Private Student Loan Advice & College Financing Resources

If college savings or financial aid falls a bit short, you may find yourself exploring different loan options to help fund your student’s education. However, that can feel like navigating through a wild maze of options. Thankfully, there are loans to help you support your student, including two loan types for parents: private parent loans and federal parent PLUS loans.   These loan options have their own set of rules, benefits, and downsides and the choice you make could affect your finances and your student’s academic path. Understanding federal parent PLUS loans vs. private loans can help you make smart financial decisions that meet your needs while ensuring that your student gets a great education.  At a Glance: Parent PLUS Loan vs. Private Loan  ​​​Understanding the difference between federal parent PLUS loans vs. private student loans is a crucial first step to financing your student’s future. Here’s a quick side-by-side comparison of each college student loan:  Feature Private Parent Loans Parent PLUS Loans Type of Interest Fixed or variable Fixed Interest Rates 3.39%-17.99% (Source) 9.08% for 2024-25 school year (Source) Origination Fees Varies by lender; Ascent’s Parent Student Loan has no application, origination, or disbursement fees 4.228% Repayment Terms Varies by lender; typically 5-25 years Varies by loan balance and repayment plan; 10-25 years Deferment Options May offer deferment or forbearance options based on the lender Deferment or forbearance options are available, though terms may vary Borrowing Limits Up to cost of the school's attendance; some lenders have set borrowing limits Up to the cost of the school's attendance minus federal financial aid Credit Requirements Varies based on the lender; typically above 600 Additional application requirements for those with adverse credit histories FAFSA Requirement? No Yes Degree Type Undergraduate or advanced degrees Can only be used for undergraduate degree  What Is a Parent PLUS Loan? Parent PLUS loans, now known as Direct PLUS loans, are federal loans with fixed interest rates and fees currently set by the U.S. Department of Education. Parents of dependent undergraduate students can apply for these loans to cover education expenses for college and select trade schools, or other career training institutions. The fixed interest rate provides more stable repayment options but can come with a higher interest rate compared to private student loans.  To be eligible for a parent PLUS loan:  You need to be the biological or adoptive parent of a dependent undergraduate student (legal guardians or grandparents are only eligible if they legally adopt the student).  You must meet minimum credit requirements based on a credit check.  Students must meet the overall financial aid eligibility requirements.  Students must be a U.S. citizen or eligible non-citizen.  The student can’t have student loan defaults unless resolved or consolidated into another federal loan.  What Is a Private Parent Loan?  A private parent loan, often referred to as a parent student loan, can help parents secure a loan to cover any costs that exceed what federal loans and financial aid cover for your student’s education, including non-tuition expenses.   When comparing private parent student loans vs. private student loans for students, a private loan:  Allows a legal guardian to apply if their student is working toward an undergraduate or a graduate degree, or certification education at an eligible school.   Gives other options for families who do not meet all the loan requirements.   Can offer more competitive rates.  Can provide the additional funding needed to fully cover education costs but may have more stringent credit requirements.  May offer flexible repayment options and allow borrowers to defer payments while your student is in school.  Not all schools are eligible to certify a parent student loan, so be sure to check with the student’s school before applying. You can check your rate with Ascent without impacting your credit score here.    Parent PLUS Loans vs. Private Student Loans: What’s the Difference? Each college student loan type offers unique benefits and challenges that can influence your financial roadmap. Below is a summary comparison of parent PLUS loans vs. private student loans:   Interest rates: Private student loans may offer varying interest rates depending on your credit score, while parent PLUS loans have a fixed interest rate set by the government.  Fees: Both loan types may come with fees, but the types of fees and amounts can differ. It’s important to understand what fees you may incur, so you’re not paying more than you need to. (An Ascent Parent Student loan has no fees, ever.)  Repayment terms: Private parent loans may provide a range of repayment options depending on the lender. Ascent’s Parent Student loan features both Interest-Only and Immediate Full Principal & Interest (P&I) in-school repayment options. Parent PLUS loans have three repayment options: Standard Repayment, Graduated Repayment, and Extended Repayment.  Deferment options: Some private loans may offer deferment options while your student is enrolled in school. Parent PLUS loans also offer deferment options, though the terms may vary. Remember that during deferment, interest continues to accrue on the loan.  Eligibility criteria: Private lenders may have unique credit and income eligibility requirements, so check the eligibility requirements to make sure you qualify. You cannot have an adverse credit history with Parent PLUS loans and must meet general eligibility requirements. In either case, a hard credit check may be done.  Loan amounts: The loan amounts for private parent loans can vary depending on your credit history, while a parent PLUS loan amount is limited to the full cost of your child’s education, including tuition, room, board, and other associated costs.  How to Decide Between a Parent PLUS Loan and a Private Student Loan Choosing the right student loan option will depend on your financial situation and unique needs. Before deciding, consider the financial aid package your student may receive, which will outline the cost of attendance and the federal loans and/or grants they’re eligible for.  Your creditworthiness, income, and budget are also important factors that may influence your decision between a parent PLUS loan vs. a private loan.   When a Parent PLUS Loan Might Make Sense  A parent PLUS loan may be a good option if:  You have an average or mediocre credit score: Since parent PLUS loans are based on when you borrow, rather than on creditworthiness, you don’t have to have good or excellent credit to benefit. You must show that you don’t have an adverse credit history that includes issues like bankruptcy.  You work for a nonprofit or are a public servant: You may be eligible for the Public Service Loan Forgiveness (PSLF) program if you took out a parent PLUS loan.   You want to consolidate into a federal student loan: Many people with federal loans make use of income-driven repayment plans, but those apply to federal student loans, not parent PLUS loans. However, you may consolidate into a federal loan if you are eligible and thus qualify for income-driven repayment plans.  When a Private Loan Might Make Sense  A private loan may be a good option if:  You have a good to excellent credit score: Interest rates for private loans are partially based on the borrower’s creditworthiness. When comparing parent PLUS loans vs. private loans, you’ll likely get a better rate on a private loan if you have great credit.   You prefer a shorter loan term: Private loans often have more repayment term options.   ​​You can pay the loan quickly: Private loans may offer variable interest rates. If you borrow while rates are low and can pay it back quickly, you could capitalize on those low interest rates.​​​  ​​​You are trying to build your credit: Borrowing private student loans can help build and improve your credit history when managed responsibly. Since private student loans are reported to credit bureaus, making on-time payments consistently can strengthen your credit score over time. A strong credit profile can open doors to better interest rates on future loans, credit cards, and even housing opportunities. ​​  Alternatives to Parent Student Loans While parent student loans are a common solution for covering education costs, other options are available. Research may uncover other financing options that better fit your budget and needs to help cover your student’s school expenses. Other financing options include:  Cosigned loans: This allows a parent or cosigner to share the financial responsibility for the loan with their student. Cosigned loans can make it easier for your student to qualify for a loan or secure a better interest rate, especially if you have a good credit history. For a deeper dive into cosigning, check out our article: why do you need a cosigner?  Researching scholarships: Explore private scholarships available for your child’s field of study or extracurricular activities.​ Ascent has awarded over $330,000 in scholarship giveaways to date. ​  Discussing alternative financial aid options with your college or trade school: Engage early with financial aid offices at prospective colleges to understand all available options to ensure you maximize available aid.  Exploring savings plans: Consider establishing an education savings plan early to help offset future education costs.   Considering work-study programs: Work-study opportunities can help your family cover education costs while providing your student with valuable work experience. You can check to see if you’re eligible for work-study programs by completing the Free Application for Federal Student Aid (FAFSA®).  Choosing an affordable school: Consider colleges or trade schools that fit your budget, so you don’t have to borrow as much. In-state institutions, public universities, and trade schools may be more affordable if you’re on a tighter budget.  Learn More with Ascent Navigating the financial path to higher education can be challenging for parents and students, and understanding your options is the key to making informed decisions about your future and finances. Whether you’re a parent, guardian, or student borrower, Ascent is here to help you decide between a parent PLUS loan vs. a private loan so you can achieve your financial goals. For more tips and resources, check out our financial wellness center or follow our blog for new updates. FAQ  What Are the Negatives About Parent PLUS Loans?  Potential drawbacks of a parent PLUS loan are that they are non-transferable, may have higher interest rates, and have no grace period (parents are expected to start paying on the loan within 60 days of loan disbursement).   Do Parent PLUS Loans Get Forgiven When a Parent Dies?  Yes, if ​a parent​​, ​or the qualifying student​,​ dies, the loan will be discharged.   Do Parent PLUS Loans Have Lower Interest Rates?  No, parent PLUS loans typically have higher interest rates because eligibility isn’t based on creditworthiness. If you have good credit and desire lower interest rates, private lenders may offer better rates for student loans.  What Disqualifies You from a Parent PLUS Loan?  An adverse credit history may disqualify you for a parent PLUS loan. Adverse history occurs if you have issues like bankruptcy or foreclosure on your record. You may be able to appeal or add a cosigner to receive a parent PLUS loan.   Is It Better for a Parent or Student to Take Out a Private Loan?  Generally, if the parent has a good credit score, they may qualify for better interest rates and terms. However, if your student qualifies for financial aid and federal student loans, it may be beneficial to start there so you’re only taking out additional loans for what you need.  

