan

    Any borrower with eligible direct federal loans, including FFEL Program loans, can apply. Perkins loans are eligible if they’re consolidated. You’ll be eligible for discharge 20 years if you took out your first loan after July 1, 2014, and 25 years if you took out your first loan before July 1, 2014.

  4. Income-Contingent Repayment (ICR) Plan

    Any borrower with eligible direct federal loans can apply. FFEL Program loans, Perkins loans and Plus loans made to parents are eligible if they’re consolidated. You’ll be eligible for discharge after 25 years of repayment.

7. Parent Plus Loan Forgiveness

Because Plus loans for parents are so restrictive in terms of repayment options, receiving forgiveness is particularly difficult. In fact, it’s nearly impossible until you consolidate them, thus making them eligible for an Income-Contingent Repayment plan.

But if you’re a parent who’s still dealing with your own student loans, this is not the time to combine forces, as your own student loans have more options for payment plans and forgiveness.

Pro Tip

Scam alert: Loan forgiveness typically takes years. Steer clear of a company that promises you fast loan forgiveness or says it has “special access” to federal programs you’ve never heard of.

“If parents have loans for their children and their own loans for their own education, they should never ever combine them together in a consolidation loan,” said Heather Jarvis, an attorney who specializes in student loans. “[The student loans] would essentially be contaminated by the parent loans.”

For more details, check out this step-by-step explanation about how to wipe out your Parent Plus loans.

A person with a disability sits on a park bench with a friend as they look at a book with their book bags next to them.
Getty Images

8. Student Loan Disability Discharge

Struggling with student loans is stressful enough without also dealing with a disability.

If you develop a total and permanent disability after taking out federal student loans, you are eligible to have your debts forgiven. If you’re a military veteran, the discharge will be automatic, but if you’re a civilian, the process can take three years to qualify for the discharge.

Here’s how a TPD discharge could wipe out your student loan debt.

9. Student Loan Death Discharge

It’s not a pleasant topic to consider. But if a borrower dies owing federal student loans, the loan gets canceled, according to the Federal Student Aid Office of the U.S. Department of Education. Parent Plus loans are discharged if the parent or the student dies.

Check out this article for more info about what happens to student loans when you die.

10. Student Loan Bankruptcy Discharge

You may have heard that student loans cannot be discharged in a bankruptcy. That’s true… most of the time. But if you’re able to prove that repaying your federal student loans would result in an “undue hardship,” you could qualify for a student loan bankruptcy discharge. Don’t get too excited. It’s extremely rare.

11. Closed School Discharge

If your school closes before you’re able to complete your program, you may be eligible for a 100% discharge of your federal direct loans, FFEL program loans or Perkins loans. You’ll need to ask your loan servicer for a loan discharge application.

For more details about the program, check out the Department of Education’s closed school discharge program.

12. False Certification Discharge

If you think your school falsely certified your eligibility for federal student aid, you could qualify for a false certification discharge.

13. Unpaid Refund Discharge

If you withdrew from a school, but the school didn’t return the funds to your loan servicer, you could be eligible for an unpaid refund discharge.

Student Loan Forgiveness Programs FAQ

What are examples of student loan forgiveness programs?

How does student loan forgiveness work?

With student loan forgiveness, discharge and cancellation, you are no longer required to make loan payments. You’ll need to qualify first, and – in most situations – you’ll need to have a proven, loan payment record over a long period of time. 

How do I apply for student loan forgiveness or discharge?

Each loan forgiveness program has different qualifiers and applications. Visit the Federal Student Aid website to find out if you qualify and how to apply. 

Tiffany Wendeln Connors is a staff writer/editor at The Penny Hoarder. Senior staff writer Robert Bruce contributed to this article. 

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Source: thepennyhoarder.com

14 Major Companies That Offer a Student Loan Repayment Benefit

In 2016, the company was on the forefront of offering student loan repayment benefits when it announced it would be helping its own employees pay down student loan debt with 0 per month in employer student loan repayment assistance.
PwC says during those six years, an employee may see a reduction in student loan principal and interest obligations of as much as ,000 and a shortened loan payoff of up to 3 years.
“With student loan debt at an all-time high, we’re proud to have been the first entertainment company in North America to offer student loan repayment assistance. We’ve saved our employees over million since the program launched in early 2017,” Live Nation says on their website. 
In a 2020 survey, SoFi found that student loan repayment assistance was the second most requested financial wellness benefit — second only to a 401(k) retirement plan with a match.
Total student loan debt has reached nearly .75 trillion, affecting 46 million Americans. According to Student Loan Hero, 55% of the class of 2020 took out student loans and graduated with an average of ,400 in student debt.

