How do I apply for financial aid?

You should start by filling out the federal government’s aid application, the FAFSA. This application is used by both the federal government and colleges when federal money is being dispersed.

The best way to fill out and submit the FAFSA is online at the Department of Education’s website at www.fafsa.ed.gov. In order to do so, you and your child will first need to obtain an FSA ID, which you can also do online.

The FAFSA relies on current asset information and income information from two years prior. For example, the 2026-2027 FAFSA relies on your 2024 income tax return. The FAFSA has the ability to directly import your tax information using the IRS direct data exchange tool, which is built into the form. The FAFSA typically opens on October 1 for the following school year. For example, the 2026-2027 FAFSA opens on October 1, 2025.

Regarding college financial aid, colleges generally require both the FAFSA and the PROFILE form (or their own aid form in place of the PROFILE). The PROFILE can also be filled out and submitted online. Make sure to find out which application your child’s college requires and make a note of all filing deadlines. Deadlines can vary depending on whether your child is a new student or a returning student and whether your child is applying early decision/early action or regular decision.

This content has been reviewed by FINRA.

Repaying Your Student Loans

You vaguely remember signing a form every year at college registration time. Now that you’ve graduated, it’s all become painfully clear — those forms were promissory notes detailing your student loan obligations. Your loans aren’t going away, and you’ll want to repay them as quickly as possible. So whether you have a small sum or a small fortune to pay off, it’s helpful to brush up on some student loan basics.

First, remember the grace period

After you graduate, you’ll probably have a lot to think about — deciding where to live, finding a job, renting an apartment. Fortunately, you don’t have to add student loans to your list, at least not right away. Thanks to the grace period built into most student loans, you’ll likely get anywhere from six to nine months before you need to start repaying your loans. This gives you some breathing room to get financially settled.

Understand your repayment options

Gone are the days when your only repayment option consisted of fixed, equal payments spread over a 10-year term. Though this is certainly one option — and typically the fastest way to pay off your loans — it’s not the only option. Because of the growing number of students who require student loans to finance their education and the ever increasing amount of their debt, the federal government offers several flexible repayment plans to help students manage this large financial responsibility. (Private student lenders may or may not offer the following plans — check with your lender.)

Standard repayment plan: This is the original repayment plan. With a standard plan, you generally pay a fixed amount each month for up to 10 years. Starting July 1, 2026, the federal government is launching a new version of this type of plan called the Standard Repayment Plan. Under this plan, borrowers pay a fixed amount each month over a fixed period of time that could be longer than 10 years, depending on their loan balance:

Less than $25,000: 10 years

$25,000 to less than $50,000: 15 years

$50,000 to less than $100,000: 20 years

$100,000 and over: 25 years

There is no prepayment penalty; borrowers can pay off their loans early.

Graduated repayment plan: With a graduated plan, your payments start out low in the early years of the loan but increase in later years (the term is still 10 years). This plan is tailored to individuals with relatively low current incomes (e.g., recent college graduates) who expect their incomes to increase in the future. However, you’ll ultimately pay more for your loan than you would under the standard plan, because more interest accumulates in the early years of the plan when your outstanding loan balance is higher.

Extended repayment plan: With an extended plan, you extend the time you have to repay your loan, usually from 12 to 25 years, depending on the loan amount. Your fixed monthly payment is lower than it would be under the standard plan, but again, you’ll ultimately pay more for your loan because of the interest that accumulates under the longer repayment period. Note: Many lenders allow you to combine an extended plan with a graduated plan, meaning payments can be fixed or graduated.

Income-based repayment plan: With an income-based repayment plan, your monthly loan payment is based on your annual discretionary income and family size. The federal government’s lineup of income-based repayment plans is undergoing consolidation. In 2026, there are four income-driven repayment plans available:

Saving on a Valuable Education (SAVE) Plan (formerly the REPAYE Plan)

Pay As You Earn (PAYE) Plan

Income-Based Repayment (IBR) Plan

Income Contingent Repayment (ICR) Plan

However, three of these plans will be phased out and eliminated by July 1, 2028: the SAVE Plan, the PAYE Plan, and the ICR Plan. The IBR Plan will remain available to borrowers who have already borrowed for college and who don’t take out any new loans after July 1, 2026, and borrowers will no longer need to show a “partial financial hardship” to enroll. But this plan won’t be available to new borrowers.

