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.
* * *
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 6 lenders of 2020!
|Lender||Variable APR||Eligible Degrees|
|1.99% – 5.64%1||Undergrad & Graduate|
|1.89% – 5.90%2||Undergrad & Graduate|
|2.25% – 6.09%3||Undergrad & Graduate|
|1.89% – 6.77%4||Undergrad & Graduate|
|2.39% – 6.01%||Undergrad |
|1.99% – 5.41%5||Undergrad & Graduate|
|Check out the testimonials and our in-depth reviews! |
1 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 2.98% APR (with Auto Pay) to 5.79% APR (with Auto Pay). Variable rate loan rates range from 1.99% APR (with Auto Pay) to 5.64% 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 July 31, 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 7/31/2020. 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.
© 2020 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.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
All credit products are subject to credit approval.
Laurel Road began originating student loans in 2013 and has since helped thousands of professionals with undergraduate and postgraduate degrees consolidate and refinance more than $4 billion in federal and private school loans. Laurel Road also offers a suite of online graduate school loan products and personal loans that help simplify lending through customized technology and personalized service. In April 2019, Laurel Road was acquired by KeyBank, one of the nation’s largest bank-based financial services companies. 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. All loans are provided by KeyBank National Association, a nationally chartered bank. Member FDIC. For more information, visit www.laurelroad.com.
As used throughout these Terms & Conditions, the term “Lender” refers to KeyBank National Association and its affiliates, agents, guaranty insurers, investors, assigns, and successors in interest.
Assumptions: Repayment examples above assume a loan amount of $10,000 with repayment beginning immediately following disbursement. Repayment examples do not include the 0.25% AutoPay Discount.
Annual Percentage Rate (“APR”): This term represents the actual cost of financing to the borrower over the life of the loan expressed as a yearly rate.
Interest Rate: A simple annual rate that is applied to an unpaid balance.
Variable Rates: The current index for variable rate loans is derived from the one-month London Interbank Offered Rate (“LIBOR”) and changes in the LIBOR index may cause your monthly payment to increase. Borrowers who take out a term of 5, 7, or 10 years will have a maximum interest rate of 9%, those who take out a 15 or 20-year variable loan will have a maximum interest rate of 10%.
KEYBANK NATIONAL ASSOCIATION RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE.
This information is current as of September 9, 2020. Information and rates are subject to change without notice.
3 Important Disclosures for SoFi.
4 Important Disclosures for Splash Financial.
Splash Financial Disclosures
Terms and Conditions apply. Splash reserves the right to modify or discontinue products and benefits at any time without notice. Rates and terms are also subject to change at any time without notice. Offers are subject to credit approval. To qualify, a borrower must be a U.S. citizen or permanent resident in an eligible state and meet applicable underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates are reserved for the highest qualified borrowers. If approved, your actual rate will be within a range of rates and will depend on a variety of factors, including term of loan, a responsible financial history, income and other factors. Refinancing or consolidating private and federal student loans may not be the right decision for everyone. Federal loans carry special benefits not available for loans made through Splash Financial, for example, public service loan forgiveness and economic hardship programs, fee waivers and rebates on the principal, which may not be accessible to you after you refinance. The rates displayed may include a 0.25% autopay discount.
The information you provide to us is an inquiry to determine whether we or our lenders can make a loan offer that meets your needs. If we or any of our lending partners has an available loan offer for you, you will be invited to submit a loan application to the lender for its review. We do not guarantee that you will receive any loan offers or that your loan application will be approved. Offers are subject to credit approval and are available only to U.S. citizens or permanent residents who meet applicable underwriting requirements. Not all borrowers will receive the lowest rates, which are available to the most qualified borrowers. Participating lenders, rates and terms are subject to change at any time without notice.
To check the rates and terms you qualify for, Splash Financial conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, the lender will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
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 September 10, 2020.
5 Important Disclosures for CommonBond.
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. 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 0.16% effective August 10, 2020.