Planning for college is an exciting time of life, but it can get stressful when you don't have a clear plan or know your options for paying for college, including loans for undergraduate students.With some research and planning, you can make informed financial choices that benefit you and those supporting you. Following the three steps below will help you understand different ways to pay for college, including types of financial aid, so the only thing you have to worry about is your classes – not your next tuition payment. 1. Start Saving What You Can According to the Education Data Initiative, 30% of families have a dedicated college savings fund, which may include a 529 plan that’s tax deductible. However, they also found that 54% of parents don’t even know what the 529 plan is. If you and your parents can save for college, it’s good to start early, so you understand how to pay for college or university in ways that benefit you most. Here are a couple of options: 529 savings plan: This is a popular way to pay for college because it offers tax-free earnings and withdrawals when the savings are used at eligible educational institutions. There may also be benefits when reporting income on the FAFSA form, and if it’s not spent, you or your parents may be able to roll the funds into a Roth IRA tax-free. The downside is you must spend funds on educational expenses or incur a 10% penalty on withdrawals used for other purposes.  Mutual funds: They give you or your parents the freedom to spend on whatever you want, and you can invest as much as you want. The downside is these funds are subject to taxes and count as income on your FAFSA form. Custodial accounts: These are transferred from an adult to a child when they turn 18, 21, or 25, depending on your state’s regulations. They offer the freedom to save and spend as you want but are subject to taxes.  A few other ways to pay for college include savings from U.S. bonds, a Roth IRA, and a Coverdell Education Savings Account (ESA).  1. Choose a School That Fits Your Budget Deciding how to pay for college starts when choosing your school. Before you enroll, consider the school’s cost and experience. It may seem difficult to measure these factors, but it’s easier when you break it down into your overall return on investment (ROI).  Here are five factors to consider when choosing a school: Cost: This can vary greatly, particularly when comparing public and private colleges. Private colleges are typically more expensive. Major: Consider how your chosen field of study will impact your future salary, and if it will provide the income to pay back loans efficiently. Use a college ROI calculator to estimate how much money you can expect to earn after graduation. Faculty: Good professors can help you network and potentially offer access to relevant internships and job opportunities. Location: Estimate your travel and living expenses for the area so you know what you can expect to spend. Experience: Think about what type of extracurriculars you plan on joining and what they may cost. You can set yourself up for success by finding a balance between your academic interests and your finances, both now and after you graduate. 2. Get the Most Out of Financial Aid Many people take out private student loans to help pay for college, but there are several other ways to pay for college, including financial aid.  Your eligibility for federal financial aid is determined by filling out the FAFSA, which tells you how much you can receive in grants, student loans, and scholarships to pay for college.  Federal student loans are borrowed directly from the U.S. Department of Education at a lower fixed interest rate. Direct subsidized loans (based on need) for undergrads don’t have to be paid back until you graduate, leave school, or drop to part-time status.  Federal grants: There are several types of grants for students including the Pell Grant, Federal Supplemental Educational Opportunity Grant (FSEOG), and the Teacher Education Assistance for College and Higher Education (TEACH) Grant. Eligibility and annual awards vary depending on need and field of study. Under select circumstances (like withdrawing early), you may have to repay a grant.  Your financial aid package is determined each year by you and your parent’s income and assets, and you will have to fill it out for each year you plan to attend college.  4. Apply for Scholarships Scholarships are a great way to pay for college because they don’t have to be paid back, making college more affordable for you and your parents or guardians. They may cover all college expenses or a portion, depending on the type of scholarship. Scholarships can be: Offered by your educational institution or other organization. Awarded based on need or merit. For athletes. Specific to certain groups like women or people of color. It’s important to start scholarship research early to meet application deadlines and eligibility requirements. You can find scholarships by: Contacting your school of choice. Searching online. Talking to your school counselor or advisor. Checking with nonprofits, community organizations, foundations, or religious organizations that align with your interests, beliefs, or field of study. Researching state and federal agencies. As you find scholarships, confirm they are legitimate. Searching for financial aid and scholarships is free, and organizations should never ask for money when applying. 5. Ask About Work Study College work-study programs allow you to earn money for school expenses by working a part-time job that’s typically on campus. You must fill out the FAFSA if you’re seeking a federal work-study program. If you’re eligible, you’ll be notified in your financial aid offer. If you don’t qualify for a work-study job through your FAFSA application, consider a part-time position either on or off campus to help pay for college.  A part-time job or paid internship can help cover extra costs associated with college while adding to your resume. It’s also a great way to build relationships and network with others in your field.  One potential downside to work-study programs is that your hours are capped, and wages are lower. You may also have limited job availability and more competition for work-study positions. 6. Use a Tuition Payment Plan Tuition payment plans are a great way to pay for college over time instead of all at once. Through an agreement with your college or university, you can pay tuition-related expenses on a monthly, quarterly, or semester basis. Some plans may also cover room and board if you choose to live on campus, but they typically don’t cover textbooks, personal expenses, or off-campus housing.  If you’re considering a tuition payment plan, it’s important to understand the details as some plans may have rules, fees, or penalties. Fees are typically more common if your payment plan goes beyond the academic school year.  7. Choose the Right Private Lender While your FAFSA financial aid package may include federal student loans and other support, you may still have a gap in funding for your desired school. Private student loans can help cover any shortfalls, but it’s important to compare multiple loan offers to ensure you find the solution that’s best for you and your family.  As you explore private loans, look at the following details to find the one with the best benefits for your future: Interest, fees, and APR: The cost of your loan depends on the interest rate applied to your balance and fees charged by the lender. Knowing the APR helps compare the cost of both interest and fees.  Repayment options: Understand how long your loan lasts and when payments begin.  ACH benefits: Some lenders offer borrower perks if you enroll in automatic ACH payments.  Graduation benefits: Look for additional benefits, like cash back at graduation, that may be awarded by a lender when you graduate from your program.   Cosigner support: Some private student loans require you to get a loan with a cosigner, while others do not. Find a lender that matches your family’s decision on who is responsible for the loan.  Success services: Some lenders offer complimentary access to professional development training, resources, and coaching, like AscentUP. Like choosing the right college, finding ways to pay for college involves multiple factors, including cost and borrower experience, so it’s important to do your research and make a choice that’s best for you! Get the Ultimate Guide to Paying for College As you find ways to pay for college, Ascent is here to serve as a resource for building a strong financial foundation.  From scholarship opportunities to FAFSA advice, you’ll find everything you need to take the stress out of paying for college in our Ultimate Guide to Paying for College. Being informed on how to make responsible financial decisions can help you pursue your goals and attend your dream school. FAQ What are some other ways you can pay for college? In addition to federal financial aid, student loans, and work-study programs, there are other options for paying for college. These include employer tuition assistance, 529 savings plans, and education tax credits. At what age does your parents' income not matter for college? You are considered a dependent student on the FAFSA form if you are under 24 years old. These are special circumstances when you may be considered independent under 24: You are married. You have dependents. You are an active-duty US Armed Forces member or a veteran. You are working toward an advanced degree (master’s or doctorate) the same year you’re seeking financial aid.  You have a legal guardian who isn’t a parent or step-parent, or you are emancipated You are unhoused or at risk of being unhoused. Can I get a Pell Grant without my parents? Federal Pell Grants are ways to pay for college and are typically awarded to undergraduates who need more financial assistance. You can apply for the Pell Grant without your parents' information, but only if considered an independent student per the FAFSA criteria. If you are incarcerated and part of an approved Prison Education Program, you may qualify for the Federal Pell Grant.

