The Average Homeowner Now Has $207,000 in Tappable Equity: The Question Is How Do You Tap It?

While prospective home buyers continue to grapple with high mortgage rates and limited supply, existing owners are getting richer.

A new report from Black Knight revealed that the average American homeowner is sitting on more than $207,000 in tappable equity.

The phrase “tappable equity” means an amount that leaves a 20% equity buffer in place, aka 80% loan-to-value (LTV).

This is generally what banks and mortgage lenders will allow homeowners to borrow to ensure they have some skin in the game.

The question though is how do you tap into that equity, especially in a rising rate environment?

Does a Cash Out Refinance Still Make Sense?

tappable equity

  • Mortgage holders withdrew more than $75 billion in the first quarter of 2022 via cash out refinances
  • The cash out refinance share jumped to 75% during Q1 as rate/term refis waned
  • Early Q2 data suggests higher mortgage rates will dampen demand going forward

As noted, American homeowners are sitting on a staggering amount of available home equity.

At last glance, it was over $11 trillion, or roughly $207,000 per mortgage holder.

That figure is up from $127,000 at the start of the pandemic, and more than 2X the levels seen back in 2006 during the prior market height.

Here’s the problem though – mortgage rates have also basically doubled since the start of the pandemic, making a refinance a tough sell.

Still, cash out refinance volume doubled over the past 12 months, with such loans accounting for 75% of all refinances in the first quarter of 2022.

That was up from a 61% share in the fourth quarter of 2021 and 36% from a year earlier.

Of course, refinance lending overall was down 54% in the first quarter from the same period a year earlier, thanks to an 80% drop in rate/term refis.

Meanwhile, cash-out refis were off just 4% on an annual basis. However, the number of transactions fell for the second consecutive quarter, and growth in overall equity withdrawals slowed.

Ultimately, a cash out refinance won’t make sense for a lot of homeowners if their existing mortgage rate is in the 2-3% range.

Sure, it’s nice to tap into that equity, but not if you have to replace your first mortgage rate with a 5-6% interest rate.

What About a Second Mortgage, Such as a HELOC or Home Equity Loan?

The alternative a lot of borrowers are looking at now that mortgage rates are no longer on sale is a second mortgage.

Banks and mortgage lenders are also ramping up their offerings to account for this trend.

There are basically two main options available to homeowners; a home equity line of credit (HELOC) and a fixed-rate closed second.

The HELOC works similarly to a credit card in that you can borrow only what you need, pay it back over time, or simply keep it open for a rainy day.

The downside to the HELOC is that it features an adjustable interest rate, which is tied to the prime rate.

Whenever the Fed moves rates higher, the prime rate will go up by the same amount.

The Fed is expected to raise rates .50% in June and July to tame inflation. This will translate to a 1% increase in HELOC rates.

Of course, they might be done after that, and if the economy goes into a recession, they could turn around and lower rates too.

So HELOCs might have a somewhat telegraphed price assumption over the next year or so.

If you are risk averse, there’s the home equity loan, which allows you to borrow the full amount at closing.

You get a lump sum of your equity, but no additional draws in the future. The upside is that the interest rate is typically fixed.

The downside is that the interest rate is likely higher than a HELOC to account for the fixed rate advantage.

And as noted, you borrow the full amount, whether you need it or not. This means paying interest on the full amount.

Still, either option may be advantageous to a cash out refinance, which disrupts your first mortgage.

Use a Home Equity Sharing Company?

There are also so-called “home equity sharing companies” where you trade a portion of future home price appreciation for cash today.

One such company in this emerging industry is Point, which allows you to get payment-free cash.

However, you do give up a share of your (hopefully) rising property value in exchange, and they charge an upfront transaction fee that is deducted from your proceeds.

The cost of borrowing then depends upon when you pay it back, via home sale, refinance, or simply buying them out. And how much your property appreciates during that time period.

There was a similar company called Noah, which paused applications a while back. It’s unclear if they’ll resume lending at some point.

Other names in the nascent field include Hometap, Unison, and Unlock.

Personally, I don’t love the idea of giving up future gains, especially when they’re unknown. But it’s an option nonetheless.

