Note that due to the coronavirus pandemic, some of our advice below is not as relevant right now. The answers are still worth taking a look at, but you may also want to check out our Student Loan Hero Coronavirus Information page for the most up-to-date guidance.
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If you have student loan questions, you’re not the only one. And like most people, you probably went to Google to search for the answers.
Through Google autocomplete and Google Trends, we identified 20 student loan questions that people search for the most. Here are the student loan questions and answers everyone’s searching for.
1. How much does college cost?
2. Is college free?
3. Is college worth it?
4. Is college for everyone?
5. How can I pay for college?
6. How do student loans work?
7. How do I get federal student loans?
8. How do I fill out FAFSA?
9. What is a Stafford Loan?
10. What is a Perkins Loan?
11. What is a PLUS loan?
12. How can I pay student loans?
13. How do I defer student loans?
14. What does forbearance mean?
15. Should I consolidate student loans?
16. How do I consolidate student loans?
17. Can student loans be forgiven?
18. How can I get student loans out of default?
19. Can student loans be garnished?
20. Can I deduct student loan interest?
Ultimately, your cost of college depends on what school you choose. If you want to get a better sense of the average cost of college, consider these College Board stats from the 2019-2020 school year:
- 4-year public institutions for students enrolled in-state: $10,440
- 4-year public institutions for students enrolled out-of-state: $26,820
- 2-year public institutions for students enrolled in-state: $3,730
- 4-year private institutions: $36,880
- For-profit institutions: $14,600 (in 2018-19 year)
Unfortunately, college isn’t free. However, college students might be able to get a portion of their college costs paid for through financial aid, scholarships, and other programs. Student Loan Hero even offers a $5,000 scholarship every semester.
Since going to college is such a big expense, it’s no wonder many people question the benefits of it. Yet, the data does seem to show that a college degree is a worthy investment.
Holding a bachelor’s degree can boost an individual’s median weekly earnings to $1,173, according to the Bureau of Labor Statistics. For those with an associate degree, that number is $836 and for those with a high school diploma and no college, that number is $712.
Ultimately, the formula for whether college is worth it is similar to any investment. What are your initial costs and what’s the payoff later?
You can make sure college is a smart investment by keeping college costs under control. And make sure you’re maximizing your opportunities and earnings after graduating.
After attending years of public schooling, it can seem daunting to sign on for more classes in college. Especially now that you’ll bear the responsibility for paying for your education.
That’s why it’s a smart idea to check in with yourself and ask, “Is college right for me?”
While some studies may show that earning a college degree might come with higher earnings, there are still many Americans who did not pursue higher education but are earning a decent salary and hold satisfactory careers.
There are opportunities outside of college for you to gain marketable skills and experience, from vocational school to online tutorials.
There are several resources students should look at when trying to figure out how to pay for college. Here are the most common ones:
- Financial support from parents or family members
- Federal aid, including need-based grants and student loans
- Your own personal income and savings
- Scholarships and grants
- Employer benefits like tuition reimbursement
Student loans are an important tool many students use to cover college costs. But it’s important to understand how student loans work.
The majority of student loans in the U.S. are federal loans. However, private student loans can also be an option.
You can take out student loans for each semester in school, and funds are typically disbursed through your college’s financial aid office.
Some student loans charge interest. In some cases, your loans will accrue interest as soon as you borrow them. Even if you’re still in school.
You usually won’t have to make any payments on your loans until six months after your last semester. Then student loans payments will begin. A standard repayment schedule is 10 years or more.
Direct loans are federal student loans that the U.S. Department of Education funds directly to those enrolled in school. Students can get access to these student loans by completing a Free Application for Federal Student Aid (FAFSA).
Once your FAFSA is processed, you’ll get a summary of what types of federal student loans you qualify for and how much you can borrow.
You can then claim the student loans you need. Funds are disbursed to your student account with your educational institution.
It can take some time and persistence to figure out how to fill out FAFSA and submit it.
The first step is to visit StudentAid.gov. Then, sign up for an account and get a federal student aid (FSA) ID number. Next, log in with your FSA ID number to start your FAFSA and complete it.
To complete the FAFSA, you’ll need your recent tax returns on hand, as well as your parents’ if you’re a dependent. The electronic system will walk you through each question and ask for information required to complete it.
Make sure you file all of your info by the FAFSA deadline.
A Stafford loan is a Direct Loan funded by the Department of Education. Students can qualify to borrow through a Stafford Loan by submitting their FAFSA.
These loans typically carry low-interest rates, which are currently set at 5.05% for undergraduate borrowers.
