Student Loan Fees: What to Know About Federal and Private Student Loans

 May 18, 2020
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When you’re shopping around for student loans, you probably pay the most attention to lenders’ interest rates. But while the interest rate has a big impact on your repayment, there is another factor you should consider: student loan fees.

Both federal and private student loan lenders can charge different fees, including origination fees, late payment fees and returned check fees. Here’s what you need to know about the different fees you may encounter and what lenders typically charge:

Student loan fees: Federal student loans

While federal student loans are known for their relatively low interest rates and repayment benefits, they do charge a student loan origination fee.

Federal student loan origination fees

A student loan origination fee is a percentage of your loan amount that is proportionately deducted from the loan when your lender disburses the money. How large the origination fee is depends on what type of federal student loan you’re applying for.

  • Direct Subsidized and Unsubsidized Loans: 1.059%
  • Direct PLUS Loans (including Grad PLUS and Parent PLUS Loans):4.236%

How are loan origination fees calculated?

The origination fee is deducted from your loan before it’s disbursed, reducing how much of the loan you can actually use.

  • Direct Unsubsidized Loan: If you took out a Direct Unsubsidized Loan for $10,000, you’d pay $105.90 in origination fees. It would be taken from the loan amount before disbursement, so you’d receive $9,894.10 for your school tuition and fees.
  • PLUS Loans: PLUS Loans have a 4.236% origination fee. If you applied for a $10,000 Parent PLUS Loan, your origination fee would be $423.60. That amount would be deducted from the loan, so you’d only receive $9,576.40 for your education expenses.

When applying for a loan, it’s important to keep the origination fee in mind to ensure you take out enough money to cover your education costs. Otherwise, the origination fee could leave you several hundred dollars short.

Federal student loan late fees

Even though you may have federal student loans, you still have to make all of your payments on time. Otherwise, you could be subject to student loan late fees.

According to Federal Student Aid’s Master Promissory Note, the document all borrowers need to review and sign before they can access their loan, your loan servicer can start charging you late fees within 30 days after the payment is due. The late fee is $0.06 for each dollar of the late payment.

For example, let’s say your minimum monthly payment was $350. If you missed your payment by 30 days, your federal loan servicer would charge you a fee equal to 6% of the late payment amount. In this case, your fee would be $21.

Student loan fees: Private student loans

Private student loans are very different from federal loans, as there isn’t one standard set of fees. Each lender sets their own rules and fees, so it’s a good idea to shop around and pay attention to extra costs like origination fees, late fees and returned payment fees.

Private student loan origination fees

Unlike federal student loans, most private student loan lenders do not charge origination fees.

However, there are exceptions, particularly if you’re taking out specialty loans for higher education. For example, CommonBond charges a 2% origination fee on medical loans.

Private student loan late fees

While some lenders charge late fees if you miss a payment, not all private lenders do. Late payment policies vary widely from lender to lender. These are the late payment policies for the following lenders:

  • Citizens Bank: 5% of the payment amount.
  • CommonBond: 5% of the unpaid amount of the payment due or $10.00, whichever is less.
  • Education Loan Finance: 5% of the past due amount or $50, whichever is less.
  • Laurel Road: 5% of the late payment or $28, whichever is less.
  • Sallie Mae: 5% of the amount of the past due payment, up to a maximum of $25.
  • SoFi: No late fees.

Private student loan returned payment fees

When you take out a student loan, another common fee to keep in mind is returned payment fees. If a payment is returned to you because the account has insufficient funds or it’s been closed, the lender may charge you a penalty.

Returned payment fees can vary by lender. Here are some lenders’ returned payment policies:

  • Citizens Bank: $15 for each payment refused or returned
  • CommonBond: $5, subject to state law restrictions
  • Education Loan Finance: $30 for any payment that is returned unpaid for any reason
  • Laurel Road: Up to $20 for any payment that is returned to you
  • Sallie Mae: Up to $20
  • SoFi: No returned payment fee

Forbearance fees

Some private student loan lenders offer forbearance in cases of financial hardship. If you qualify, you can temporarily postpone your payments without becoming delinquent on your loan.

However, some lenders charge borrowers a flat fee to enter into forbearance. For example, Sallie Mae charges borrowers up to $50 per loan, up to a maximum of $150 per forbearance period.