Interested in applying for private student loans? Learn more about the step-by-step process of how to apply for a private student loan from Ascent Funding.

The federal student loan payment pause is set to end soon. Make sure you are financially prepared with information from Ascent Funding.

Around 18 million students complete the FAFSA® annually, yet billions of dollars in federal aid go unclaimed each year.  Filling out the FAFSA doesn’t have to be stressful. Understanding how to get started and what information you need to have to fill it out can feel overwhelming – but we’re here to help. For the 2025-2026 FAFSA webinar, we gathered our experts William Wozniak, VP of Communications and Student Services at INvestEd, and Peg Keough, Director of Education at College Aid Pro, to speak with Kumba McGill, our webinar host and Relationship Manager at Ascent. Bill, Peg, and Kumba covered all the important details you need to know to navigate this year’s FAFSA. Get a beginner’s rundown of the FAFSA at 5:50 - What is the FAFSA and why is it important?  Here are the five major takeaways from our session to help you navigate the FAFSA with confidence: Not sure if you're eligible for aid? Apply anyway! The Free Application for Federal Student Aid, also known as the FAFSA, is the starting point for determining eligibility for federal grants and loans, work-study opportunities, state and institutional aid, and even some private scholarships. That’s a whole lot of opportunity in just a single application! In almost all cases, it’s better to file for the FAFSA than it is to not file for the FAFSA. The amount of aid you could be eligible for might surprise you! Skipping it could mean leaving money on the table. Learn about eligibility at 21: 20 - Who is eligible & how do I stay eligible? The 2025-2026 FAFSA has been simplified Good news! The FAFSA has been significantly streamlined. These updates are designed to make the FAFSA more accessible and less time-consuming. This year, the application has been slimmed down – from 108 questions to only 36! Instead of filling out questions you don’t even need to consider, the form uses something called “skip logic” and will skip questions that don’t apply to you, ensuring a quicker and more user-friendly experience. Additionally, tax information is now automatically pulled in from the IRS. (Hooray!) This will save time and reduce errors commonly made when transferring information from tax documents. Make Sure You Understand Key Changes Every FAFSA season brings changes, and this year is no exception. In addition to simplifying the application and importing tax information, this year’s application aims to provide overall greater access to financial aid. If you haven’t been eligible for some types of aid in the past, you may now be eligible for it this year. If it’s been a while since you’ve filled out the FAFSA, you might remember the Expected Family Contribution (EFC). This has been replaced with the Student Aid Index (SAI). The SAI is calculated slightly differently than the EFC – but many families will not see a big difference. Family size and Adjusted Gross Income (AGI) calculations have changed, which would expand eligibility for Pell Grants. Furthermore, the FAFSA is now available in more languages – making it accessible to more families. Listen to the changes in-depth at 17:15 – What's changed? Be prepared to submit additional information Being prepared to submit additional information also means being informed on deadlines. Depending on how you or your student applies for admission (early decision, early action, or regular decision), your college may prioritize your application differently. Learn more about important due dates and deadlines at 11:15 - Important due dates and deadlines If your state offers aid, submitting the FAFSA sooner than later is highly encouraged because some states award aid first-come, first-served. Check your state’s deadline on the FAFSA website. Completing the FAFSA is just the beginning. Colleges may request extra documentation, such as proof of income changes or details about special circumstances. To avoid surprises, submit your FAFSA early – ideally a week before the earliest college deadline. Documents that you will need include: 2023 Federal tax forms and W2s Information about untaxed income (e.g. child support, veterans education benefits, etc.) Current cash or investment balances For more on preparing for your application, go to 27:32 - What do I need to get started? Explore all your options While the FAFSA is an essential first step, it’s not the only resource for paying for college. Scholarships, private loans, and state-specific aid programs can also play a significant role. Filing the FAFSA can even help you identify gaps that these additional resources might fill. Hear how our experts view additional options at 1:07 – What are my other options? In Conclusion All in all, paying for college doesn’t need to be stressful – but it does take some proactive planning. Starting with the FAFSA ensures you have access to as many opportunities as possible. For a detailed breakdown of these insights, watch our webinar recording – and don’t hesitate to reach out to our team of student loan experts with any questions! https://www.youtube.com/watch?v=xYo-DDmWZq8

What happens when you default on your student loans? This question may arise in the minds of many borrowers, particularly during financially challenging times. Before accepting a college loan, it’s important to understand that neglecting student loan repayments can lead to consequences beyond immediate financial distress. These ramifications can influence your daily life and impact your financial health.  This article will discuss the potential risks associated with defaulting on student loans and provide strategies and knowledge to help prevent them. A strong understanding of your contractual obligations and the resources to help you repay your loans successfully is the first step toward maintaining your financial health.  The Importance of Paying Back Your Student Loans  Student loans, like any other loan, represent a promise. You've borrowed money to fund your education and pledged to pay it back. When you honor this promise, it's a win-win situation. Your credit score remains robust, making future borrowing easier, and it showcases your financial responsibility. You're meeting your financial obligations to your lender by repaying your student loans.  But what if things aren't going so smoothly? We know handling student loans with a cosigner or without can be tough. Life happens, work can be unpredictable, and balancing everything at once can feel like a juggling act. However, not paying student loans doesn't make these problems disappear. In fact, failing to pay back your student loans can make things much worse.  The Impact of Not Paying Student Loans If you are in a financial bind and considering defaulting on your student loans, know there are resources available to help you navigate these waters. The last thing you want to do is make a financial decision that will impact your financial well-being for years to come. The Federal Student Aid website is a great place to start. It's packed with helpful resources to guide you on your repayment journey. Remember, it's all about taking it one step at a time.  Below are some potential consequences borrowers may face for not paying back student loans.  Legal Ramifications Defaulting on student loans can lead to serious legal and financial repercussions. If you fail to make your scheduled loan payments for at least 270 days, your federal student loans enter a state of default. This can trigger a series of consequences, including wage garnishment and withholding of tax refunds.  Once your loan enters default, the entire unpaid balance and all accrued interest become due immediately—a process known as acceleration. The federal government can then garnish up to 15% of your disposable income without a court judgment. Additionally, your tax refunds and federal benefit payments may be garnished or withheld to repay your overdue student loan balances, a process known as Treasury Offset.  Consequences can vary based on the type of student loan—federal or private—and the specific terms of your loan agreement. Therefore, it's crucial to understand your loan terms and seek advice from a financial advisor or legal professional if you struggle to make payments. Ascent has a library of financial wellness resources to help you understand your options regarding responsible borrowing.   Negative Effects on Credit Score Your credit score might seem abstract, but it's a key player in your financial journey. This three-digit number can influence your ability to secure future loans, the interest rates you'll be offered, and even your eligibility for renting an apartment. If you cannot make student loan payments, it's important to know that this can lead to a dip in your credit score.   Late or missed payments on your student loan can negatively impact your credit score. Furthermore, when your loan defaults, your credit report may reflect multiple missed payments, significantly lowering your credit score.   Student loan repayment isn’t just about consequences, though. Making regular on-time payments on student loans will help you build and maintain a healthy credit score, setting you up for financial success in the future.  Ineligibility for Federal Student Aid  One of the lesser-known consequences of defaulting on your student loans is the potential ineligibility for further federal student aid. This could pose a significant barrier if you plan to return to school or pursue further education. You may put your grad school dreams on hold until your defaulted loans are resolved.  The impact of not paying back your student loans can be severe and long-lasting. Failure to pay back your student loans and the impact this decision could have on your credit score may impact your future and financial health for years to come. The penalties associated with default can also result in hefty expenses, especially for borrowers who are already financially vulnerable.   It's important to note that the consequences of defaulting on student loans can vary depending on several factors, including the type of loan, the duration of the default, and state laws. Therefore, it's crucial to understand the terms of your loan agreement and seek advice from your lender or a legal professional if you're struggling with repayment.   Exploring Alternative Repayment Options  If you're struggling to make student loan payments, it's important to know that alternative repayment options are available. These options can make your debt more manageable and help you avoid the negative consequences of defaulting on your loans.  Loan Forgiveness Programs  Loan forgiveness programs can be a lifeline for those struggling with student loan debt. These programs can eliminate part or all of your loan if you meet certain conditions. For instance, the U.S. Department of Education offers forgiveness and discharge programs for federal student loans. You may qualify to have some or all of your loans forgiven or discharged in certain situations, such as working in public service or in instances of total and permanent disability.  Repayment Plans In addition to loan forgiveness programs, repayment plans can help make your monthly payments more manageable.  Remember, the key is to take action and explore these options before your loans go into default. If you're unsure what steps to take, consider contacting your loan servicer or a financial advisor for guidance.  Seeking Professional Help for Student Loan Repayment  Navigating the complexities of student loan repayment can seem daunting, but remember, you're not alone. Professionals and resources are available to help you manage your student loan debt, understand the intricacies of your loans, explain your options like student loan forbearance or student loan deferment, and even negotiate with your lenders on your behalf.  Learn More with Ascent At Ascent Funding, we're devoted to helping students and their families understand the ins and outs of student loans. Whether you're working to manage your student loan payments or simply eager to understand more about committing to a student loan, we have many resources tailored to your needs.  No matter where you are in your journey—whether you are embarking on your college adventure or already addressing student loan repayment—explore our Financial Wellness Hub and find resources to guide your path to financial success for years to come.   