Seniors Can Consider a Reverse Mortgage to Tap Available Home Equity

One final option to consider, assuming you’re a senior (62+) is the reverse mortgage.

Not only does it allow you to tap your available home equity, but it also comes with no monthly payments.

This is obviously a plus if you’re retired or close to retirement and want to keep your home, but need cash.

It may also be easier to qualify for a reverse mortgage versus a traditional mortgage, especially for fixed income borrowers.

Like the options discussed above, it’s possible to take out a reverse mortgage as a line of credit, or opt for a lump sum payout.

Additionally, you can opt for an adjustable-rate mortgage or a fixed-rate mortgage. So there’s lots to consider.

There are pros and cons to all those options, and which one you choose will be based on your individual needs and risk appetite.

Reverse mortgages can be more complicated than a traditional mortgage, so shopping around could come with the added benefit of education.

It may also allow you to see more loan program options and scenarios to choose from, including proprietary offerings.

To sum things up, it’s not nearly as cheap as it was just a few months ago to tap your home’s equity, but there are still opportunities on the table.

Take the time to educate yourself about each to determine which, if any, is best for you.

Source: thetruthaboutmortgage.com

The Average Homeowner Now Has $207,000 in Tappable Equity: The Question Is How Do You Tap It?

While prospective home buyers continue to grapple with high mortgage rates and limited supply, existing owners are getting richer.

A new report from Black Knight revealed that the average American homeowner is sitting on more than $207,000 in tappable equity.

The phrase “tappable equity” means an amount that leaves a 20% equity buffer in place, aka 80% loan-to-value (LTV).

This is generally what banks and mortgage lenders will allow homeowners to borrow to ensure they have some skin in the game.

The question though is how do you tap into that equity, especially in a rising rate environment?

Does a Cash Out Refinance Still Make Sense?

tappable equity

  • Mortgage holders withdrew more than $75 billion in the first quarter of 2022 via cash out refinances
  • The cash out refinance share jumped to 75% during Q1 as rate/term refis waned
  • Early Q2 data suggests higher mortgage rates will dampen demand going forward

As noted, American homeowners are sitting on a staggering amount of available home equity.

At last glance, it was over $11 trillion, or roughly $207,000 per mortgage holder.

That figure is up from $127,000 at the start of the pandemic, and more than 2X the levels seen back in 2006 during the prior market height.

Here’s the problem though – mortgage rates have also basically doubled since the start of the pandemic, making a refinance a tough sell.

Still, cash out refinance volume doubled over the past 12 months, with such loans accounting for 75% of all refinances in the first quarter of 2022.

That was up from a 61% share in the fourth quarter of 2021 and 36% from a year earlier.

Of course, refinance lending overall was down 54% in the first quarter from the same period a year earlier, thanks to an 80% drop in rate/term refis.

Meanwhile, cash-out refis were off just 4% on an annual basis. However, the number of transactions fell for the second consecutive quarter, and growth in overall equity withdrawals slowed.

Ultimately, a cash out refinance won’t make sense for a lot of homeowners if their existing mortgage rate is in the 2-3% range.

Sure, it’s nice to tap into that equity, but not if you have to replace your first mortgage rate with a 5-6% interest rate.

What About a Second Mortgage, Such as a HELOC or Home Equity Loan?

The alternative a lot of borrowers are looking at now that mortgage rates are no longer on sale is a second mortgage.

Banks and mortgage lenders are also ramping up their offerings to account for this trend.

There are basically two main options available to homeowners; a home equity line of credit (HELOC) and a fixed-rate closed second.

The HELOC works similarly to a credit card in that you can borrow only what you need, pay it back over time, or simply keep it open for a rainy day.

The downside to the HELOC is that it features an adjustable interest rate, which is tied to the prime rate.

Whenever the Fed moves rates higher, the prime rate will go up by the same amount.

The Fed is expected to raise rates .50% in June and July to tame inflation. This will translate to a 1% increase in HELOC rates.

Of course, they might be done after that, and if the economy goes into a recession, they could turn around and lower rates too.

So HELOCs might have a somewhat telegraphed price assumption over the next year or so.

If you are risk averse, there’s the home equity loan, which allows you to borrow the full amount at closing.

