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

How Student Loan Hero Gets Paid

How Student Loan Hero Gets Paid

Student Loan Hero is compensated by companies on this site and this compensation may impact how and where offers appears on this site (such as the order). Student Loan Hero does not include all lenders, savings products, or loan options available in the marketplace.

Advertiser Disclosure

Student Loan Hero Advertiser Disclosure

Student Loan Hero is an advertising-supported comparison service. The site features products from our partners as well as institutions which are not advertising partners. While we make an effort to include the best deals available to the general public, we make no warranty that such information represents all available products.

Editorial Note: This content is not provided or commissioned by any financial institution. Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by the financial institution.

hidden student loan fees
Logo

We’ve got your back! Student Loan Hero is a completely free website 100% focused on helping student loan borrowers get the answers they need. Read more

How do we make money? It’s actually pretty simple. If you choose to check out and become a customer of any of the loan providers featured on our site, we get compensated for sending you their way. This helps pay for our amazing staff of writers (many of which are paying back student loans of their own!).

Bottom line: We’re here for you. So please learn all you can, email us with any questions, and feel free to visit or not visit any of the loan providers on our site. Read less

Note that the offerings from many student loan lenders and servicers have changed due to the impact of the coronavirus outbreak. Check out our Student Loan Hero Coronavirus Information Center for additional news and details.

*          *          *

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.
  • Discover: No late fees.
  • 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
  • Discover: No returned payment fee
  • 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 2021!
LenderVariable APREligibility 
1.04% – 11.98%1Undergraduate, Graduate, and Parents

Visit College Ave

1.13% – 11.23%*,2Undergraduate, Graduate, and Parents

Visit SallieMae

3.84% – 9.40%3Undergraduate and Graduate

Visit CommonBond

1.05% – 11.44%4Undergraduate and Graduate

Visit Earnest

1.22% – 11.66%5Undergraduate and Graduate

Visit SoFi

2.76% – 7.14%6Undergraduate and Graduate

VISIT CITIZENS

1.24% – 11.99%7Undergraduate and Graduate

Visit Discover

* 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 either Firstrust 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.

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.
 
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. This informational repayment example uses typical loan terms for a first year graduate student 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 7.10% fixed Annual Percentage Rate (“APR”): 120 monthly payments of $141.66 while in the repayment period, for a total amount of payments of $16,699.21. 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 4/22/2021. Variable interest rates may increase after consummation. Lowest advertised rates require selection of full principal and interest payments with the shortest available loan term.


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

3 Important Disclosures for CommonBond.

CommonBond Disclosures

Offered terms are subject to change and state law restriction. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900), NMLS Consumer Access. 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.  If you choose to complete an application, we will conduct a hard credit pull, which may affect your credit score. 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 0.15% effective Jan 1, 2021 and may increase after consummation.


4 Important Disclosures for Earnest.

Earnest Disclosures

  1. Rates include 0.25% Auto Pay Discount
     
  2. Explanation of Rates “With Autopay” (APD)
    Rates shown include 0.25% APR discount when client agrees to make monthly principal and interest payments by automatic electronic payment. Use of autopay is not required to receive an Earnest loan.

    Available Terms
    For Cosigned loans – 5, 7, 10, 12, 15 years. 
    Primary Only – 10, 12, 15 years

    In school deferred payment is not available in AL, AZ, CA, FL, MA, MD, MI, ND, NY, PA, and WA).