FAQ What are the Implications of Not Repaying My Student Loans? Deciding not to repay your student loans carries several severe legal and financial consequences. From a legal standpoint, your creditor could take action against you to recover the debt. This might take the form of wage garnishment, where a percentage of your earnings is automatically directed toward repaying the loan, or you may face a lawsuit. In some extreme federal student loan cases, the government can withhold your income tax refund or social security benefits.  From a financial standpoint, defaulting on student loans can drastically lower your credit score. A lower credit score can lead to a series of negative outcomes. For instance, it can make it harder for you to secure loans or credit in the future, or you may be charged higher interest rates. It also makes it difficult for you to rent an apartment, get a cell phone plan, or even get a job, as some employers check credit scores. So, it's critical to understand that evading repayment of your student loans is not a sustainable strategy and can lead to significant challenges down the line.  Will My Student Loans Automatically Disappear After 7 Years?  Whether your student loans will drop off your credit report after a finite amount of time depends on the type of student loan and the statute of limitations for the state you live in. Private student loans have a statute of limitations ranging between three to ten years, depending on your state of residence. Federal student loans, however, do not have a statute of limitations, which means they can stay on your credit report indefinitely or until the loan is paid off.   How Long Can I Go Without Making Payments on My Student Loans?  The duration you can go without making payments on your student loans before defaulting depends on your loan type. For federal student loans, you're typically considered in default after you haven't made a payment for 270 days (approximately nine months). For private student loans, the time frame can vary significantly and depends on the terms set by your lender—it could be a much shorter period.  However, missing even one payment can negatively impact your credit score. It can also lead to late fees and potentially accelerated repayment of the full loan amount. It's crucial to understand the consequences of not paying student loans and to take proactive measures to avoid default. If you're struggling to make payments, contact your loan servicer. They can provide information about deferment, forbearance, or income-driven repayment plans that could provide some temporary relief. 

As with all loan types, your credit score significantly impacts your eligibility for private student loans. Your credit score may also affect critical aspects of the loan, such as the total loan amount, interest rate, lender options, and repayment terms. But what is the necessary credit score for student loans? Read more to find out.  Federal Student Loans vs Private Student Loans Credit Scores  In most cases, your credit score can impact your approval for a loan, your interest rates and loan terms, and whether you need a cosigner. The credit score requirements of federal student loans and private student loans differ significantly, as do their benefits.  Credit Requirements and Benefits of Federal Student Loans  Federal loans, including Direct Subsidized Loans and Direct Unsubsidized Loans, do not have strict credit score requirements. Instead, federal loan eligibility is based primarily on financial need and enrollment status. Additionally, federal student loans do not require a cosigner.  There are many benefits of federal student loans. Direct Subsidized Loans offer interest subsidies (meaning the government pays the interest on the loan) while the borrower is in school or during grace or deferment periods. Federal loans offer income-driven repayment plans that adjust monthly payments based on the borrower’s income.   Public Service Loan Forgiveness is available for borrowers who have made the equivalent of 120 qualifying payments and work in public service jobs, such as working for government agencies or nonprofits. Federal loan borrowers facing financial challenges may also qualify for deferment or forbearance programs to reduce or postpone payments.  Federal Loans have fixed interest rates that remain for the life of the loan, and these rates may be lower than those from private lenders. Federal student loans also have predictable, standard repayment plans, but many borrowers have the option of graduated or extended repayment plans.  Credit Requirements and Benefits of Private Student Loans The credit score requirements of private student loans vary tremendously between providers, but most loan products require a certain credit score. Your credit score and history can impact the terms of your private loans, which is why private student loans often require cosigners. This is especially true for borrowers with low credit scores or minimal credit history.   Private student loans may offer many benefits and include customizable features. They can have fixed interest rates, variable interest rates, or rates that change over time based on market conditions. Private lenders often provide greater flexibility in choosing repayment terms, allowing borrowers to customize repayment plans based on their situation. ​​For example, Ascent has up to 40 repayment options–more than any other student loan–ranging from 5 to 20-year terms, depending on your program and the loan options.   Additional benefits like zero fees, cash back at graduation, and automatic payment discounts are other common perks to look out for when evaluating lenders. Some private lenders (including Ascent) also offer cosigner release options, which will relieve cosigners from responsibility for the loan if the primary borrower meets certain criteria.   Remember that loan terms, rates, and benefits will vary significantly between lenders and borrower qualifications, so it is important to do your research and find the best fit for your needs. Often, students may apply for a combination of federal and private student loans in order to cover the full cost of tuition expenses.   Understanding Credit Score for Private Student Loans  While every lender requires different credit score requirements for specific loans and terms, understanding the general credit ranges can help predict the type of loan and loan terms you will get based on your credit score.   For example, FICO® scores are based on the credit score ranges below:  Poor Credit: 300 to 579  Fair Credit: 580 to 669  Good Credit: 670 to 739  Very Good Credit: 740 to 799   Excellent Credit: 800 to 850   ​​​  As with any type of credit-based loan, a higher credit score is generally a sign that the borrower may be more credit worthy, and therefore more likely to pay the loan back on time. ​This could have an impact on your eligibility or the loan terms you are offered. ​But​, fear not,–there ​are options for aspiring borrowers with low credit scores or no credit history at all. If you are unable to qualify for a loan on your own, you can consider applying for a student loan with a cosigner.  While many lenders do have a minimum credit score, these requirements will often vary based on the loan product, credit history, and whether you are applying with or without a cosigner. In many cases, the only way to find out how your credit score will impact your eligibility or interest rate is to apply.   How to Find Out Your Credit Score for Student Loan Applications There are several ways to determine your credit score. The easiest option for many individuals is to obtain their credit score from major credit reporting agencies, including Equifax, Experian, or TransUnion. You are also entitled to one free credit report each year from AnnualCreditReport.com. Checking your credit report annually is a great way to keep track of your credit score and does not count as a hard inquiry against your credit profile.   Some credit monitoring agencies also provide ongoing access to your credit score, and many banks and financial institutions also offer free access to credit scores through their online platforms. Some credit card statements also include your credit score.  ​​​Many lenders will also allow you to check your rate without affecting your credit score in just minutes. This can be helpful if you are looking to get an idea of your ​prequalified​ rates or compare rates across different private lenders.   Tips to Improve Your Credit Score for Student Loans  Luckily, there are many ways to improve your credit score for student loans. Some of the most important strategies you can use include:  Make timely payments on all your bills, credit cards, and loans.  Reduce your credit card balances to keep your credit utilization rate (the ratio of your credit card balances to your credit limits) below 30%  Check credit reports and dispute any errors.  Only open new credit accounts after you have completed the student loan application process.  Diversify your credit mix using various types of credit, including credit cards, installment loans, and retail accounts.  Establish a good credit history if you have limited credit history. For example, opening a low interest credit card is a strategy that many college students use to start building credit early on.   Getting Student Loans Without a Cosigner A cosigner agrees to share the obligation to repay the loan if the primary borrower is unable or unwilling to do so. Getting student loans without a cosigner can be challenging, especially if you have limited credit history or low credit scores. However, there are some strategies that you can use that will make it more likely.  Build a positive credit history.  Investigate multiple loan providers, both private and federal.  Apply to lenders that consider other factors besides credit scores.  Demonstrate stable income or employment.  Apply for scholarships and grants.  Even if you can qualify for a student loan without a cosigner, applying with a cosigner may help you qualify for a larger loan, lower interest rates, or better loan terms.  Although cosigned loans are most common for students with poor credit or little credit history, there are options available for prospective students who do not have or want a cosigner. For example, Ascent offers credit-based and outcomes-based loans without a cosigner for eligible students. In addition to credit-friendly programs, some lenders may offer secured loans, where the borrower provides collateral, such as a savings account or real estate, to secure the loan. Secured loans can be a great option for students with low or no credit and are figuring out how to pay for college.   If you do plan to apply with a cosigner, visit our blog for more tips on how to find a cosigner for your student loan.  Learn More with Ascent Navigating the student loan application process can be challenging, and Ascent is committed to providing students and families with the financial resources needed to pursue their dreams.    From financial wellness resources to our flexible college loans and undergraduate student loans, we are here to help students and their families make informed decisions about their future in college, and beyond.  Credit Score for Private Student Loan FAQ Is it Hard to Get Approved for a Student Loan?  The difficulty to get approved for a student loan depends on many factors. Borrowers with a high credit score and good credit history may find it easy to get approved for a low-interest rate loan with favorable terms. On the other hand, borrowers with poor credit scores or little credit history may struggle to get approved for a student loan, particularly if they do not qualify for federal student aid. Luckily, Ascent makes the application process as simple and easy as possible.  What Disqualifies You from Getting a Student Loan? Different lenders will disqualify you from getting a student loan for different reasons. The good news is even if one disqualifies you, another may not. Some common reasons for disqualification may include:  Defaulting on existing or previous student loans  Exceeding borrowing limits  Failure to meet satisfactory academic progress (SAP) requirements  Conviction of drug offenses  Filing for bankruptcy  Failure to register for the Selective Service (the draft)  Not being enrolled in an eligible program  Outstanding refund owed on a federal grant  Does Bad Credit Affect Getting Student Loans? Bad credit can have a tremendous impact your student loan application. Many lenders will not lend to you at all, and those that will lend to you, will often only do so if you agree to relatively unfavorable terms or to have a cosigner. Bad credit may decrease the total loan amount you are approved to borrow, and increase your interest rate. 