Stafford Loans might be subsidized, meaning the Department of Education pays interest while you’re in school. Borrowers with unsubsidized Stafford Loans, however, will be responsible for paying all of their student loan interest.
As of September, 2017, the Perkins Loan program ended and the government stopped disbursing new Perkins Loans.
However, thousands of borrowers used Perkins Loans to pay for school in the past. A Perkins Loan was different from other loans offered through FAFSA. That’s because the school you attended was the lender, rather than the Department of Education.
Perkins Loans were only offered to students with “exceptional financial need.” They carried an interest rate of 5%.
Students also had a longer grace period after their last semester. They got nine months before their Perkins Loan repayment begins, instead of the usual six months.
A PLUS loan is another type of Direct Loan offered by the Department of Education.
Typically this loan is used by graduate students to fund a postsecondary degree. Or, by parents to help cover their child’s educational costs.
Unlike other federal student loans, a PLUS loan requires a credit check for approval. It also carries a higher interest rate (7.08%) than other federal student loans and has an additional fee of 4.236%.
When student loans become due, repayment is automatically set to a standard 10-year schedule.
Hopefully, the minimum monthly payments are affordable and you can keep up with them. Or, perhaps you can afford to pay larger amounts to get out of student debt faster.
If you’re struggling, however, there are some student loan repayment options and strategies that can help you manage your debt.
- Student loan deferment or forbearance, which will “pause” student loan repayment
- Income-based repayment plans, which can lower your monthly payments
- Student loan forgiveness, which can be an option for some borrowers
- Spending less and earning more, which will generate extra money for student loans
- Refinancing or consolidating student loans, which can help lower interest rates and make them more affordable
Student loans can be deferred, which means repayment will be officially suspended for a period of up to three years in some cases.
If you want to defer your student loans, you’ll need to submit a request with your loan servicer.
Keep in mind that it’s likely you will need to prove financial hardship or other eligibility requirements to get a deferment.
Forbearance of student loans is offered for borrowers who are unable to make student loan payments but don’t meet requirements for deferment.
Under forbearance, payments might be temporarily suspended or reduced for up to 12 months. Keep in mind, interest may continue to accrue on your student loans.
Through student loan consolidation, you take out a new loan and use it to pay off other student loans. If you’re wondering if you should consolidate student loans, there are some pros and cons to weigh.
Consolidating student loans can be a way to simplify student debt, get a lower interest rate, reduce monthly payments or release a cosigner of responsibility for an existing loan.
However, depending on the terms of your new loan, consolidating student debt can cost more over time. Be sure to do the math before making your decision on consolidation.
If you decide to consolidate, your next step will be to figure out how to consolidate student loans.
There are two main options for refinancing student debt: getting a new federal loan through a Direct Consolidation loan or refinancing through a private lender.
The Direct Consolidation Loan can only be used to consolidate federal student loans. It uses an average interest rate, so you’re unlikely to save money on that.
However, you can set a longer repayment period to lower monthly payments. To use this method, apply through StudentLoans.gov.
With private student loan consolidation, you will need to apply directly with the private lender. Approval will be based on your credit, income and other factors.
Make sure you pick a reputable private lender to refinance student loans. Many offer lower student loan interest rates that can save you money in the long run. Just be sure that you won’t need the special protections that come with federal loans, since you’ll lose access to them if you refinance.
In some cases, borrowers might be able to get student loan forgiveness. The federal government grants forgiveness for some student debt, depending on the type of loan and situation of the borrower.
Some circumstances that might make you eligible for student loan forgiveness include:
- Error, fraud or closure of the school you attended
- Disability or death
- Public Service Loan Forgiveness (PSLF) or similar employment-based forgiveness programs
- Perkins Loan cancellation
- Completing a payment period through an income-driven repayment plan
Student loan default happens when more than 270 days pass without you making your student loan payments. Those wondering how to get student loans out of default can pursue a few options.
One option is full repayment of the loan. You can also rehabilitate your student loans or consolidate them, which will begin the process of getting the loan out of default.
Student loans can’t be garnished since they aren’t considered wages. However, people asking this question might actually be wondering if their wages can be garnished because of student loan issues.
Unfortunately, student loan servicers do have the authority to garnish your wages if you miss payments or go into default. Private lenders will need to take you to court and get a judgment before doing so.
For federal loans, however, the government doesn’t need to get a judgment to garnish wages and only needs to give you 30 days of notice.
Student loan interest is a tax-deductible expense. Under current tax laws, you can write off student loan interest to reduce your taxable income by up to $2,500.
There are other requirements for claiming a student loan tax deduction. You will have to have a qualified student loan used only for educational expenses and meet income and other criteria.