You get a lump sum of your equity, but no additional draws in the future. The upside is that the interest rate is typically fixed.

The downside is that the interest rate is likely higher than a HELOC to account for the fixed rate advantage.

And as noted, you borrow the full amount, whether you need it or not. This means paying interest on the full amount.

Still, either option may be advantageous to a cash out refinance, which disrupts your first mortgage.

Use a Home Equity Sharing Company?

There are also so-called “home equity sharing companies” where you trade a portion of future home price appreciation for cash today.

One such company in this emerging industry is Point, which allows you to get payment-free cash.

However, you do give up a share of your (hopefully) rising property value in exchange, and they charge an upfront transaction fee that is deducted from your proceeds.

The cost of borrowing then depends upon when you pay it back, via home sale, refinance, or simply buying them out. And how much your property appreciates during that time period.

There was a similar company called Noah, which paused applications a while back. It’s unclear if they’ll resume lending at some point.

Other names in the nascent field include Hometap, Unison, and Unlock.

Personally, I don’t love the idea of giving up future gains, especially when they’re unknown. But it’s an option nonetheless.

Seniors Can Consider a Reverse Mortgage to Tap Available Home Equity

One final option to consider, assuming you’re a senior (62+) is the reverse mortgage.

Not only does it allow you to tap your available home equity, but it also comes with no monthly payments.

This is obviously a plus if you’re retired or close to retirement and want to keep your home, but need cash.

It may also be easier to qualify for a reverse mortgage versus a traditional mortgage, especially for fixed income borrowers.

Like the options discussed above, it’s possible to take out a reverse mortgage as a line of credit, or opt for a lump sum payout.

Additionally, you can opt for an adjustable-rate mortgage or a fixed-rate mortgage. So there’s lots to consider.

There are pros and cons to all those options, and which one you choose will be based on your individual needs and risk appetite.

Reverse mortgages can be more complicated than a traditional mortgage, so shopping around could come with the added benefit of education.

It may also allow you to see more loan program options and scenarios to choose from, including proprietary offerings.

To sum things up, it’s not nearly as cheap as it was just a few months ago to tap your home’s equity, but there are still opportunities on the table.

Take the time to educate yourself about each to determine which, if any, is best for you.

Source: thetruthaboutmortgage.com

Can You Get Student Loans for Community College?

Community colleges offering two-year programs can be a wonderful option for students looking to gain a higher education in less time. It can also be a great option for those looking to save a little cash while bettering their current skills, prepping for a four-year university, or going for an associate’s degree.

Moreover, it can often save students thousands of dollars in the long run toward the career of their dreams too. Though community college can cost far less than a four-year school, it still isn’t free. Here are a few helpful ways to gain a little financial assistance for your personal education journey.

The Government Looks at Community College the Same Way It Does a Four-Year School

Federal student loans are available for both two- and four-year colleges. The process of applying for federal aid is the same, regardless of the school, as long as the Department of Education sees it as an “eligible degree or certificate program.” Vocational, career, trade, or online schools often offer federal loan options, but it’s not a guarantee. If you’re not sure whether your school participates in federal loan programs, you can confirm with your school before moving forward.

To apply for federal aid, including student loans, a potential student must fill out the Free Application for Federal Student Aid (FAFSA®). On the FAFSA, all would-be students will list the schools they are interested in attending using the Federal School Code. The schools listed will use the FAFSA application answers to determine the types and amounts of aid a student can receive.

After submitting the FAFSA, the applicant will receive an award letter from each school listed on the FAFSA application. This will tell you what aid you qualified for. If you plan on applying for federal aid to attend community college, consider applying as early as possible.

Some federal aid is determined on a first-come, first-served basis, so the earlier you submit your FAFSA, the better position you may be in to receive aid.

Those hoping to obtain a federal loan for community college can apply for one of three: Direct Subsidized, Direct Unsubsidized, and Direct Plus. Here’s how to determine which one of those may be the best fit for your education goals.

Direct Subsidized and Unsubsidized Loans for Community College

When it comes to borrowing federal student loans, the government offers both subsidized and unsubsidized loans to assist students in covering the cost of higher education. For both subsidized and unsubsidized loans, the school a potential student hopes to attend will determine how much a student is eligible to borrow.