Understanding how student loan interest works and how it's calculated can help you manage your debt more effectively–and potentially save you money. Staying informed and making smart decisions about your student loans can help you invest in your education without sacrificing your financial future.  Key Takeaways Student loan interest is calculated daily and added to your balance monthly. Interest typically begins accruing upon disbursement. Calculate your student loan interest by finding the daily interest rate (annual interest rate divided by days in the year). Next, multiply your daily interest rate by your outstanding loan balance to determine how much interest accrues each day. Then multiply your daily interest accrual by the number of days in your billing cycle to determine your monthly interest charges. Capitalization occurs when unpaid interest is added to your principal balance. This makes your total debt bigger, so you’ll pay interest on a higher amount going forward. This typically happens after a deferment or grace period. There are two main types of interest rates: fixed and variable. Fixed rates remain the same, offering predictable payments. Variable rates fluctuate with the market, potentially affecting your monthly payment and total repayment amount. Understanding Student Loan Interest  When you take out a student loan, you're not just borrowing the amount you need for school; you’re also agreeing to pay interest, a cost calculated as a percentage of the principal amount. Interest is essentially the price you pay for the opportunity to borrow the money. Understanding how interest is calculated on student loans is crucial for managing your debt and planning your financial future.  Interest on student loans is typically calculated daily and added to your loan balance monthly. The amount of interest you owe depends on your loan's interest rate, the amount of your loan, the time it takes to repay it, and other loan terms. Generally, the longer you take to repay your loan, the more interest you'll pay.  Types of Student Loan Interest The primary types of student loan interest are fixed and variable. Let’s take a deeper look at the two and how they differ.   Fixed Interest Rate Loans Fixed interest rate loans have an interest rate that remains the same for the life of the loan. This means your monthly payments will be predictable, and you'll know exactly how much you'll pay over the loan term. Federal student loans typically have fixed interest rates, not based on credit score or financial history, but are set by law.   Variable Interest Rate Loans Unlike fixed-interest rate loans, variable interest rates fluctuate over time to mirror market conditions. Variable interest rates are typically tied to a financial index and can rise or fall based on the current market interest rates. While variable rates are sometimes lower than fixed rates, they're also less predictable. If rates increase significantly, so could your monthly payment and total loan cost.  Differentiating Principal and Interest Payments When you make a payment on your student loan, it's applied to both the principal and the interest. Initially, a large portion of your payment goes toward the interest. Over time, as the principal balance decreases, more of your payments are applied to the principal. Understanding this concept can help you make informed decisions about how to calculate interest on student loans and how extra payments or a different repayment plan might affect your total cost.  Steps on How to Calculate Student Loan Interest Let’s start by breaking down the equation for calculating student loans. Interest = Principal Balance x Daily Interest Rate x Time  Principal Balance: The initial amount borrowed on your student loan.  Daily Interest Rate: Your annual interest rate is divided by the number of days in the year.  Time: The number of days you want to calculate the interest.  You can calculate the amount of interest that accrues on your loan by plugging these values into the equation. Continue reading for the steps on how to calculate student loans:  1. Find Your Daily Interest Rate The first step in calculating your student loan interest is to find your daily interest rate. This is your annual interest rate divided by the number of days in the year. For example, if your annual interest rate is 5%, your daily interest rate would be approximately 0.0137%.  2. Determine Daily Interest Accrual Charge Next, you'll need to determine how much interest accrues each day. You do this by multiplying your outstanding loan balance by your daily interest rate. For instance, if your loan balance is $20,000 and your daily interest rate is 0.0137%, you would accrue about $2.74 in interest per day.  3. Multiply by Days in Billing Cycle to Find Monthly Payment Finally, to find out how much interest you'll be charged in a month, multiply your daily interest accrual by the number of days in your billing cycle. Continuing with the previous example, if your billing cycle is 30 days, you would accrue about $82.20 in interest for that month.  Tools and Resources for Calculating Student Loan Interest   ​​​​​From college degree ROI calculators to federal loan simulators, there are plenty of tools and resources available to help you understand how to calculate student loan interest. These tools can provide a detailed explanation of your loan, including how much of your payments are towards interest versus the principal and how extra payments or a different repayment plan might affect your total cost.  In addition to online calculators, your loan provider should give you detailed loan statements that break down your payments into principal and interest. Your provider should give you a clear picture of how your payments are applied and how much of your loan balance is still outstanding. If you’re unsure how to read your loan statement or have questions about your interest rate, don’t hesitate to reach out to your lender for assistance.  What is Capitalization of Interest? When calculating your student loan interest, it's also important to understand the concept of capitalization. Capitalization is when any unpaid interest on your student loan is added to the principal balance. This can happen at certain times, like when your loan enters repayment or after a period of deferment or forbearance.  When interest is capitalized, it increases the principal balance of your loan, which means you'll be paying interest on a larger amount. This can increase the total cost of your loan and make your monthly payments higher. This information can help you plan your payments and potentially save money in the long run.  When Student Loan Interest Starts  Interest on student loans typically starts accruing as soon as the loan is disbursed. This means that your loan could accumulate interest even while you’re still in school. However, with some types of loans, like subsidized federal loans, the government will pay the interest while you're in school, during the six-month grace period after you leave school, and during any periods of deferment. That’s why it is important to understand the difference between subsidized vs. unsubsidized loans.   For unsubsidized loans, the interest starts accruing when the loan is disbursed. If you choose not to pay the interest while you're in school or during your grace period, it will be capitalized, or added to your principal balance, when you start repayment.  The Importance of Understanding Student Loan Terms  Understanding how student loan interest works is just one part of managing your student loans effectively. It's also important to know the terms of your loan agreement, including your repayment schedule, the consequences of missing a payment, and what options you have if you're struggling to make your payments.  For example, many student loans offer deferment or forbearance options, which allow you to temporarily stop making payments or reduce your payment amount if you're facing financial hardship. However, interest may continue to accrue during these periods, which can increase the total cost of your loan.  Learn More with Ascent  At Ascent, we're committed to helping students and families navigate the world of college loans and make informed financial decisions. We offer a range of financial wellness resources to help you understand your loan options and manage your student loan debt effectively. Whether you're just starting your college journey or seeking graduate student loans to help you further your education, we're here to help you reach your academic and financial goals.  FAQ  How do you reduce the total interest paid on student loans? You can use several strategies to reduce the total interest paid on your student loans. One of the most effective ways is making a payment more than the minimum monthly amount. Paying above the minimum can help you reduce your principal balance faster, which means you'll be charged less interest over the life of the loan.  Another strategy is to refinance your student loans. Refinancing involves taking out a new loan with a lower interest rate to pay off your existing loans. Refinancing can reduce your monthly payment and the total amount of interest you pay. However, refinancing isn't right for everyone, and it's important to consider the pros and cons before deciding.  What happens if you don't make student loan payments?  You could face serious consequences if you don’t make your student loan payments. Your loan could become delinquent, and if you continue to miss payments, it could go into default. This can damage your credit score, making it harder for you to get credit cards, auto loans, or mortgages in the future.  In addition, if you default on federal student loans, the government can collect the debt, including garnishing your wages or withholding your tax refund. If you're struggling to make your student loan payments, it's important to reach out to your lender as soon as possible. They may be able to work with you to find a solution, such as changing your repayment plan, applying for deferment, or forbearance.  Do student loans have interest? Yes, student loans do have interest. The interest rate can vary depending on the type of loan and the lender. By law, federal student loans have fixed interest rates, while private student loans can have either fixed or variable rates. The interest on your student loans can significantly affect the total cost of the loan, so it's important to understand how to calculate interest on student loans and consider the interest rate when choosing a loan. 