Starting July 1, 2026, a new income-driven plan, the Repayment Assistance Plan (RAP), will launch and will eventually be the sole income-driven plan for new student loans. Borrowers currently repaying their federal student loans under SAVE, PAYE, or ICR will need to transition to the new RAP, or, if they qualify, to the IBR Plan, by July 1, 2028.

Under the new Repayment Assistance Plan, which is available to undergraduate and graduate students, a borrower’s monthly payment is based on his or her adjusted gross income, as follows:

$10,000 or less: flat payment of $10 per month ($120 per year)

$10,001 to $20,000: 1%

$20,001 to $30,000: 2%

$30,001 to $40,000: 3%

$40,001 to $50,000: 4%

$50,001 to $60,000: 5%

$60,001 to $70,000: 6%

$70,001 to $80,000: 7%

$80,001 to $90,000: 8%

$90,001 to $100,000: 9%

$100,001 and over: 10%

For single borrowers, only the borrower’s AGI is used to determine the monthly payment. For married borrowers, joint AGI is used if the couple files a joint federal income tax return; otherwise, for married couples who file a separate income tax return, only the borrower’s AGI is used. For borrowers with dependents, the monthly payment is reduced by $50 for each dependent listed on a borrower’s federal income tax return.

Under RAP, payments are applied first to interest, then to fees, then to principal. If the required payment is less than any new interest that accrues, the extra interest is waived. After 30 years of on-time payments, all remaining debt will be forgiven. Payments made under RAP qualify for the federal Public Service Loan Forgiveness (PSLF) program.

Regarding the other plans, here’s a brief summary of how they work.

SAVE Plan: Undergraduate borrowers who meet income guidelines pay 5% of their discretionary income to their monthly loan payments and graduate school borrowers pay 10% of their discretionary income. For borrowers with original principal balances of $12,000 or less, all remaining loan balances will be forgiven after 10 years of payments. For original loan balances over $12,000, the maximum repayment period will increase by one year for every additional $1,000 borrowed. For example, a $13,000 loan will be forgiven after 11 years of payments, a $14,000 loan will be forgiven after 12 years of payments, and so on. The SAVE Plan replaced the Revised Pay As You Earn (REPAYE) Plan. (Under REPAYE, a borrower’s monthly payment was set at 10% of discretionary income, with any remaining debt forgiven after 20 years of timely payments for undergraduate borrowers and 25 years for graduate school borrowers. Borrowers in the REPAYE Plan were automatically moved to the SAVE Plan.)

PAYE Plan: Borrowers who obtained their loans on or after July 1, 2007 and meet income guidelines generally pay 10% of their discretionary income to their monthly loan payment, with any remaining debt forgiven after 20 years of timely payments.

ICR Plan: Borrowers who meet income guidelines generally pay 20% of their discretionary income toward their monthly loan payment, with any remaining debt forgiven after 25 years of timely payments.

IBR Plan: Borrowers who obtained their loans on or after July 1, 2014 and meet income guidelines generally pay 10% of their discretionary income to their monthly loan payment, with any remaining debt forgiven after 20 years of timely payments. Borrowers who obtained their loans before July 1, 2014 generally pay 15% of their discretionary income, with any remaining debt forgiven after 25 years.

Under any of these programs, borrowers in certain public interest jobs may be able to have their loans forgiven after 10 years under the federal Public Service Loan Forgiveness (PSLF) Program.

For more information about any of these programs visit the Department of Education’s student aid website.

The federal student aid website also offers a loan repayment simulator tool that borrowers can use to check eligibility and estimate monthly payments.