Direct Subsidized Loans are based on financial need and they come with a major benefit — the U.S. Department of Education pays the interest while the student is still enrolled in school at least half-time and for the loan grace period (usually the first six months after leaving school).

Direct Unsubsidized Loans are similar to subsidized loans except that they are not based on financial need, they are based on your cost of attendance and other financial aid you receive. As such, the borrower would be responsible for all accrued interest on the loan. While not required to make payments as a student, there is an option to make interest-only payments on the unsubsidized loan.

When the interest on a Direct Unsubsidized Loan is not paid during periods of deferment, such as the grace period, the accrued interest will be capitalized. That means, when graduation day comes and the grace period ends, the interest that has accumulated on the loan will be added to the principal value of the loan and you’ll be responsible for paying off both. Interest will also continue to accrue based on that new principal.

There is an annual limit to how much money undergraduate students can borrow in Direct Subsidized and Unsubsidized Loans. For example, the limit for your first undergraduate year is $5,500 for dependent students (and $9,500 for independent students).

Direct PLUS Loans for Community College

There is another option from the government, known as the Direct PLUS Loan . This loan is available to parents of dependent students. Unlike both Direct Subsidized and Unsubsidized Loans, when a person borrows via a Direct PLUS Loan, he or she will be subject to a credit check. If the person has an adverse credit history, they may not be approved to borrow the loan.

If you are a parent of a dependent undergraduate student, you can receive a Direct PLUS Loan for the remainder of your child’s college costs not covered by other financial aid.

It’s important to note when a person borrows a Direct PLUS Loan, there are fees in addition to interest. With this loan, parents can borrow up to the cost of attendance (determined by the school) minus any other financial aid received. In order to obtain this loan, parents must qualify and their credit history will be checked. Interest will also accrue.

Private Student Loans

If a student does not receive enough aid through federal student loans or maxes out his or her eligibility for federal student loans, they can seek additional funding through private student loans. Private student loans can be borrowed from banks, credit unions, or other lenders.

Each institution has its own eligibility requirements so each borrower will have to check with individual lenders to see about qualifications. Like federal loans, there is usually a limit to the amount you can borrow with private loans, which can vary by lender. The limit might be the cost of tuition, less the amount of aid the student is already receiving, for example. However, the limit on some private loans may be higher than the federal loan limit.

Furthermore, government student loans come with deadlines to apply , while students may apply for private student loans at any time. But one major downfall of private student loans is the fact that they may also come with higher eligibility requirements, like a specific credit score, to even be considered. Additionally, private lenders aren’t required to offer the same borrower protections as federal student loans, such as a grace period or income-driven repayment plans. Because of this, private student loans are generally considered only after all other financing options have been thoroughly reviewed.

Other Options For Community College Student Loans

Federal and private student loans aren’t the only options. And this is where, as a student, you can really do some homework.

Several states also offer their own student loan programs to help students. To qualify for many of these loans, a student must be a resident of the state program you’re applying for, or an out-of-state student enrolled in a college or university within that particular state. Check out each state’s student loan offerings here .

Saving Post-Graduation

Even if you went to community college, you may still graduate with student loan debt. But, there’s a way you can save after graduation as well. Upon completion of your degree (or, if you’ve already finished school), you may want to consider looking into student loan refinancing with SoFi.

This way, you may be able to get a better interest rate than what you originally qualified for or change the terms of your loan to fit your post-grad life. And you can focus on earning and saving for your future thanks to your hard-earned education.

When you refinance with SoFi there are no prepayment penalties or origination fees. Plus you’ll gain access to benefits like community events, career coaching, and unemployment protection. To see what your student loans could look like after you refinance with SoFi, take a look at our easy to use student loan refinance calculator.

Private Student Loans With SoFi

Community college students have a variety of options available to them when paying for their education. In addition to some scholarships or grants, students may use student loans, either federal or private, to help pay for college.

Private student loans can be an option for students who are looking to fill in financing gaps. SoFi offers no fee student loans with competitive interest rates available for qualifying borrowers. SoFi student loans also allow borrowers to select one of four flexible repayment plans.