The Free Application for Federal Student Aid, or FAFSA, is the first step in the application process for federal student aid, encompassing all federal loans. For students looking to secure financial aid for the upcoming school year, it can pay off to be proactive and file the FAFSA as early as possible.   Read on to find out why, plus we'll review important FAFSA deadlines, eligibility requirements, and tips for a successful application process. 5 Benefits of Filing the FAFSA Early Filling out the FAFSA early maximizes your chances of securing the most possible federal aid. The sooner you apply, the sooner you’ll have a clear view of the bigger financial picture. This gives you more time to seek out alternative sources of funding—like private student loans—should federal aid not cover the full cost of your tuition and expenses.  Those are just a few reasons to file the FAFSA as early as possible. Here’s the full list:  1. Maximize Financial Aid Opportunities Some federal student aid, namely grants and scholarships, areis awarded on a first-come, first-served basis. Completing the FAFSA early gives applicants the best chance of securing the maximum federal financial aid they may qualify for.  2. Access to State Grant Programs Not only is some federal aid granted on a first-come, first-served basis, but a portion of state aid is as well, especially state grant programs. Since many of these programs determine eligibility at least partially through the FAFSA, filing early may increase your eligibility for state grants and other state student aid.  3. Avoid Last-Minute Panic The college and student aid application processes can be stressful, especially when facing critical deadlines. Avoiding last-minute rushing gives you time to ensure your FAFSA submission is thorough and accurate. This can help curb your stress levels and ensure you can provide the most accurate information on the application.   4. Ease of Comparison Between Colleges  The sooner you complete the FAFSA, the sooner you may receive your financial aid award letters. This can give you more time to carefully compare the aid packages offered by different colleges and make the best possible decision for your educational (and financial) future.   5. More Time to Pursue Other Forms of Financial Aid Submitting the FAFSA and getting your results as early as possible gives you more time to explore and pursue other financial aid options, such as scholarships and private grants. It also gives you more time to pursue private student loans as a supplemental option should federal aid leave a gap between funding and your total expenses.  FAFSA Eligibility Requirements To qualify for federal student aid through the FAFSA, prospective students must meet the following general FAFSA eligibility requirements:  A demonstration of financial need as determined by information provided in the FAFSA  U.S. citizenship, U.S. national status, or eligible noncitizen status  A valid Social Security Number, unless the applicant is a citizen of the Freely Associated States  A high school diploma, GED, or other recognized ability-to-benefit alternative  Enrollment (or acceptance for enrollment) in an eligible degree or certificate program  Continued satisfactory academic progress  In addition to the above, you’ll also have to consent to have your personal tax information transferred into the FAFSA form and sign a certification statement pertaining to your intended use of funds and qualification to obtain further education. For a visual aid on the information above, check out this FAFSA eligibility infographic.   The Importance of Meeting FAFSA Deadlines Meeting FAFSA deadlines is critical for several reasons. First, it can help ensure that you receive the maximum federal financial aid you’re eligible for. Second, it can impact your ability to meet deadlines for state and institutional aid programs. Lastly, advanced planning can help your family plan for college funding and their anticipated contribution.  Conversely, missing important FAFSA deadlines can have negative consequences. The pool of available funds you’re eligible to receive might be reduced, limiting financial aid options, and the disbursement of your financial aid may be delayed. Additionally, many aid programs have strict deadlines, leaving applicants who file late submissions ineligible for certain types of aid.  With​​​​​ that in mind, here are some important FAFSA deadlines for the 2024-25 school year:  December 31, 2023 – The 2024 FAFSA goes live; the earliest possible application date  February 1, 2024 – The first state deadline for priority consideration (some states don’t offer priority consideration, and those that do have different dates)  April 2, 2024 – The first state deadline for program consideration (all states have different dates)  June 30/July 1, 2024 – The deadline for many states (most states set their deadline either at this point or before)  ​​June 30, 2025 – The last possible date a 2024 FAFSA can be submitted​​​  ​​​September 14, 2025 - The deadline for any corrections or updates to be submitted​​​​  School deadlines – Each institution may have its deadline; check with the school you’re interested in attending  ​​​     ​​​The 2025-26 FAFSA form is scheduled for public release on or before December 1, 2024. Additional deadlines will be added as they are announced, so check back for updates.​​  Although not ideal, there are still options if you submit the FAFSA late. However, it will limit your options considerably. According to StudentAid.gov, “some states and colleges continue to award aid to FAFSA latecomers.” Still, your odds of receiving aid become slim, and payouts are often lower.  Contact the financial aid offices at schools you’re considering for assistance and information on their options for late submissions. Private scholarships, grants, and loans are one possibility to potentially replace federal or state aid for students who miss deadlines.  Tips for a Successful FAFSA Application  Completing the FAFSA can significantly impact the financial aid you’re eligible to receive. Here are some tips for a successful application.  Gather the necessary documents and information immediately and keep them in a single, easily accessible location. This includes Social Security numbers, tax returns,  tax forms (such as your W-2), and other financial records.  Provide up-to-date and fully accurate information to increase approval chances and minimize delays or errors in the application process.  Complete and submit the FAFSA as early as possible to maximize possible aid.  Seek professional guidance from financial aid professionals or counselors if you are unsure about any aspect of the FAFSA.  Keep track of all federal, state, and institutional application deadlines that apply to you, and make sure you meet them.  Carefully review the confirmation page for accuracy and completeness after you submit the FAFSA and address any issues immediately.  Update your FAFSA if your financial circumstances change significantly.  Learn More with Ascent You deserve to achieve your academic dreams. But to do so, you must be able to fund them. Whether you’re looking for graduate or undergraduate student loans, Ascent is here to help with a range of options to finance your education, including cosigned student loans and no cosigner student loans.   Visit our Bright Future Hub for more resources to help you succeed in college and beyond.  FAQ Do you get more money from FAFSA if you apply early? You can often get more money from FAFSA if you apply early. There are a few reasons for this. You may be prioritized for the many federal, state, and institutional aid programs allocated on a first-come, first-served basis. You will also have more time to apply for scholarships, grants, and private student loans and to compare the financial aid packages offered by institutions you’re considering.   Why is it best to file the FAFSA as early as possible? There are many reasons why it’s best to file the FAFSA as early as possible. Some of the most important include:  Maximizing the financial aid opportunities available to you  Maximizing access to state and institutional aid programs  Receiving award notifications faster  Having more time to make informed decisions about college acceptance and financial planning  Maximizing the chances of taking part in the Federal Work-Study program  Planning and comparing financial aid packages and eligibility as soon as possible  Meeting institutional and state financial aid application deadlines  Reducing stress and last-minute panic  Minimizing the possibility of mistakes and errors that could negatively impact financial aid eligibility  When should I fill out my FAFSA? You should fill out your FAFSA as soon as possible. The FAFSA for the 2024-25 school year is live and can be filled out anytime. Be aware that each state and institution will have its own FAFSA application deadlines, as will many private scholarships and grants. The last possible day to fill out the 2024-25 school year FAFSA is June 30, 2025. 