14 Companies That Offer a Student Loan Repayment Benefit

For eligible employees, Aetna matches up to ,000 in student loan payments per year, with a lifetime maximum of ,000, for full-time employees. For employees who work a minimum of 20 hours per week, Aetna offers ,000 annually with a ,000 lifetime max toward student loan debt.

1. Fidelity

Over the last decade, many notable companies have jumped on the student loan repayment assistance bandwagon. Here are some of the more notable ones.
In a blog post, the company said it hoped the program would help employees “pay off their student loans faster, allowing them to save money to use in other ways, whether it’s purchasing a new home, starting a family, or investing in a 401(k).” The tech giant also said the student loan repayment program would expand globally over time.

2. Live Nation

In 2018, the Santa Monica-based streaming giant announced it would being offering its employees a student loan assistance match of up to ,200 per year.
And thanks to the CARES Act, any money your employer kicks in to help you pay down your student loans is not taxable. Whether payments are made to the employee or the lender, up to ,250 in assistance is excluded from taxable income through 2025.

3. Aetna

Chegg is an American-based educational technology company that began its student loan repayment benefits program in 2019.

4. Hulu

The global tax firm provides all regular employees who work at least 20 hours a week an opportunity to take part in its student loan repayment program.
New York Life, the third-largest insurance company in the United States, introduced its student loan repayment program in 2017. The company will contribute 0 monthly over the course of five year – that’s a potential of ,200 in student loan repayment help.

5. Google

The visual technology company Nvidia offers an impressive student loan repayment program for full and part-time employees who have completed degrees within the last three years.
Federal government employees may be eligible for the Federal Student Loan Repayment program. As the name suggests, it’s only available for federal loans. But, if eligible, a federal worker can receive considerable student debt relief — a maximum of ,000 per year and a lifetime maximum of ,000.

6. Estee Lauder

The company also offers one-on-one student loan counseling sessions with financial experts at no cost.

7. Nvidia

This is in addition to the ,000 the company provides to all its employees who have student loan debt. The program is available to employees who attended both two-year and four-year institutions, regardless of whether or not they graduated.
The entertainment company will match employees’ student debt contributions of up to 0 monthly – or ,200 a year, up to ,000 lifetime. Employees are required to have worked for Live Nation for at least six months.
With student loan debt such an overarching problem, more companies are offering student loan repayment assistance to employees, and using that benefit as a recruiting tool to attract new talent. After all, when you’re ,000 in debt, what’s the more attractive benefit — a free gym membership or getting significant help with your student loan debt?

8. Penguin Random House

Associates and senior associates at PwC can take advantage of the student loan paydown benefit in which PwC with pay up to ,200 per year towards employees’ student loans. They will continue to pay for up to six years, or until the employee gets promoted to management — whichever comes first.

9. PricewaterhouseCoopers

Nvidia will contribute up to 0 per month directly to the employee’s loan servicer (if the monthly payment is less than 0, they will only cover that amount), with an annual cap of ,000 and a lifetime cap of ,000 of student loan assistance.
For entry-level through manager level, the company provides up to ,000 annually for employees with at least two years tenure. For director to vice-president level, Chegg offers up to ,000 annually.

10. SoFi

Here are more than a dozen notable employers whose benefits package can help you make your student loan payments.

Source: thepennyhoarder.com

11. The Federal Government

As a personal finance company, SoFi offers all the services you would expect from a large bank, including a program that helps employers set up student loan repayment assistance for their employees.

12. New York Life

Since implementing the program, New York Life says more than 1,200 employees have enrolled, with the company contributing nearly million toward student loan payments. More than 140 employees have seen their loans totally paid off.
Estee Lauder, a global cosmetics company, announced in 2018 that it would contribute 0 per month of student loan assistance to eligible employees, with a lifetime maximum of ,000. After the initial launch of the program, 65% of participating employees were age 35 and under.

13. Anderson Global

Robert Bruce is a senior writer for The Penny Hoarder.
The financial services giant  pays up to ,143 per year, and a ,000 lifetime maximum, in student loan payments for regular employees who work at least 30 hours per week. Workers with 20 to 29 hours per week can receive up to ,071 per year with a lifetime maximum of ,500 toward their student loan debt.