5 Important Disclosures for SoFi.

sofiDisclosures

UNDERGRADUATE LOANS: Fixed rates from 4.23% to 11.26% annual percentage rate (“APR”) (with autopay), variable rates from 1.22% to 11.66% APR (with autopay). GRADUATE LOANS: Fixed rates from 4.13% to 11.37% APR (with autopay), variable rates from 1.12% to 11.73% APR (with autopay). MBA AND LAW SCHOOL LOANS: Fixed rates from 4.30% to 11.52% APR (with autopay), variable rates from 1.29% to 11.89% APR (with autopay). PARENT LOANS: Fixed rates from 4.60% to 10.76% APR (with autopay), variable rates from 1.22% to 11.16% APR (with autopay). For variable rate loans, the variable interest rate is derived from the one-month LIBOR rate plus a margin and your APR may increase after origination if the LIBOR increases. Changes in the one-month LIBOR rate may cause your monthly payment to increase or decrease. Interest rates for variable rate loans are capped at 13.95%, unless required to be lower to comply with applicable law. Lowest rates are reserved for the most creditworthy borrowers. If approved for a loan, the interest rate offered will depend on your creditworthiness, the repayment option you select, the term and amount of the loan and other factors, and will be within the ranges of rates listed above. The SoFi 0.25% autopay interest rate reduction requires you to agree to make monthly principal and interest payments by an automatic monthly deduction from a savings or checking account. The benefit will discontinue and be lost for periods in which you do not pay by automatic deduction from a savings or checking account. Information current as of 4/1/2021. Enrolling in autopay is not required to receive a loan from SoFi. SoFi Lending Corp., licensed by the Department of Business Oversight under the California Financing Law License No. 6054612. NMLS #1121636 (www.nmlsconsumeraccess.org)..


6 Important Disclosures for Citizens Bank.

Citizens Bank Disclosures

Undergraduate Rate Disclosure: Variable interest rates range from 2.76% – 7.14% (2.76% – 7.14% APR). Fixed interest rates range from 3.01% – 7.50% (3.01% – 7.50% APR).

Graduate Rate Disclosure: Variable interest rates range from 2.19% – 6.73% (2.19% – 6.73% APR). Fixed interest rates range from 2.89% – 7.09% (2.89%-7.09% APR).

Business/Law Rate Disclosure: Variable interest rates range from 1.36% – 9.54% (1.36% – 8.82% APR). Fixed interest rates range from 4.13% – 9.84% (4.13% – 9.12% APR).

Medical/Dental Rate Disclosure: Variable interest rates range from 1.36% – 8.34% (1.36% – 8.04% APR). Fixed interest rates range from 4.03% – 8.64% (4.03% – 8.34% APR).

Parent Loan Rate Disclosure: Variable interest rates range from 2.10% – 7.41% (2.10%-7.41% APR). Fixed interest rates range from 4.69% – 7.83% (4.69% – 7.83% APR).

Bar Study Rate Disclosure: Variable interest rates range from 4.45% – 9.60% (4.45% – 9.53% APR). Fixed interest rates range from 7.39% – 12.94% (7.38% – 12.81% APR).

Medical Residency Rate Disclosure: Variable interest rates range from 3.55% – 7.05% (3.55% – 6.77% APR). Fixed interest rates range from 6.99% – 10.49% (6.97% – 10.07% APR).

Variable Rate Disclosure: Variable Rates are 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 March 1, 2021, the one-month LIBOR rate is 0.11%. Variable interest rates will fluctuate over the term of the loan with changes in the LIBOR rate, and will vary based on applicable terms, level of degree and presence of a co-signer. The maximum variable rate is the greater of 21.00% or 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 require a 5-year repayment term, immediate repayment, a graduate 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.

Federal Loan vs. Private Loan Benefits: Some federal student loans include unique benefits that the borrower may not receive with a private student loan, some of which we do not offer.  Borrowers should carefully review federal benefits, especially if they work in public service, are in the military, are considering possible loan forgiveness options, are currently on or considering income based repayment options or are concerned about a steady source of future income and would want to lower their payments at some time in the future. When the borrower refinances, they waive any current and potential future benefits of their federal loans. For more information about federal student loan benefits and federal loan consolidation, visit http://studentaid.ed.gov/. We also have several resources available to help the borrower make a decision on our website including Should I Refinance My Student Loans? and our FAQs. Should I Refinance My Student Loans? includes a comparison of federal and private student loan benefits that we encourage the borrower to review.

Eligibility Criteria: Applicants must be a U.S. citizen, permanent resident, or eligible non-citizen with a creditworthy U.S. citizen or permanent resident co-signer. For applicants who have not attained the age of majority in their state of residence, a co-signer is required. Citizens Bank reserves the right to modify eligibility criteria at any time. Citizens Bank private student loans are subject to credit qualification, completion of a loan application/Promissory Note, verification of application information, and if applicable, self-certification form, school certification of the loan amount, and student’s enrollment at a Citizens Bank participating school.