If you submitted the Free Application for Federal Student Aid (FAFSA) and are anticipating a gap between your covered financial aid and your tuition expenses, you’re not alone. Like many students and families in your situation, you’re likely exploring supplemental financing options to help you cover the rising costs of college. This is where options like scholarships and private student loans can come in handy.   Understanding the different options for student loans can be a stressful, but important step as you prepare for your educational journey. One consideration you need to make when selecting a student loan is the interest rate. You can choose from two major types of interest rates: fixed or variable.  Whether a student loan with a fixed or variable interest rate is a better choice depends on many factors, including your financial circumstances, educational goals, and loan terms. Read on to understand how student loans work and the differences between fixed and variable interest rate student loans.  What Is a Fixed Rate Student Loan?  A fixed rate student loan is a type of student loan with an interest rate that remains the same for the duration of the loan. The payment due on a fixed rate student loan will not change over the life of the loan. Fixed rate loans can help protect borrowers from increases in market interest rates that could otherwise cause payments to fluctuate.   Fixed rate student loans can cover some education-related expenses, including tuition, fees, housing, textbooks, and other educational necessities. Fixed rate loans can apply to undergraduate, graduate, and professional degrees.   Typically, repayment on a fixed rate student loan begins once the student completes their degree program, and repayment is done through installments over a fixed number of years. Many lenders offer flexible repayment options, so be sure to compare lenders while you are doing your research.    Pros and Cons of Fixed Rate Student Loans  There are many advantages of fixed rate student loans, including:  Stability and predictability of monthly payments.  The ability to accurately and confidently budget your future payments.  Protection for borrowers from fluctuations and increases in market interest rates.   Knowledge of the total cost of the loan from when it is signed.  A potentially lower overall cost if interest rates rise significantly over time.   High desirability for risk-averse borrowers.  On the other hand, there are also some disadvantages of fixed rate loans, those include:  Likely higher initial interest rates.  Likely higher initial loan payments.  No benefits or cost savings if interest rates go down.  Lower flexibility than variable rate loans.  Potentially higher overall loan costs when market interest rates remain low over time.  The loan may not reflect future economic conditions or market interest rates.  What Is a Variable Student Loan? Also known as an adjustable-rate student loan, a variable student loan has an interest rate that can periodically change. In most circumstances, changes in variable rate student loans are caused by updates to a specified financial index. The terms of your loan will determine how often the interest rate may change, whether annually, semi-annually, or monthly.   Due to changing interest rates, the payments on a variable rate student loan may fluctuate significantly over the life of the loan. Variable rate loans expose borrowers to fluctuations in market interest rates.  Like fixed rate student loans, variable rate loans can be used to pay expenses for undergraduate, graduate, and professional degree programs and for education-related expenses, such as tuition, fees, room and board, textbooks, and other necessities.   Repayment for variable rate student loans typically begins after the borrower is no longer enrolled in their degree program unless deferred for some reason, such as entering a new degree program. Repayment takes place over a set time through installments.  Like fixed rate loans, multiple student loans can be consolidated into a single variable rate student loan.  Pros and Cons of Variable-Rate Student Loans  There are many advantages of variable rate student loans, including  Likely lower initial interest rates.  Likely lower initial loan payments.  May decrease interest rates and loan payments over time.  High cost-effectiveness in low interest rate environments.  Potentially lower overall loan costs in low interest rate environments.  Greater flexibility than fixed rate student loans.  May better reflect future economic conditions or market interest rates.  On the other hand, some disadvantages of variable rate student loans include:  Expose borrowers to interest rate volatility.  Eliminate the ability to accurately budget for more than a short period in the future.  Potentially higher interest rates.  Potentially higher monthly payments.  Potentially higher overall loan costs if interest rates rise over time.  Less desirable for risk-averse borrowers.  May expose borrowers to greater refinancing risks.  Dependency on market conditions.  Uncertainty of the total cost of the loan until it is paid in full.  Do not protect borrowers from fluctuations and increases in market interest rates.  Factors to Consider When Choosing Between Fixed vs. Variable Rate Student Loans  Many factors must be considered when choosing between a fixed rate vs variable rate student loan. Here are some of the primary factors you should evaluate:  The Interest Rate Outlook: If interest rates are expected to remain low or increase gradually over the life of the loan, variable rate loans are often more desirable, and vice versa.  Risk Tolerance: If you prefer stability, accurate planning, and low risk fixed rate loans are a better choice. If you are willing to accept some risk of paying more under certain market conditions in order to potentially pay less initially, variable rate loans might be a better choice.  Loan Repayment Timeline: The shorter the loan repayment time, the less likely you are to experience significant interest rate changes.  Loan Terms and Conditions: Be sure to carefully review the terms and conditions of each loan you are considering, including any and all rate caps or limits on variable rate adjustments.  Overall Financial Goals and Stability: You should consider your financial priorities, such as a consistent monthly payments, minimizing risk, paying the least possible amount, projected salary, and much more.  Should I Get a Fixed or Variable Rate Student Loan?  Deciding on what type of loan to apply for can be challenging. Unfortunately, unless you can predict the future, it is impossible to know whether a fixed or variable student loan will be the right choice for you. However, making an informed decision about the best decision for your situation is possible.  The first thing to consider are your loan options based on income, credit score, and other eligibility criteria. You may only get approved for certain loans depending on your credit score and other factors. You will need to compare all the terms and conditions of the specific loans to decide on the right one for you.   When comparing fixed vs. variable rate student loans, you must balance many factors and consider your circumstances and preferences.   For example, if you are uncomfortable with risk, a variable rate loan will probably not appeal to you. On the other hand, if the potential to save money over the long term is worth some risk to you, a variable rate loan might be ideal. ​​​​If you anticipate your salary will remain relatively stable over time, a fixed rate loan might be more advantageous.  For a better understanding of your potential rates and repayment options, it can be helpful to review some hypothetical APR and repayment examples. If you are ready to view your personalized rate, you can check your rate in minutes without impacting your credit score.    Learn More with Ascent Choosing the right student loan is a major decision that will impact your finances during and after college. Knowledge is power, so research which loan type is best for your unique circumstances.  Whether you are looking for more information on how to get a student loan or comparing undergraduate student loans, Ascent is here to provide various financial wellness resources for students and families. If you need an additional financial boost to help cover your tuition expenses, we offer several loan types to meet your needs including cosigned student loans and no cosigner student loans.   We look forward to helping you take the next step toward pursuing your goal in college, and beyond.  Fixed Rate vs Variable Rate Student Loan FAQs Can I Change my Student Loan from Variable to Fixed?  In many cases (but not all), you can change your student loan from variable to fixed if you meet certain criteria. You can do so by consolidating multiple student loans into a single fixed rate student loan or by refinancing the loan. Whether or not these options are available to you, as well as the specific terms that are available to you, will depend on several factors, including the type of student loans you have, the policies of the lender or loan servicer, the terms of your loan, and your creditworthiness and repayment history.  Can you Refinance on a Fixed Loan?  It may be possible to refinance a fixed rate student loan. You will typically have to obtain a new loan with different terms, including a new interest rate. Whether you can refinance a fixed rate student loan depends on several factors, including the loan type, the lender’s policies, and your financial situation. It may also be possible for you to consolidate your fixed rate student loans with other student loans to form a new, single student loan. 