Find out more about the student loan options available from SoFi. You can get a quote from SoFi in just a few minutes.

FAQ

Will student loans pay for all of college?

Student loans can be used to pay for college expenses. There are borrowing limits depending on the loan type. For example, first-year dependent students may be eligible to borrow up to $5,500 in Direct Loans. Of this, no more than $3,500 can be subsidized loans. Students may look to alternatives like private student loans to fill in gaps. The borrowing limit for federal student loans is determined by the individual lender.

How much are student loans for an associate’s degree?

Student loans for community college are available, including for associate’s degrees. In order to borrow a federal student loan, potential borrowers must be enrolled in an eligible degree granting program, as defined by the U.S. Department of Education. These programs may include associate degree programs.

What do you do if you can’t afford college?

If you can’t afford college, consider evaluating the costs and programs available at different colleges. Consider factors like location and room and board, in addition to tuition. Also fill out the FAFSA form, which allows students to apply for federal financial aid including grants and scholarships (which don’t typically need to be repaid) and federal student loans (which do need to be repaid). Consider contacting the financial aid office at your school for more personalized information.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC), and by SoFi Lending Corp. NMLS #1121636 , a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law (License # 6054612) and by other states. For additional product-specific legal and licensing information, see SoFi.com/legal.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL SEPTEMBER 1, 2022 DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
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Source: sofi.com

Paying for College With No Money in Your Savings

With the high cost of a college education, affording college with no money set aside might feel impossible. However, there are many forms of financial aid — whether from federal, state, school, or private organizations — that can help you pay for your college degree.

Learning how to pay for college with no money might require approaching your higher education costs from different angles. This includes cutting your college expenses, finding alternate financial aid sources, or both.

Average Cost of College

How much you can expect to pay for college varies, depending on the school you choose, your degree level, whether you’re a state resident, and other factors.

According to the CollegeBoard’s 2021 Trends in College Pricing and Student Aid report, the average tuition and fees for a full-time, in-state undergraduate student attending a public four-year school in 2021-22 is $10,780. Out-of-state students can expect to pay an average of $27,560 in tuition and fees for the same academic year. And students attending a nonprofit four-year private institution are charged an average $38,070 in tuition and fees.

Institution Type Average Annual Tuition and Fees
Public Four-Year College, In-State Student $10,740
Public Four-Year College, Out-of-State Student $27,560
Private Four-Year College, Nonprofit $38,070

Keep in mind that these figures are exclusively for tuition and fees. This cost doesn’t account for additional expenses that college students often face, like textbooks, school supplies, housing, and transportation.

Ways to Pay for College

The cost of being a college student can seem overwhelming when you don’t have savings or out-of-pocket funds available to directly pay for school.

If you want to go to college but have no money or are a parent who’s helping your child pay for college, here are a few ideas on how to go to college with no money saved.

Fill Out FAFSA® to See if You Qualify for Financial Aid

The best way to pay for college with no money — and really, the first step you should always take — is submitting a Free Application for Federal Student Aid, also known as the FAFSA.

The FAFSA is the first step in finding out if you qualify for a federal financial aid program. For example, you can see if you’re eligible for the Pell Grant, Federal Work-Study, and Direct Loans. The information on your FAFSA is also commonly used to determine your eligibility for state, school, and other privately sponsored aid.

Grants

In addition to federal grants, search for grants from your state and school for additional funding. Grant funds generally don’t need to be repaid as long as you meet the grant program’s requirements.

Some organizations — nonprofit and for-profit — also host their own need- or merit-based grant programs for college students.

Scholarships

Scholarships are considered gift aid, meaning they typically don’t need to be repaid. There are a plethora of scholarship opportunities that are awarded due to financial need or merit.

You can search for scholarships online from various companies, organizations, community groups, and more. Ask your school’s financial aid office for help finding these advantageous sources of aid.

Negotiate With the College for More Aid

If your financial circumstances have changed since you submitted your FAFSA, request a professional judgment to have your school reevaluate your financial aid package.
Not all schools accept this request, but if yours does, this process gives you a chance to provide additional documentation that’s used to recalculate your financial need.