Student loan fees FAQ

Are there refinance origination fees?

If you want to refinance your student loans, there’s good news: most refinancing lenders don’t charge a refinance origination fee. To find a lender, check out our list of the five best banks to refinance and consolidate student loans in 2020.

What are student loan forgiveness fees?

If you are pursuing student loan forgiveness, you should know that there aren’t fees to apply for loan forgiveness. However, you may owe taxes on the forgiven amount, depending on the type of forgiveness you’re eligible to receive.

  • Public Service Loan Forgiveness: If you qualify for Public Service Loan Forgiveness (PSLF), the forgiven loan balance is not taxable as income.
  • Income-driven repayment forgiveness: After 20 to 25 years of making payments under an income-driven repayment plan, you can qualify to have your remaining balance discharged. However, the forgiven amount is taxable as income.

What should I know about student loan default fees?

When it comes to student loan default fees, most federal and private loan companies will charge you their standard late fee. However, if you continue to miss payments and enter into default, they can pursue additional measures to recoup their money. They can send your account to collections or take you to court, damaging your credit. In the case of federal loans, they can even garnish your wages and seize your tax refund.

Casey Bond contributed to this report.

Need a student loan?

Here are our top student loan lenders of 2022!
LenderVariable APREligibility 
2.49% – 13.85%1Undergraduate

Visit College Ave

2.55% – 11.44%2Undergraduate

Visit Earnest

3.25% – 13.59%3Undergraduate

Visit SallieMae

0.00% – 23.00%4Undergraduate

Visit Edly

3.25% – 9.69%6Undergraduate



Visit FundingU

* The Sallie Mae partner referenced is not the creditor for these loans and is compensated by Sallie Mae for the referral of Smart Option Student Loan customers.

1 Important Disclosures for College Ave.

CollegeAve Disclosures

College Ave Student Loans products are made available through Firstrust Bank, member FDIC, First Citizens Community Bank, member FDIC, or M.Y. Safra Bank, FSB, member FDIC.. All loans are subject to individual approval and adherence to underwriting guidelines. Program restrictions, other terms, and conditions apply.

  1. As certified by your school and less any other financial aid you might receive. Minimum $1,000.
  2. Rates shown are for the College Ave Undergraduate Loan product and include autopay discount. The 0.25% auto-pay interest rate reduction applies as long as a valid bank account is designated for required monthly payments. Variable rates may increase after consummation.
  3. This informational repayment example uses typical loan terms for a freshman borrower who selects the Deferred Repayment Option with a 10-year repayment term, has a $10,000 loan that is disbursed in one disbursement and a 8.35% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $179.18 while in the repayment period, for a total amount of payments of $21,501.54. Loans will never have a full principal and interest monthly payment of less than $50. Your actual rates and repayment terms may vary.

Information advertised valid as of 9/15/2022. Variable interest rates may increase after consummation. Approved interest rate will depend on the creditworthiness of the applicant(s), lowest advertised rates only available to the most creditworthy applicants and require selection of full principal and interest payments with the shortest available loan term.

2 Rate range above includes optional 0.25% Auto Pay discount. Important Disclosures for Earnest.

Earnest Disclosures

Actual rate and available repayment terms will vary based on your income. Fixed rates range from 3.47% APR to 13.03% APR (excludes 0.25% Auto Pay discount). Variable rates range from 2.80% APR to 11.69% APR (excludes 0.25% Auto Pay discount). Earnest variable interest rate student loan refinance loans are based on a publicly available index, the 30-day Average Secured Overnight Financing Rate (SOFR) published by the Federal Reserve Bank of New York. The variable rate is based on the rate published on the 25th day, or the next business day, of the preceding calendar month, rounded to the nearest hundredth of a percent. The rate will not increase more than once per month. Although the rate will vary after you are approved, it will never exceed 36% (the maximum allowable for this loan). Please note, Earnest Private Student Loans are not available in Nevada. Our lowest rates are only available for our most credit qualified borrowers and contain our .25% auto pay discount from a checking or savings account. It is important to note that the 0.25% Auto Pay discount is not available while loan payments are deferred.