Diving into advanced education is an exciting chapter in anyone's life. It's a time of personal growth, career development, and pursuing passions. But the financial side of this journey can sometimes feel overwhelming. That's where Direct PLUS or Grad PLUS Loans come in. These college loans are designed to support graduate and professional students pursuing higher education.   In this guide, we'll learn about Grad PLUS Loans and explore their features, benefits, and how they may fit into your financial strategy for an advanced degree.  Key Takeaways The passage of the “Big Beautiful Bill” (OBBBA) eliminates Grad PLUS loans for new borrowers after July 1, 2026. Grad PLUS Loans are federal loans for graduate and professional students that can cover the full cost of attendance—including tuition, housing, and other expenses—once other federal loan options have been exhausted. Eligibility for Grad PLUS Loans requires a credit check, enrollment at least half-time in a qualifying program, and meeting federal student aid requirements. Students with adverse credit may still qualify with a cosigner or extenuating circumstances. Grad PLUS Loans offer fixed rates and borrower protections, but private graduate loans may offer unique benefits or more competitive interest rates for borrowers with strong credit. Repayment typically begins six months after graduation or dropping below half-time. Interest accrues during this grace period, so it pays to understand how capitalization works and whether making early payments is worth it. What is a Grad PLUS Loan? A Grad PLUS Loan is a federal loan that can help cover some school costs for those pursuing advanced graduate degrees. What sets Grad PLUS Loans apart from other student loans is their ability to cover the total cost of attendance. Beyond just tuition, these loans can also apply to books, housing, and other education-related expenses, filling in the financial gaps where other types of aid may fall short.  Graduate PLUS Loans are specifically available to graduate and professional students who have exhausted their eligibility for Direct Subsidized or Unsubsidized Loans. Grad PLUS loans are made available by the U.S. Department of Education and have a fixed interest rate that is set annually. Interest rates for Grad PLUS Loans may be higher than other federal student loans, so be sure to factor this in when planning repayment.  Eligibility of Grad PLUS Loans While Grad PLUS Loans offer valuable financial support for graduate and professional students, they are not available to just any student. To qualify for Grad PLUS Loans, you must meet certain criteria:  Enrollment Status: You must be a graduate or professional student enrolled at least half-time in a program leading to a graduate or professional degree or certificate at a school participating in the Direct Loan Program.  General Eligibility for Federal Student Aid: Like other federal student loans, you need to meet the general eligibility requirements for federal student aid. This includes being a U.S. citizen or eligible non-citizen, having a valid Social Security number, maintaining satisfactory academic progress, and not defaulting on federal student loans.  Satisfactory Credit History: Graduate PLUS Loans require a satisfactory credit history. While you are not required to meet a specific credit score threshold, having an adverse credit history may affect your eligibility. An adverse credit history means you’ve experienced certain negative credit events, such as bankruptcy, foreclosure, or defaulted loans. If you have an adverse credit history, you may still be eligible for a student loan with a cosigner. You may also be able to demonstrate extenuating circumstances.  ​​If you’re looking for a Ph.D. student loan or loan for your MBA, Grad PLUS Loans can be an option to cover the full cost of attendance for your graduate or professional studies. However, if you do not qualify for Grad PLUS loans or find that federal loans do not cover your full tuition expenses, you can consider private graduate student loans to help supplement this gap. ​​​​​  Key Features of a Grad PLUS Loan Grad PLUS Loans are designed with the students’ best interests in mind, offering financial support and protections to make pursuing higher education more attainable and manageable. Before deciding, it's essential to understand all aspects of these loans and consider how they align with your unique financial needs and academic goals. Here are several of the key features of these types of loans:  ​​​​​ Loan Limits Grad PLUS Loans stand out for their flexible loan limits. Unlike other federal loans, which have set annual and lifetime limits, the Grad PLUS Loan is designed to cover the full cost of attendance. This means they can cover everything from tuition and books to housing and other education-related expenses, making them a particularly beneficial option for programs with high tuition costs.  Interest Rates Interest rates can make a big difference in the total cost of a loan. With Grad PLUS Loans, you don't have to worry about fluctuating rates. Grad PLUS Loans offer fixed interest rates, which means the rate you get when you take out the loan won't change over the life of the loan. The stability of the Grad PLUS loan can make it easier to plan for your loan repayment.  Borrower Protections Life can be unpredictable. Graduate PLUS Loans come with borrower protections, providing a safety net during challenging times. These protections include options for loan deferment, forbearance, and access to income-driven repayment plans. These options can provide much-needed flexibility when dealing with financial hardship or changes in income.  Application and Repayment of Grad PLUS Loans Applying for a Grad PLUS Loan is a straightforward process, like other types of Federal Aid:  1. Complete the FAFSA: You can start the process by filling out the Free Application for Federal Student Aid (FAFSA). This form determines your eligibility for federal aid, including Grad PLUS Loans.  2. Submit the Direct PLUS Loan Application: After completing the FAFSA, proceed to the Direct PLUS Loan Application. This application is specific to the Grad PLUS Loan and provides information about your school, desired loan amount, and authorizing a credit check.  3. Credit Check and Eligibility: Unlike other federal loans, Grad PLUS Loans require a credit check to assess your creditworthiness. An adverse credit history may affect your eligibility, but you can still qualify by obtaining an endorser or documenting extenuating circumstances to the U.S. Department of Education.  4. Loan Approval and Award Letter: Once approved for the Grad PLUS Loan, your school's financial aid office will send you an award letter. This letter outlines the loan amount and provides instructions for accepting or declining the loan.  Repayment of Grad PLUS Loans As you progress through your academic journey, understanding the repayment process for Grad PLUS Loans is crucial for your financial success. Here's a breakdown of key points to keep in mind:  Grace Period: Repayment for Graduate PLUS Loans typically begins six months after you graduate, leave school, or drop below half-time enrollment. During this grace period, you have time to organize your finances and start earning an income before making payments.  Interest during the Grace Period: It's essential to be aware that interest continues to accrue on the loan during the grace period. If you defer payments, the accrued interest will be added to the loan balance (capitalized) when repayment begins.  Repayment Options: During the grace period, you can make interest-only payments or defer your payments. Considering your financial situation and goals will help you decide on the best repayment option for your circumstances.  Grad PLUS Loans Compared to Other Options Grad PLUS Loans are a great resource, but they are just one of the financial aid options available. It's important to consider all your options and choose the best fit for your needs.  Federal Loan Options vs. Grad PLUS Loans Federal loans, such as Direct Unsubsidized Loans and Direct Subsidized Loans, are often the first stop for many students. These loans typically offer lower interest rates than Grad PLUS Loans, which can result in lower overall costs. However, they also have lower loan limits, which may only cover part of the cost of attendance for some programs. This is where Grad PLUS Loans can step in to fill the gap.  Private Student Loans vs. Grad PLUS Loans Private student loans are another option to consider if you want to close the gap between your federal loan coverage and your tuition costs. ​​​​These loans can offer competitive interest rates (especially for borrowers with strong credit), flexible repayment terms, and additional benefits not offered with federal loans. At Ascent, we are proud to offer over 40 repayment options–more than any other lender–in addition to perks like 1% cash back at graduation, dedicated U.S.-based customer service, and access to career coaching resources and internship support.   The Importance of Financial Literacy and Loan Repayment Financial literacy plays a vital role in the lives of students taking on student loans. As you embark on your educational journey, it’s important to equip yourself with the knowledge and understanding of various financial concepts related to borrowing and repaying loans. Being financially literate means comprehending the terms and conditions of your loans, the impact of interest on your total repayment amount, and the array of repayment options available to you.  Financial wellness is important to Ascent, which is why our borrowers have access to extensive financial literacy throughout their application and once they are a borrower, to ensure students (and cosigners) understand the responsibilities of borrowing money to pay for college.  Learn More with Ascent At Ascent, we are committed to helping students navigate the financial aspects of their educational journey. Whether you want to learn the basics of student loans or explore options for graduate student loans, we provide the necessary resources and support.  Explore our financial wellness resources or contact us to learn more about Ascent’s graduate student loan options today.   FAQ How Much Can You Borrow with Grad PLUS? One of the standout features of Grad PLUS Loans is their flexible loan limits. You can borrow up to the full cost of attendance minus any other financial aid received. This includes tuition, books, housing, and other education-related expenses. This flexibility can make Grad PLUS Loans a valuable resource for funding your education.  What is the Difference Between a PLUS Loan and a Grad PLUS Loan? While PLUS Loans and Grad PLUS Loans are part of the federal loan program, the main difference is who can borrow the money. PLUS Loans are available to parents of dependent undergraduate students, while Grad PLUS Loans are designed for graduate and professional students.  Do Grad PLUS Loans Get Forgiven? Yes, Grad PLUS Loans are eligible for certain forgiveness programs. For example, if you work in public service, you may be eligible for Public Service Loan Forgiveness. Grad PLUS Loans are also eligible for income-driven repayment plans, which cap your monthly payments at a percentage of your income and can lead to loan forgiveness after a certain period.