As you try to figure out all of your student loan questions, make sure you get the answers you need to make the best financial decisions possible. Your bank account will thank you in the future.
Rebecca Safier contributed to this report.
Interested in refinancing student loans?Here are the top 5 lenders of 2020!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Laurel Road is a brand of KeyBank National Association offering online lending products in all 50 U.S. states, Washington, D.C., and Puerto Rico. Mortgage lending is not offered in Puerto Rico. All loans are provided by KeyBank National Association.
ANNUAL PERCENTAGE RATE (“APR”)
There are no origination fees or prepayment penalties associated with the loan. Lender may assess a late fee if any part of a payment is not received within 15 days of the payment due date. Any late fee assessed shall not exceed 5% of the late payment or $28, whichever is less. A borrower may be charged $20 for any payment (including a check or an electronic payment) that is returned unpaid due to non-sufficient funds (NSF) or a closed account.
For bachelor’s degrees and higher, up to 100% of outstanding private and federal student loans (minimum $5,000) are eligible for refinancing. If you are refinancing greater than $300,000 in student loan debt, Lender may refinance the loans into 2 or more new loans.
ELIGIBILITY & ELIGIBLE LOANS
Borrower, and Co-signer if applicable, must be a U.S. Citizen or Permanent Resident with a valid I-551 card (which must show a minimum of 10 years between “Resident Since” date and “Card Expires” date or has no expiration date); state that they are of at least borrowing age in the state of residence at the time of application; and meet Lender underwriting criteria (including, for example, employment, debt-to-income, disposable income, and credit history requirements).
Graduates may refinance any unsubsidized or subsidized Federal or private student loan that was used exclusively for qualified higher education expenses (as defined in 26 USC Section 221) at an accredited U.S. undergraduate or graduate school. Any federal loans refinanced with Lender are private loans and do not have the same repayment options that federal loan program offers such as Income Based Repayment or Income Contingent Repayment.
All loans must be in grace or repayment status and cannot be in default. Borrower must have graduated or be enrolled in good standing in the final term preceding graduation from an accredited Title IV U.S. school and must be employed, or have an eligible offer of employment. Parents looking to refinance loans taken out on behalf of a child should refer to https://www.laurelroad.com/refinance-student-loans/refinance-parent-plus-loans/ for applicable terms and conditions.
For Associates Degrees: Only associates degrees earned in one of the following are eligible for refinancing: Cardiovascular Technologist (CVT); Dental Hygiene; Diagnostic Medical Sonography; EMT/Paramedics; Nuclear Technician; Nursing; Occupational Therapy Assistant; Pharmacy Technician; Physical Therapy Assistant; Radiation Therapy; Radiologic/MRI Technologist; Respiratory Therapy; or Surgical Technologist. To refinance an Associates degree, a borrower must also either be currently enrolled and in the final term of an associate degree program at a Title IV eligible school with an offer of employment in the same field in which they will receive an eligible associate degree OR have graduated from a school that is Title IV eligible with an eligible associate and have been employed, for a minimum of 12 months, in the same field of study of the associate degree earned.
The interest rate you are offered will depend on your credit profile, income, and total debt payments as well as your choice of fixed or variable and choice of term. For applicants who are currently medical or dental residents, your rate offer may also vary depending on whether you have secured employment for after residency.
The repayment of any refinanced student loan will commence (1) immediately after disbursement by us, or (2) after any grace or in-school deferment period, existing prior to refinancing and/or consolidation with us, has expired.
POSTPONING OR REDUCING PAYMENTS
After loan disbursement, if a borrower documents a qualifying economic hardship, we may agree in our discretion to allow for full or partial forbearance of payments for one or more 3-month time periods (not to exceed 12 months in the aggregate during the term of your loan), provided that we receive acceptable documentation (including updating documentation) of the nature and expected duration of the borrower’s economic hardship.
We may agree under certain circumstances to allow a borrower to make $100/month payments for a period of time immediately after loan disbursement if the borrower is employed full-time as an intern, resident, or similar postgraduate trainee at the time of loan disbursement. These payments may not be enough to cover all of the interest that accrues on the loan. Unpaid accrued interest will be added to your loan and monthly payments of principal and interest will begin when the post-graduate training program ends.
We may agree under certain circumstances to allow postponement (deferral) of monthly payments of principal and interest for a period of time immediately following loan disbursement (not to exceed 6 months after the borrower’s graduation with an eligible degree), if the borrower is an eligible student in the borrower’s final term at the time of loan disbursement or graduated less than 6 months before loan disbursement, and has accepted an offer of (or has already begun) full-time employment.
