Student loans generally don’t come with as many fees as other types of debt. But while they’re less common, most aren’t free of all fees — especially if you’re late on a repayment.
1. Origination fees
Direct Subsidized and Unsubsidized Loan origination fee: 1.059%
Direct PLUS Loan origination fee: 4.236%
Private loans typically don’t come with an origination fee, but federal loans do. This fee is a percentage of your loan amount, which the government deducts from your balance when you take out the loan. Keep this in mind when you decide how much to take out — the amount you receive will be lower than the amount you borrowed.
Like federal interest rates, Congress sets federal loan origination fees each year, which go into effect on October 1st.
2. Late fees
If you miss a repayment on your student loan, you might have to pay a late fee — though how much depends on the type of loan you took out.
Federal loan late fees
Federal Direct Loans come with a late fee of up to 6% of the amount due if a repayment is more than 30 days late. Loans through the Federal Family Education Loan (FFEL) Program also have the same fee, which lenders can charge after a 15-day grace period.
Private loan late fees
Private lenders typically charge around 5% of your loan amount and cap it at around $35, though it can vary. Usually, you have a grace period of 10 to 15 days before the first late fee applies. Some lenders like Discover and SoFi don’t charge late fees at all.
3. NSF fees
Also known as a returned check or returned payment fee, some private lenders might also charge a nonsufficient funds (NSF) fee if a repayment bounces. This often works the same way as a late fee, though it can be slightly higher depending on the lender. Some lenders also charge a flat fee regardless of the amount due.
Federal loans generally don’t come with NSF fees. However, your bank might charge this fee if you don’t have overdraft protection on your account.
4. Application fees
While far less common than origination fees, in rare cases you might have to pay an application fee when you apply for a private loan. Unlike an origination fee, this is often a flat fee of around $50 — though it varies by lender.
5. Prepayment penalties
Also uncommon on student loans, a few private lenders might charge a penalty for paying your loan off early. Prepayment penalties are meant to ensure the lender doesn’t lose out on interest charges it would have earned if you repaid your loan according to the term laid out in your contract. These fees often vary depending on the type of loan you have.
Even though prepayment penalties are extremely rare, check with your lender before you apply for refinancing. Otherwise, you could find yourself doubling up on your loan cost.
6. Deferment or forbearance fees
While it’s free to apply for deferment or forbearance with federal loans, a few private lenders charge a fee to pause repayments. Depending on the lender, it could be a one-time flat fee or a fee charged every month you skip repayments.
Deferment and forbearance can already make your loan more expensive, since you’re still responsible for the interest that adds up while your loans are on hold. If your lender charges a fee, the extra cost might not be worth it. Reach out to your servicer to ask about fees before you apply for deferment or forbearance for your private student loans.
7. Collection fees
If you default on your student loan, your lender will likely charge a collection fee. This is meant to cover the cost your lender or the collection agency runs up when trying to get your repayments. This can cover anything from court and attorney fees to processing costs. Generally, your lender adds this to your loan amount.
Federal loans go into default after you miss a repayment by 270 days. But private loans can go into default in as little as 30 to 60 days after missing a repayment.
Is a no-fee loan really better?
Not necessarily. While federal loans tend to come with more fees than what you’d find with private lenders, they also come with more protections and forgiveness opportunities. You can switch up your repayment plan, apply for forgiveness or go into deferment or forbearance for free. And you never have to worry about prepayment penalties if you decide to pay off your debt early.
On top of that, federal loans generally have lower rates — even when you add in the origination fee — and don’t require a cosigner.
Student loans don’t come with as many fees as other types of debt — especially private student loans. The key to keeping fees to a minimum is staying on top of your repayments and contacting your lender first before making any changes.
Generally, no — most student loan refinancing providers don’t charge an application or origination fee, but check before you apply. Also, check with your current lender to make sure you won’t have to pay a prepayment penalty.
Federal loans and some private lenders have lifetime limits to how much you can borrow. However, your maximum loan amount is typically your school’s cost of attendance (COA) for that year. Your COA is an estimate of how much you’d have to pay to attend school, including tuition, fees, housing and personal expenses.
The student loans you get by filling out the FAFSA are federal Direct Loans. These come with different rates depending on your program and degree type:
Direct Subsidized and Unsubsidized Loans for undergraduates: 2.75%
Direct Unsubsidized Loans for graduate students: 4.3%
Direct PLUS Loans for parents and graduate students: 5.3%
Anna Serio is a trusted lending expert and certified Commercial Loan Officer who's published more than 1,000 articles on Finder to help Americans strengthen their financial literacy. A former editor of a newspaper in Beirut, Anna writes about personal, student, business and car loans. Today, digital publications like Business Insider, CNBC and the Simple Dollar feature her professional commentary, and she earned an Expert Contributor in Finance badge from review site Best Company in 2020.
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