Start With Community College and Transfer

If you want to go to college but have no money, one option is to attend a community college for the first two years of your college education. According to the same CollegeBoard report, the average 2020-21 cost for tuition and fees at a local two-year college is $3,800 for a full-time undergraduate student.

After completing your general education courses at a junior college, you can then transfer to a four-year school.

Choose a Less Expensive University

The type of school you choose can also help you afford college if you don’t have money saved. As mentioned earlier, the cost of college varies widely between a public versus private institution.

Additionally, choosing a public school in your home state generally costs less than attending an out-of-state school. When reviewing cost, be sure to factor in the scholarships and grants you may qualify for.

Live at Home

Room and board is one of the largest expenses facing students. Instead of having to account for costs toward a dorm room or off-campus housing, living at home and commuting to school can help you keep expenses lower.

Talk with your parents about whether living at home while you earn your degree is an option.

Study Abroad

Some students may explore pursuing their degree abroad, as one solution to cut expenses. Thanks to government subsidies in some countries, attending university abroad can be less expensive than staying in the U.S. In some cases, American students may even qualify for free tuition.

Work-Study

The Federal Work-Study program allows you to earn financial aid with part-time work through an employer partner.

Federal Student Loans

If you need to borrow money for college, a federal student loan is the first choice for students. The Department of Education offers subsidized and unsubsidized federal loans to students. These loans need to be repaid.

Undergraduate students might be eligible for subsidized federal loans in which the government pays for accrued interest while you’re enrolled in school, during your grace period and while in deferment. These are awarded based on financial need.

Private Student Loans

After exhausting all of your federal student aid opportunities, students may apply for a private student loan if they need additional cash to pay for college.

Private student loan rates and terms differ from federal loans. Generally, private student loans don’t offer borrowers income-driven repayment plans, or flexible deferment or forbearance terms when you’re having trouble repaying your loan.

Also, loan details often differ between lenders. To find a competitive private student loan, compare rates from a handful of lenders before choosing one.

Working Part-Time

To supplement the financial aid you’ve received, consider working part-time while you’re enrolled in school. Funds from a part-time job can help you pay for day-to-day costs as a student, like groceries, transportation, or general living expenses while you’re studying for your degree.

Borrowing From Family Members

If you have a money gap between the financial aid you’ve received and your college expenses, an option is to ask a close family member if they’re willing to offer you a loan.

Depending on your family’s financial resources and your relationship with your parents or relatives, you might have access to this alternative low-interest financing option. When borrowing money from family, be clear about how much you need, how the funds will be used, and expectations regarding repayment after you leave school.

Is College Right for You?

Attending a degree-granting, four-year college isn’t the only choice you have for furthering your education and career prospects. Enrolling in a trade school or seeking vocational training can help you advance your skills for more job-focused opportunities.

Trade School

A trade school offers programs that teach students the hands-on skills for a technical or labor-based profession.

Vocational Training

Vocational schools provide students with the education to earn a certification or formal training quickly for service-oriented professions.

SoFi Private Student Loans

If you’ve decided that a traditional college education is for you, you might still need additional funds, despite exploring alternatives to afford college with no money. A SoFi private student loan can help by offering easy financing through a fast online process.

It provides competitive rates and flexible terms to suit your repayment needs. Plus, checking your rates can be done in just three minutes.

Interested in seeing how a private student loan from SoFi can help you pay for college? Learn more and find out if you pre-qualify in a few minutes.*

FAQ

Is there any way to go to college entirely for free?

Yes, but financial aid is highly variable and is determined based on your unique situation. Students might be eligible to enroll in college at no cost, depending on their financial need. Similarly, some students might be able to attend college for free based on merit, like with a full academic or athletic scholarship.

Is relying completely on student loans for college a good idea?

No, relying completely on student loans for college isn’t a good idea. To keep your student loan debt out of college as low as possible, it’s generally wise to seek out a mix of financial aid options. Prioritize aid that you don’t have to repay, like grants and scholarships, and use student loans as a last option when funding your college education.

Why is the cost of college so high in the US?

The high cost of college in the U.S. can be attributed to various factors. An increased demand for higher education, and unrestrained administrative and facility costs have been cited as reasons for the ongoing rise of college costs.


*Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC), and by SoFi Lending Corp. NMLS #1121636 , a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law (License # 6054612) and by other states. For additional product-specific legal and licensing information, see SoFi.com/legal.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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Source: sofi.com

All You Need to Know About Credit Card Numbers

A credit card number — that long string of digits on the front or back of every credit card — contains more information than you might think. Though credit card numbers may seem rambling and random, each digit actually has a specific purpose and place. The number you see on a credit card provides information about the individual account holder, the payment network, and the card issuer. It also uses a special formula to help prevent transaction errors and fraud.

Have you ever wondered, “What is my credit card number and what does it represent?” Read on as we break down the significance of each digit and guide you through what you need to know.

What Is a Credit Card Number?

A credit card number is a set of digits — usually 16 — that’s printed on the front or back of a credit card.

It’s important to note that your credit card number is not the same thing as your account number. Your credit card number includes your account number, but it has additional digits (an account number typically has 12), and it provides more information. When you make a credit purchase online or on the phone, you can expect to be asked for your full card number to authenticate the transaction.

Though the information provided by every credit card number is basically the same, the format may differ a bit from card to card: Sometimes the numbers are raised; sometimes they’re flat. And generally, although not always, the digits are divided into four sets of four (xxxx xxxx xxxx xxxx).

The format for credit cards and debit cards is similar — which is why you might pull out the wrong card from time to time.

Who Decides What Your Credit Card Number Is?

Your credit account number is assigned by the financial institution that issues your credit card. But the structure and sequence of the digits in your credit card number must follow a rigid set of standards imposed by the International Organization of Standardization (ISO) and enforced by the American Network of Standards Institute (ANSI).

All card issuers follow these rules, so consumers can use their cards or card numbers no matter where they are in the world.

Credit Card Number Structure

Even if you know what a credit card is and how credit cards work, you may not be familiar with what the numbers on your card mean. Though most credit card numbers have 16 digits, the length may vary. Of the four major card networks, Visa, Mastercard, and Discover card numbers all have 16 digits, while American Express card numbers have only 15. Here’s what those digits actually mean.

The First Number: Industry Identifier

The first digit in a credit card number is known as the Major Industry Identifier (MII), and it can tell you both the industry associated with the card and the payment network.

Payment Network

Most credit cards start with a 3, 4, 5, or 6. These numbers represent the major payment networks, each of which has its own identifier:

•   American Express cards begin with a 3

•   Visa cards begin with a 4

•   Mastercard cards typically start with a 5, but may start with a 2

•   Discover cards start with a 6

Knowing your credit card’s payment network can be useful, because the network determines which merchants will accept the card. Your favorite local market or small boutique might accept credit card payments with a Mastercard, Visa, or Discover card, for example, but they may not let you pay with American Express.

Recommended: When Are Credit Card Payments Due

Industry Association

There are many different types of credit cards. Some credit cards are meant for general use, while others may be geared to a more specific purpose. The MII can tell you which type of industry your card is most associated with. Here’s what some MIIs generally mean:

•   1: Airlines

•   2: Airlines and financial

•   3: Travel and entertainment

•   4: Banking and financial

•   5: Banking and financial

•   6: Merchandising and banking

•   7: Petroleum

•   8: Health care and communications

•   9: Government and other

The Next 5 Numbers: Identification Numbers

The next five digits complete the Bank Identification Number (BIN), or Issuer Identification Number (IIN). This can tell you who the card issuer is.

The credit card issuer is the financial institution that offers the card and manages your account. Some of the largest credit card issuers in the U.S. include American Express, Bank of America, Capital One, Chase, Citi, Wells Fargo, and Discover.

When you apply for a credit card, it’s the issuer who accepts or declines your application. When you make a purchase, you’re borrowing money from the credit card issuer, and when you pay your bill, you’re paying back that money. Any time you check your balance, request a higher credit limit or a lower interest rate, or obtain a replacement card, you’re doing it through your credit card issuer.

Recommended: Does Applying For a Credit Card Hurt Your Credit Score

The Next 9-12 Numbers: Account Identifier

The remaining digits on the card — except for the very last one — identify the account and the cardholder.