If Lender agrees (in its sole discretion) to postpone or reduce any monthly payment(s) for a period of time, interest on the loan will continue to accrue for each day principal is owed. Although the borrower might not be required to make payments during such a period, the borrower may continue to make payments during such a period. Making payments, or paying some of the interest, will reduce the total amount that will be required to be paid over the life of the loan. Interest not paid during any period when Lender has agreed to postpone or reduce any monthly payment will be added to the principal balance through capitalization (compounding) at the end of such a period, one month before the borrower is required to resume making regular monthly payments.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of March 4, 2020 and is subject to change.
2 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Splash Financial loans are available through arrangements with lending partners. Your loan application will be submitted to the lending partner and be evaluated at their sole discretion. For loans where a credit union is the lender, or a purchaser of the loan, in order to refinance your loans, you will need to become a credit union member.
The Splash Student Loan Refinance Program is not offered or endorsed by any college or university. Neither Splash Financial nor the lending partner are affiliated with or endorse any college or university listed on this website.
You should review the benefits of your federal student loan; it may offer specific benefits that a private refinance/consolidation loan may not offer. If you work in the public sector, are in the military or taking advantage of a federal department of relief program, such as income based repayment or public service forgiveness, you may not want to refinance, as these benefits do not transfer to private refinance/consolidation loans.
Splash Financial and our lending partners reserve the right to modify or discontinue products and benefits at any time without notice. To qualify, a borrower must be a U.S. citizen and meet our lending partner’s underwriting requirements. Lowest rates are reserved for the highest qualified borrowers. This information is current as of May 1, 2020.
Fixed APR: Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Fixed Rate options range from 2.88% (without autopay) to 7.27% (without autopay) and will vary based on application terms, level of degree and presence of a co-signer. Rates are subject to change without notice. Fixed rate options without an autopay discount consist of a range from 2.88% per year to 6.21% per year for a 5-year term, 3.40% per year to 6.25% per year for a 7-year term, 3.45% to 5.08% for a 8-year term, 3.89% per year to 6.65% per year for a 10-year term, 4.18% per year to 5.11% per year for a 12-year term, 4.20% per year to 7.05% per year for a 15-year term, or 4.51% per year to 7.27% per year for a 20-year term, with no origination fees. The fixed interest rate will apply until the loan is paid in full (whether before or after default, and whether before or after the scheduled maturity date of the loan).
Variable APR: Annual Percentage Rate [APR] is the cost of credit calculating the interest rate, loan amount, repayment term and the timing of payments. Variable rate options range from 1.99% (with autopay) to 7.10% (without autopay) and will vary based on application terms, level of degree and presence of a co-signer. Our lowest rate option is shown with a 0.25% autopay discount. Our highest rate option does not include an autopay discount. The variable rates are based on the Variable rate index, is based on the one-month London Interbank Offered Rate (“LIBOR”) published in The Wall Street Journal on the twenty-fifth day, or the next business day, of the preceding calendar month. As of April 27, 2020, the one-month LIBOR rate is 0.43763%. The interest rate on a variable rate loan is comprised of an index and margin added together. The margin is a fixed amount (disclosed at the time of your loan application) added each month to the index to determine the next month’s variable rate. Variable rate options without an autopay discount consist of a range from 2.01% per year to 6.30% per year for a 5-year term, 4.00% per year to 6.35% per year for a 7-year term, 2.09% per year to 3.92% per year for a 8-year term, 4.25% per year to 6.40% per year for a 10-year term, 2.67% per year to 4.56% per year for a 12-year term, 3.44% per year to 6.65% per year for a 15-year term, 4.75% per year to 6.93% per year for a 20-year term, or 5.14% per year to 7.10% for a 25-year term, with no origination fees. APR is subject to increase after consummation. Variable interest rates will fluctuate over the term of the borrower’s loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree earned and presence of a co-signer. The maximum variable rate may be between 9.00% and 16.00%, depending on loan term. The floor rate may be between 0.54% and 4.21%, depending on loan term. These rates are subject to additional terms and conditions, and rates are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.
3 Important Disclosures for SoFi.
4 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.21% APR (with Auto Pay) to 8.77% APR (with Auto Pay). Variable rate loan rates range from 3.21% APR (with Auto Pay) to 8.72% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of May 8, 2020, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 5/08/2020. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at [email protected], or call 888-601-2801 for more information on our student loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown. All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 0.8100000000000002% effective April 10, 2020.
|1.99% – 6.65%1||Undergrad & Graduate|
|1.99% – 7.10%2||Undergrad & Graduate|
|3.21% – 6.67%3||Undergrad & Graduate|
|3.21% – 8.72%4||Undergrad & Graduate|
|3.22% – 6.05%5||Undergrad & Graduate|