14. Chegg

Google announced its student loan repayment program in 2021. The company will match up to ,500 annually in student loan payments.
The New York-based publishing house became the first book publishing company to offer a student loan repayments benefit in 2016. Once employees have been with the company for one year, they are eligible for up to ,200 per year for 7.5 years, with a maximum repayment of ,000 toward student loan debt.
“We estimated that 15 to 20 percent of our team members would benefit from this. So far, 12 percent have signed up,” Taunya Post, Hulu’s director of HR operations, told Benefits News when the program was announced. 
In 2021, the company announced it was waiving its six-month waiting period after hire and making the employer student loan repayment benefit available from day one.
The company will pay 0 a month over the course of five years. At the end of the five years, the company will provide a ,000 lump sum payment, for a total relief package of ,000.

What Happens When Someone Pays My Student Loans?

If someone offers you assistance in paying off student loans, your immediate answer might be “Go for it!” but it’s important to understand the implications.

While a parent, grandparent, employer, or even a mysterious benefactor could pay off your student loans, they may be responsible for a gift tax if they contribute more than the annual limit. The gift could also come with emotional strings attached.

Read on to learn about the gift tax — and how to repay your student loans if the responsibility is all yours.

Student Loans, Explained

As federal student loan repayment was poised to begin again on August 31, 2022 after a pandemic-related hiatus of two-plus years, and as widespread student loan forgiveness had not come to fruition, those bills were top of mind for many. Borrowers who held private loans did not have any uniform break in payments.

If you applied for private student loans or federal PLUS loans, you either applied by yourself or with a cosigner or endorser, respectively. If you have a cosigner or endorser, that person is legally responsible for repaying the loans if you are unable to do so. But if your student loans are solely in your name, you are responsible for repayment according to the outlined terms.

When you applied for student aid, getting out of student debt may have been the last thing on your mind. But when you’re starting repayment or in the midst of it, it can be challenging to pay down your loans as well as budget for your life.

More employers are offering student loan repayment as a perk. Through CARES Act legislation, employers can contribute up to $5,250 per employee toward student loans through 2025. That sum is not considered part of an employee’s taxable income.

Family members may decide to help, or your spouse may pitch in.

If it’s all on you, there are ways to make student loan payments more manageable.

Can Parents Pay Off Their Child’s Student Loans?

Yes.

If a parent is a cosigner, paying the student loans in full will not trigger a gift tax. In the mind of the IRS, the parent is not providing a gift but is merely paying off a debt.

But if a parent is not a cosigner, a gift tax could be triggered, depending on how much they pay.

The annual exclusion for gifts is $16,000 in 2022. That means an individual can give you up to $16,000 without triggering the gift tax, which the givers, not receivers, generally pay. If your parents file taxes jointly, they would be able to give a combined $32,000 a year, which could include paying down loans. Borrowers who have the good fortune to snag $16,000 from Mom, Dad, Granddad, and Grandma could get a total of $64,000 without any family member having to pay a gift tax.

To avoid triggering a gift tax, one option would be to help pay during multiple tax years. But it’s also a good idea for parents to consider their retirement plans and test what-ifs before offering to pay their children’s student loans. Working with a financial planner may help parents find a path that works for them and their children.

It’s also not an all-or-nothing decision. Some parents choose to pay a portion of student loans or offer cash toward repayment in lieu of other gifts.

Recommended: Should Parents Cosign on Student Loans?

What Happens When Someone Pays Off Student Loans For You?

A person can pay off student loans for you in a couple of ways:

•   Pay the lender directly

•   Pay you, with the expectation you will pay the lender

Once someone has paid off your student loans, it’s as if you had paid them off yourself. You would not have any tax liability.

Gift Tax, Explained

The gift tax applies to the transfer of any type of property (including money), or the use of income from property, without expecting to receive something of at least equal value in return, the IRS says, adding that if you make an interest-free or reduced-interest loan, you may be making a gift.

There are some exceptions. Gifts between spouses aren’t included in the gift tax. That means if you are married and your spouse pays off your loans, that would not trigger a gift tax event. (The IRS includes lawfully married same-sex couples.)

Tuition paid directly to qualifying educational institutions in the United States or overseas is also not subject to gift tax. But student loans are different.

If the gift someone is planning to give you is above the annual exclusion amount, they may want to work with a CPA or lawyer to find the most advantageous way to do so. Splitting up the gift across multiple calendar years can be one way to avoid triggering a gift tax.

Other Options to Pay Off Student Loans

Not everyone has a benefactor, and that’s OK. While someone taking your student loan balance down to zero can seem like a dream, there are realistic ways to ease the burden of student loans, no third party required.