Don’t worry, there isn’t a secret indicator in your card number that tells people how often you’re using your credit card or if you’re paying your bills on time. This part of your card number simply represents what account the card is connected to.

If your card is lost or stolen, or your card number is compromised in a credit card scam, you may notice that the number on your replacement card has changed, even if your account number hasn’t. So if you’re keeping a list of card numbers in a secure place, you may have to update that card number.

Fun fact: Each credit card issuer has approximately 1 trillion potential numerical configurations from which it can create account numbers.

Recommended: Tips for Using a Credit Card Responsibly

The Last Number: Checksum

The last digit of a credit card number is referred to as the “checksum” or “check digit.” Card issuers and payment networks use it to catch errors and help protect against unauthorized card use. (Let’s face it: Even if you follow all the “credit card rules,” things can happen.)

When a card is used for a purchase or payment, this digit is used as part of a mathematical formula called the Luhn algorithm to verify the card’s validity. If the checksum doesn’t work, the transaction is quickly rejected. (If you’ve ever mistyped your card number when shopping online, you’ve seen this algorithm in action.)

Most major networks use the final digit as the checksum. However, if you have a Visa credit card, it may be the 13th digit.

What About the Other Numbers on the Card?

Besides the card number, there are two other sets of digits that also can play a critical role when you use your credit card.

Card Verification Value (CVV)

The Card Verification Value (or CVV number on a credit card) or Card Verification Code (CVC) is also used to protect the card owner. If you do a lot of online shopping, you’re probably very familiar with this three- or four-digit number, which usually is found on the back of a credit card near or inside the signature strip.

On some cards, there may be seven digits in this spot. If this is the case, the first four digits you see are the last four digits of your credit card number. The last three digits in the grouping represent the CVV.

If you have an American Express card, the CVV is a four-digit number located on the front of the card, just above the logo.

The CVV is designed to help protect against identity theft. If you aren’t presenting your card in person during a transaction (because you’re using it online or over the phone), providing the CVV can help prove you’re in possession of the physical card.

Expiration Date

The expiration date offers yet another layer of protection for the card holder. Most businesses require that you provide the credit card number, the CVV, and the card’s expiration date when you make an online purchase.

The credit card expiration date typically appears on the front of the card with two digits for the month and two digits for the year (xx/xx). But if the account number is printed on the back of the card, you’ll likely find the expiration date there.

Even if you never need to use it to make a remote purchase or payment, it can be a good idea to glance at your card’s expiration date from time to time. That way, you can ensure you always have a current card in your wallet.

You’ll also know when it’s time to watch for the arrival of a replacement card. If a new card doesn’t arrive in the month the old card expires, you can call the issuer and immediately take steps to protect yourself if it appears the card has been lost or stolen. (The phone number for customer service is also on your card.)

The Takeaway

At first glance, the number on your credit card might look like a meaningless jumble. But if you take a closer look, you’ll find each digit has a purpose — to provide information, to keep your account secure, and to make the card more user-friendly.

When you’re considering getting a credit card, you also may want to look for additional protections and benefits. With a SoFi credit card, for example, you can receive Mastercard ID theft protection and cell phone protection, and there are no foreign transaction fees. And as a SoFi cardholder, you may be eligible to earn 2% cash back when you redeem it to save, invest, or pay down an eligible SoFi loan.1

Looking for rewards that can help get you to your goals? Look into a SoFi credit card.

FAQ

Where do I find my credit card number?

Your credit card number may appear on the front or back of your credit card.

Is the credit card number the same as the account number?

No, the two numbers are linked, but they are not the same. Your credit card number includes your account number, but it has more digits, and those extra digits are important to how each transaction is processed.

How long is a credit card number?

A credit card number typically has 16 digits, but the number can vary. American Express uses a 15-digit format for its credit cards.

Can a credit card number be stolen?

Yes. A credit card number can be stolen in multiple ways: through the theft of a physical card, during a data breach, with a card skimmer, or if the cardholder uses an unsecured website or public Wi-Fi when making a credit transaction.


1See Rewards Details at SoFi.com/card/rewards.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’swebsite .
The SoFi Credit Card is issued by The Bank of Missouri (TBOM) (“Issuer”) pursuant to license by Mastercard® International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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Source: sofi.com