Loan consolidation: Loan consolidation is technically not a repayment option, but it does overlap. With loan consolidation, you combine several student loans into one loan, sometimes at a lower interest rate. Thus, you can write one check each month. You need to apply for loan consolidation, and different lenders have different rules about which loans qualify for consolidation. However, with most loan consolidations, you can choose an extended repayment and/or a graduated repayment plan in addition to a standard repayment plan.

To pick the best repayment option, you’ll need to determine the amount of discretionary income that you have to put toward your student loan each month. This, in turn, requires you to make a budget and track your monthly income and expenses.

In addition to inquiring about repayment options, ask whether your lender offers any special discounts for prompt loan repayment. For example, some lenders may shave a percentage point off your interest rate if you allow them to directly debit your checking account each month. Or, they may waive some monthly payments after receiving on-time payments for a certain length of time.

Apply for a deferment or forbearance if you can’t pay

At times, you may find it financially difficult or impossible to repay your student loan. The worst thing you can do is ignore your payments (and your lender) completely. The best thing you can do is contact your lender and apply for a deferment, forbearance, or cancellation of your loan.

Deferment: With a deferment, your lender grants you a temporary reprieve from repaying your student loan based on a specific condition, such as unemployment, temporary disability, military service, or a return to graduate school on a full-time basis. For federal loans, the federal government pays the interest that accrues during the deferment period, so your loan balance won’t increase. A deferment usually lasts six months, and you are limited in the total number of deferments you can take over the life of the loan. Starting July 1, 2027, the economic hardship deferment and the unemployment deferment will be eliminated.

Forbearance: With a forbearance, your lender grants you permission to reduce or stop your loan payments for a certain period of time at its discretion, typically for economic hardship. However, interest continues to accrue, even on federal loans. Like a deferment, a forbearance usually lasts six months, and the total number allowed over the life of the loan is limited. For new loans issued July 1, 2027 and after, a forbearance will be limited to a single nine-month pause every 24 months.

Cancellation: With a cancellation, your loan is permanently wiped off your list of financial obligations. It’s not easy to qualify for a cancellation, though. Situations when this may be allowed are the death or permanent total disability of the borrower, or if the borrower takes a job teaching needy populations in certain geographic areas. Typically, student loans can’t be discharged in bankruptcy.

Remember, these things are never automatic. You’ll need to fill out the appropriate application from your lender, attach any supporting documentation, and follow up to make sure that your application has been processed correctly.

Keep track of your paperwork

If your idea of organization is stuffing your random assortment of student loan papers into your sock drawer, or not keeping them all, think again. Repaying your student loans is a serious matter, and you’ll need to stay on top of it. It’s important to keep accurate, accessible records. Open a file folder for each loan, and file any accompanying paperwork there, such as copies of promissory notes, coupon booklets, correspondence from your lender, deferment and/or forbearance paperwork, and notes of any phone calls.

Investigate the student loan interest deduction

On the bright side, you might be able to deduct some or all of the student loan interest you pay on your federal tax return. In 2026, if you’re a single filer with a modified adjusted gross income (MAGI) under $85,000 or a joint filer with a MAGI under $175,000, you can deduct up to $2,500 of student loan interest that you pay during the year. A partial deduction is available to single filers with a MAGI between $85,000 and $100,000 and joint filers with a MAGI between $175,000 and $205,000.

There are a couple of hurdles, though. You must have incurred the loans when you were at least a half-time student, and you can’t take the deduction if you’re claimed as a dependent on someone else’s tax return.

If you paid $600 or more of interest to a single lender on a qualified student loan during the year, you should receive Form 1098-E at tax time from your lender, showing the amount of student loan interest you’ve paid for the year. For more information, see IRS Publication 970.

Do you have leftover 529 plan funds?

If you have funds available in a 529 plan, you can use them for student loan repayment. There is a lifetime limit of $10,000 per 529 plan beneficiary and $10,000 for each of the beneficiary’s siblings. Keep in mind that any portion of student loan interest that is paid for with tax-free 529 plan funds is not eligible for the student loan interest deduction.