Loyalty Discount Disclosure: The borrower will be eligible for a 0.25 percentage point interest rate reduction on their loan if the borrower or their co-signer (if applicable) has a qualifying account in existence with us at the time the borrower and their co-signer (if applicable) have submitted a completed application authorizing us to review their credit request for the loan. The following are qualifying accounts: any checking account, savings account, money market account, certificate of deposit, automobile loan, home equity loan, home equity line of credit, mortgage, credit card account, or other student loans owned by Citizens Bank, N.A. Please note, our checking and savings account options are only available in the following states: CT, DE, MA, MI, NH, NJ, NY, OH, PA, RI, and VT and some products may have an associated cost. This discount will be reflected in the interest rate disclosed in the Loan Approval Disclosure that will be provided to the borrower once the loan is approved. Limit of one Loyalty Discount per loan and discount will not be applied to prior loans. The Loyalty Discount will remain in effect for the life of the loan.

Automatic Payment Discount Disclosure: Borrowers will be eligible to receive a 0.25 percentage point interest rate reduction on their student loans owned by Citizens Bank, N.A. during such time as payments are required to be made and our loan servicer is authorized to automatically deduct payments each month from any bank account the borrower designates. Discount is not available when payments are not due, such as during forbearance. If our loan servicer is unable to successfully withdraw the automatic deductions from the designated account three or more times within any 12-month period, the borrower will no longer be eligible for this discount.


7 Important Disclosures for Discover.

Discover Disclosures

  1. Aggregate loan limits apply.
  2. Get a cash reward on each new Discover undergraduate and graduate student loan when you earn at least a 3.0 GPA (or equivalent) in any academic period covered by the loan. Limitations Apply. Visit DiscoverStudentLoans.com/Reward for terms and conditions.
  3. Lowest APRs shown for Discover Student Loans are available for the most creditworthy applicants for undergraduate loans, and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments. The interest rate ranges represent the lowest and highest interest rates offered on Discover student loans, including undergraduate, graduate, health professions, law and MBA Loans. The fixed interest rate is set at the time of application and does not change during the life of the loan. The variable interest rate is calculated based on the 3-Month LIBOR index plus the applicable margin percentage. For variable interest rate loans, the 3-Month LIBOR is 0.250% as of April 1, 2021. Discover Student Loans may adjust the rate quarterly on each January 1, April 1, July 1 and October 1 (the “interest rate change date”), based on the 3-Month LIBOR Index, published in the Money Rates section of the Wall Street Journal 15 days prior to the interest rate change date, rounded up to the nearest one-eighth of one percent (0.125% or 0.00125). This may cause the monthly payments to increase, the number of payments to increase or both. Your APR will be determined after you apply. Learn more about Discover Student Loans interest rates at DiscoverStudentLoans.com/Rates.
  4. Lowest APRs shown for Discover Private Consolidation Loans are available for the most creditworthy applicants who are approved and choose a shorter repayment term, and include a 0.25% interest rate reduction while enrolled in automatic payments. The fixed interest rate is set at the time of application and does not change during the life of the loan. The variable interest rate is calculated based on the 3-Month LIBOR index plus the applicable margin percentage. For variable interest rate loans, the 3-Month LIBOR is 0.250% as of April 1, 2021. Discover Student Loans may adjust the rate quarterly on each January 1, April 1, July 1 and October 1 (the “interest rate change date”), based on the 3-Month LIBOR Index, published in the Money Rates section of the Wall Street Journal 15 days prior to the interest rate change date, rounded up to the nearest one-eighth of one percent (0.125% or 0.00125). This may cause the monthly payments to increase, the number of payments to increase or both. Your APR will be determined after you apply. Visit Discover.com/student-loans/consolidation.html for more information, including up-to-date interest rates and APRs.
Lowest APRs shown for Discover Student Loans are available for the most creditworthy applicants for undergraduate loans, and include an interest-only repayment discount and a 0.25% interest rate reduction while enrolled in automatic payments.