The strategies include student loan refinancing, student loan consolidation and, in some cases, student loan forgiveness.

The one thing that won’t help: if you stop paying your student loans. Ignoring your student loan payments will result in an increased balance, additional fees, and lower credit score.

If you hold federal student loans and stop paying them, part of your wages could be garnished. Your tax refund could be withheld. If you default on a private student loan, the lender might file a suit to collect from you.

In other words, coming up with a repayment plan will be beneficial.

What Is Student Loan Consolidation?

If you have federal student loans, you may consider consolidation, or combining multiple loans into one federal loan. The interest rate is the average of all the loans’ rates, rounded up to the nearest one-eighth of one percentage point.

Federal student loan consolidation via a Direct Consolidation Loan can lower your monthly payment by giving you up to 30 years to repay your loans. It can also streamline payment processing.

Consolidating loans other than Direct Loans may give borrowers access to additional income-driven repayment plan options and Public Service Loan Forgiveness.

What Is Student Loan Forgiveness?

For federal student loan holders, there are several paths toward student loan forgiveness. They include:

•   Income-based repayment. Four federal income-driven repayment programs promise loan forgiveness after 20 or 25 years of payments.

•   Public Student Loan Forgiveness: This federal program was designed to help graduates working in public service have any remaining loan balance forgiven if they meet criteria that include working for a qualifying organization and making 10 years’ worth of payments.

•   Disability discharge: Some people may have their loans forgiven because of total and permanent disability.

What about bankruptcy? It’s extremely difficult to have student loans discharged through bankruptcy.

And while there has been talk from lawmakers on both sides of the aisle regarding sweeping student loan forgiveness, so far that’s all it has been.

What Is Student Loan Refinancing?

Student loan refinancing is loan consolidation of sorts through a private lender. Instead of blending loans into one with an average rate, a borrower takes on one new, private student loan that will pay off previous federal and/or private student loans. The goal is a lower interest rate. The repayment term also may change.

Refinancing federal student loans will mean that borrowers will no longer be eligible for federal repayment programs and other benefits. But if a borrower has no plans to use those programs, a lower rate could make refinancing worthwhile. Getting quick rate quotes with a student loan refinancing calculator can help a borrower see how much money they might save by refinancing one or all of their loans.

Refinancing Student Loans With SoFi

Even if no one in your life is in a position to pay off your student loans, understanding your options for lowering your monthly payments or saving money over the life of the loan can give you multiple avenues toward taking control of your finances.

SoFi offers flexible terms and low fixed or variable rates on refinancing student loans.

Rates are still low, and checking yours is easy.

FAQ

Can I pay off my child’s student loans?

Sure. You can pay off your child’s student loans. But …

Is paying off a child’s student loans considered a gift?

Yes. Paying student loans for someone else is considered a gift and would incur a gift tax for any gift above $16,000 in a calendar year (the gift exclusion cutoff for 2022).

That means both parents can contribute $32,000 per calendar year toward their child’s student loans sans gift tax.

Can I pay off my sibling’s student loans?

Yes. You can absolutely win sibling of the year and pay off your sibling’s student loans. Just know that any gift above $16,000 in one calendar year will trigger a gift tax that you will be responsible for paying.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC), and by SoFi Lending Corp. NMLS #1121636 , a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law (License # 6054612) and by other states. For additional product-specific legal and licensing information, see SoFi.com/legal.

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 SEPTEMBER 1, 2022 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.

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.
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.

Photo credit: iStock/Halfpoint
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Source: sofi.com

Can You Roll Your Student Loans Into Your Mortgage?

It’s possible to roll student loans into a mortgage using a cash-out refinance. In order to to do this, you’ll already need to have enough equity in your home. While this could potentially help you secure a lower interest rate, it’s not the right choice for everyone. Read on for more information on situations when it may make sense to roll your student loan into a mortgage and other strategies to pay off student loan debt.

Paying Your Student Loans

Paying off one loan with another is a standard form of debt reshuffling or consolidation. When it comes to student loans, though, your options may seem limited. It is, however, possible to roll student loan debt into a new mortgage through a cash-out refinance loan — as long as you have sufficient equity in your home.

But just because you can, it doesn’t mean you should. Here are some tips on how to consolidate student loans into a mortgage — and whether it may be the right move for you.

Rolling Student Loans Into a Mortgage

A cash-out refinance is a type of mortgage loan that enables you to turn a portion of your home’s equity into cash. Simply refinance your existing mortgage for more than what you currently owe into a new loan with new terms and keep the difference.