3 Sallie Mae Disclaimer: Click here for important information. Terms, conditions and limitations apply.

4 Important Disclosures for Edly.

Edly Disclosures

1. Loan Example:

  • Loans from $5,000 – $20,000
  • Example: $10,000 IBR Loan with a 7% gross income payment percentage for a Senior student making $65,000 annually throughout the life of the loan.
    • Payments deferred for the first 12 months during final year of education.
    • After which, $270 Monthly payment for 12 months.
    • Then $379 Monthly payment for 44 months.
    • Followed by one final payment of $137 for a total of $20,610 paid over the life of the loan.

About this example

The initial payment schedule is set upon receiving final terms and upon confirmation by your school of the loan amount. You may repay this loan at any time by paying an effective APR of 23%. The maximum amount you will pay is $22,500 (not including Late Fees and Returned Check Fees, if any). The maximum number of regularly scheduled payments you will make is 60. You will not pay more than 23% APR. No payment is required if your gross earned income is below $30,000 annually or if you lose your job and cannot find employment.

2. Edly Student IBR Loans are unsecured personal student loans issued by FinWise Bank, a Utah chartered commercial bank, member FDIC. All loans are subject to eligibility criteria and review of creditworthiness and history. Terms and conditions apply.

5 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

  • Variable Rate Disclosure: Variable interest rates are based on the 30-day average Secured Overnight Financing Rate (“SOFR”) index, as published by the Federal Reserve Bank of New York. As of September 1, 2022, the 30-day average SOFR index is 2.23%. Variable interest rates will fluctuate over the term of the loan with changes in the SOFR index, and will vary based on applicable terms, level of degree and presence of a co-signer. The maximum variable interest rate is the greater of 21.00% or the prime rate plus 9.00%.
  • Fixed Rate Disclosure: Fixed rate ranges are based on applicable terms, level of degree, and presence of a co-signer.
  • Lowest Rate Disclosure: Lowest rates are only available for the most creditworthy applicants, require a 5-year repayment term, immediate repayment, a graduate or medical degree (where applicable), and include our Loyalty and Automatic Payment discounts of 0.25 percentage points each, as outlined in the Loyalty Discount and Automatic Payment Discount disclosures. Rates are subject to additional terms and conditions, and are subject to change at any time without notice. Such changes will only apply to applications taken after the effective date of change.


    Undergraduate Rate Disclosure: Variable interest rates range from 3.25%-10.35% (3.25% – 9.69% APR). Fixed interest rates range from 4.24% – 10.59% (4.24% – 9.93% APR). 

    Graduate Rate Disclosure: Variable interest rates range from 3.75%-9.90% (3.75% – 9.68% APR). Fixed interest rates range from  5.22% – 10.14% (5.22% – 9.91% APR). 

    Business/Law Rate Disclosure: Variable interest rates range from 3.75%-9.35% (3.75% – 9.16% APR). Fixed interest rates range from 5.20% – 9.59% (5.20% – 9.39% APR).

    Medical/Dental Rate Disclosure: Variable interest rates range from 3.75%-9.02% (3.75% -8.98% APR). Fixed interest rates range from 5.18% – 9.26% (5.18% – 9.22% APR). 

    Parent Loan Rate Disclosure: Variable interest rates range from 3.25%-9.21% (3.25% – 9.21% APR). Fixed interest rates range from 3.96%-9.50% (3.96%-9.50% APR).

    Bar Study Rate Disclosure: Variable interest rates range from 6.58%-11.72% (6.58% – 11.62% APR). Fixed interest rates range from 7.39% – 12.94% (7.40% – 12.82% APR). 

    Medical Residency Rate Disclosure: Variable interest rates range from 5.67%-9.17% (5.67% – 8.76% APR). Fixed interest rates range from 6.99% – 10.49% (6.97% – 10.08% APR).

6 Important Disclosures for Funding U.

Funding U Disclosures

Offered terms are subject to change. Loans are made by Funding University which is a for-profit enterprise. Funding University is not affiliated with the school you are attending or any other learning institution. None of the information contained in Funding University’s website constitutes a recommendation, solicitation or offer by Funding University or its affiliates to buy or sell any securities or other financial instruments or other assets or provide any investment advice or service.