When you’re trying to pay off your student loans, it’s a good idea to explore all your options. Some students wonder if they can pay off their loans with scholarships. If you received a scholarship your junior year, for example, can you use it to pay off a student loan from your freshman year?
The answer to that question is a little complicated.
You Can Sometimes Use Scholarships to Pay Off Student Loans
Sadly, not all scholarships can be used for student loans. Most scholarships are designed to cover your college expenses, mostly tuition, and in some cases, they’ll be sent directly to your college, not to you. If they do send the money to you, the scholarship provider usually will tell you what you can and can’t use the money for. When it comes to student loans, most won’t let you convert it to cash to put towards those payments. However, it doesn’t hurt to ask the provider.
Thankfully, there are scholarships that are specifically designed to pay off student loan debt, including some that are open to students who have already graduated. They can be difficult to find, but current and past examples have included the $10,000 #PayMyStudentLoans Contest by MoneySolver, Fab Aid, and Swipe Away $10k Sweepstakes.
In some cases, scholarships can also be used for other college expenses such as rent, room and board, living expenses, books, and a computer. It’s important to only use the money for what is specified by the provider. If the scholarship provider follows up and finds out the money was put towards something else, they could withdraw the award and you will have to pay it back.
Other Ideas to Lower Student Loan Debt
If you don’t win any scholarships that pay off student loans, there are other routes available to you. You may want to consider
Taking Advantage of Repayment Programs
There are several programs available, both sponsored by the government and not, that will help you repay your student loans. It’s important to note though that these have very specific requirements that you will have to meet. They may need you to work in a specific field or job for a set number of years. You may need to complete research in an industry, be former military, have a certain amount in debt. It’s also possible you’ll need a combination of these and other qualifications. Some will only pay up to a specific amount, too.
Explore Refinancing Options
Federal student loans can’t be refinanced through the government (they can only be consolidated), but you can explore your options to have them refinanced through private lenders. They may be able to offer you lower interest rates or different repayment terms. You might be able to consolidate them with any private loans you have. It’s essential to explore all of your options to ensure you’re choosing the best solution.
- If you’re interested in refinancing, check out our sister site—Refi.Me!
Paying Off Student Loans
Student loans can be difficult to pay off for some, but there are options out there. There are scholarships, grants, and contests you can try applying for. However, you’ll also want to consider repayment programs and refinance options.