Once you have the cash in hand, and as long as there are no loan conditions to pay off specific debt with the cashout, you can do whatever you want with it, including paying off your student loans.

You may need to do the legwork of determining how much you need to add to the new proposed loan and may be responsible for ordering the final payoff. If it is not a condition of the new mortgage loan, the lender would normally not request escrow to order the payoff and pay the loan in full at loan closing. If you would like escrow to perform this service for you, just let them know.

Once you’ve completed the loan consolidation process, you may still have the same amount of debt as you did before (possibly more if you added any applicable closing costs to your new loan). You’ll just be paying it all in one monthly payment, based on your new mortgage terms.

If you want to refinance student loans into a mortgage, it could be beneficial in some situations. However, it’s important to understand the benefits and drawbacks of doing so and also to compare the benefits of this option with other alternatives.

One such drawback is that you may no longer be eligible for federal student loan benefits , such as the ability to pursue federal student loan forgiveness or federal student loan repayment plans. This includes income-driven repayment plans, where your monthly student loan repayment changes according to your income.

Pros and Cons of Rolling Student Loans into a Mortgage

Depending on your debt situation and your credit profile, consolidating student loans and your mortgage into new terms could be a smart idea or a terrible one. Here are some of the pros and cons to consider.

Pros of Rolling Student Loans into Mortgage

•   It could lower your interest rate: If you pay a higher interest rate on your student loans and current mortgage vs. a new Cash-Out Refi, consolidating may help reduce how much you pay in overall interest.

•   It could lower your monthly payment: If you qualify for a lower interest rate and choose a longer repayment period with the new loan, it may significantly lower the total amount you pay each month for your mortgage and student loans combined. Keep in mind that extending the life of the loan may mean you pay more in interest in the long-term.

•   It simplifies your finances: Having a single monthly payment might make your finances easier to manage. The fewer monthly payments you have to keep track of, the better. If you have multiple student loans, rolling them into your mortgage can make your life easier.

Cons of Rolling Student Loans into Mortgage

•   You could end up paying more interest over time: Stretching a 10-year student loan repayment term to up to 30 years could end up costing you more in interest, even if the interest rate is lower. Also, if you have paid down a 30 year mortgage for a few years and originate a new 30 year mortgage, you will be extending your existing loan term and may be paying additional interest over the life of the loan.

•   You may not be eligible: To qualify for a cash-out refinance loan, you typically need to have at least 20% equity left over after the new loan amount on the cash-out refinance. Even if you do have more than 20% equity right now, the difference might not be enough to pay your student loan in full.

•   You may pay closing costs: Depending upon the rate and term you choose, you may have applicable closing costs. FannieMae offers a program for student loan cash-out refinance loans. Consider getting a quote for this program and compare the rate and fees of this program to a standard cash-out refi.

•   You may be reducing the amount of available equity in your home: Taking cash out of your home can reduce the amount of available equity in your home. Market value fluctuations can also impact the amount of available equity.

3 Alternatives to Rolling Student Loans into a Mortgage

Before you seriously consider consolidating student loans into a mortgage, it’s important to know what other options you may have for paying down your debt faster.

1. Refinancing Your Student Loans

Whether you have federal or private student loans, you can refinance your student loans with a private lender like SoFi. Depending on your credit, income, and financial profile, you may qualify for a lower interest rate, monthly payment, or both.

You can also gain some flexibility by choosing a longer or shorter repayment term. Keep in mind that refinancing federal student loans means they’ll no longer be eligible for any federal programs or borrower protections, such as income-driven repayment plans.

2. Seeking Repayment Assistance

Employers are increasingly offering student loan repayment assistance as an employee benefit. Well-known companies that provide this repayment benefit include Aetna, Fidelity, PricewaterhouseCoopers, SoFi, and more. If your current employer doesn’t offer student loan repayment assistance, consider finding a job that does when you are next seeking employment.

3. Apply for Student Loan Forgiveness or Grants

Depending on your career path, you may qualify for student loan forgiveness or grant programs. Examples of these programs include (but are not limited to):

•   Health care

•   Veterinary medicine

•   Law

•   Military

•   STEM

If you’re working in one of these fields or a similar one, check to see if there are forgiveness or grant programs for which you may qualify. As previously mentioned, a cash-out refi may make you ineligible to participate in these programs. Check on any possible loss of benefits before considering a refinance of these loans.

Deciding If Rolling Student Loans into a Mortgage Is Right for You

Using a cash-out refinance to consolidate student loans and a mortgage into one affordable monthly payment sounds appealing, especially if you can get a lower interest rate than what you’re currently paying. But it’s crucial to consider all of the costs involved before you make a decision.

A lower interest rate, for instance, doesn’t necessarily mean you’ll pay less interest over the life of the loan. Work with a mortgage loan officer or run an amortization schedule in order to do the math.

Also, keep closing costs in mind. Closing costs can vary depending upon the loan scenario and is tied to factors such as the interest rate you choose, your credit score, loan type, property type, and more.

And paying closing costs is not a given. For instance, you can choose to take a higher interest rate (if it is still lower than what you currently have) and use the lender rebate money built into that higher rate to cover some or all of your applicable closing costs. When the time comes to lock in your rate, speak with your chosen lender about various loan programs and the estimated closing costs tied to each rate and term option.

Finally, take a look at some of the other options out there and determine whether you could potentially save more money in interest with them. The more time you spend researching, the better your chances of settling on the option that is most affordable overall.

Can You Buy a House With Student Loans?

While existing debt can impact whether you’re approved for a loan, or the interest rate and loan terms if you are approved, it’s still possible to buy a house with student loan debt. When you apply for a mortgage, the lender will review your complete financial picture including your debt obligations, which might include student loans, credit card debt, or a car loan.

Debt-to-income ratio is one important consideration for lenders. This is a measurement of how much debt one has in comparison to how much money you earn and lenders rely on this metric to inform whether or not you’d be able to make the monthly payments on a new loan, considering your existing debt. Generally speaking, lenders are unlikely to approve anyone for a mortgage with a debt-to-income ratio higher than 43%, though lenders may be more inclined to lend to someone with a debt-to-income ratio lower at or less than 36%.

Beyond debt-to-income ratio, lenders will also evaluate factors such as the borrower’s credit score.

Before applying, do some number crunching to see what a mortgage might cost and how it will impact your overall debt-to-income ratio. This might be helpful in understanding the mortgage rates you may be eligible for.

In addition to traditional home loans there are programs available for first-time home buyers that might make buying a home with student loan debt more achievable.

Refinancing Student Loans With SoFi

If you are interested in consolidating your student loan debt at a lower interest rate but don’t want to roll them into your mortgage, you may instead want to consider student loan refinancing. With SoFi student loan refinancing, you can refinance your private or federal loans (or both!) with no application fees, origination fees, or prepayment penalties. And you still get the benefit of consolidating your loans to one payment, with a new (and potentially better) interest rate and loan terms. Keep in mind that refinancing any federal loans will eliminate them from federal programs and borrower protections such as income-driven repayment plans or deferment options.

The Takeaway

When paying down student loan debt faster, there’s no one-size-fits-all solution. The more information you gather about your options, the easier it will be to eliminate your debt as quickly as possible.

If you’re interested in refinancing your student loans, consider SoFi. Student loan refinancing at SoFi has no fees and as a SoFi member, borrowers qualify for perks such as career coaching, community events, and more.

Learn more about SoFi student loan refinancing.

FAQ

Is it a good idea to roll your student loans into a mortgage?

Evaluate all loan details carefully before rolling your student loans into a mortgage. Factors such as closing costs, loan term, any additional fees, and interest rate can all influence how much it will cost to borrow money over the life of a loan. In some cases, it may be possible to qualify for a lower interest rate when borrowing a mortgage. In other cases, extending the repayment of your student loans over a 30-year period with your mortgage may make it more expensive. If you have any questions on your personal financial situation, consider speaking with a qualified financial professional or mortgage loan officer who can offer a personalized assessment.

Can student loans be included in a mortgage?

Student loans can be included in a mortgage if you have enough equity in your home. Rolling student loans into a mortgage generally requires the borrower to take out a cash-out refinance loan, which allows you to turn a portion of your home’s equity into cash. Once you have the cashout in hand, you can pay off your existing student loans.

Terms may vary by lender. There are certain programs, such as Fannie Mae’s Student Loan CashOut Refi that specialize in this type of borrowing.

How much of student loans is counted for a mortgage?

Student loans are evaluated as a part of your overall debt-to-income ratio. In general, lenders avoid lending to borrowers with a debt-to-income ratio greater than 43%.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC), and by SoFi Lending Corp. NMLS #1121636 , a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law (License # 6054612) and by other states. For additional product-specific legal and licensing information, see SoFi.com/legal.

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 SEPTEMBER 1, 2022 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.

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 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.
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