What Can You Use Student Loans For?

To attend college these days, many students take out student loans. Otherwise, they wouldn’t be able to afford the hefty price tag of tuition and other expenses.

According to U.S. News & World Report, among the college graduates from the class of 2020 who took out student loans, the average amount borrowed was $29,927. In 2010, that number was $24,937 — a difference of about $5,000.

Student loans are meant to be used to pay for your education and related expenses so that you can earn a college degree. Even if you have access to student loan money, it doesn’t mean you should use it on general living expenses. By learning the answer to, “What can you use a student loan for?” you will make better use of your money and ensure you’re in a more stable financial situation post-graduation.

Recommended: I Didn’t Get Enough Financial Aid: Now What?

5 Things You Can Use Your Student Loans to Pay For

Here are five things you can spend your student loan funds on.

1. Your Tuition and Fees

Of course, the first thing your student loans are intended to cover is your college tuition and fees. The average college tuition and fees for a private institution in 2021-2022 is $38,185, while the average for a public, out-of-state school is $22,698 and $10,338 for a public, in-state institution.

2. Books and Supplies

Beyond tuition and fees, student loans can be used to purchase your textbooks and supplies, such as a laptop, notebooks and pens, and a backpack. Keep in mind that you may be able to save money by purchasing used textbooks online or at your campus bookstore. Hard copy textbooks cost, on average, between $80 and $150; you may be able to find used ones for a fraction of the price. Some students may find that renting textbooks may also be a cost-saving option.

Recommended: How to Pay for College Textbooks

3. Housing Costs

Your student loans can be used to pay for your housing costs, whether you live in a dormitory or off-campus. If you do live off-campus, you can also put your loans towards paying for related expenses like your utilities bill. Compare the costs of on-campus vs. off-campus housing, and consider getting a roommate to help you cover the costs of living off-campus.

4. Transportation

If you have a car on campus or you need to take public transportation to get to school, work, or your internships, then you can use your student loans to pay for those costs. Even if you have a car, you may want to consider leaving it at home when you go away to school, because gas, maintenance, and a parking pass could end up costing much more than using public transportation and your school’s shuttle, which should be free.

5. Food

What else can you use student loans for? Food would qualify as a valid expense, whether you’re cooking meals at home or you’ve signed up for a meal plan. This doesn’t mean you should eat out at fancy restaurants all the time just because the money is there. Instead, you could save by cooking at home, splitting food costs with a roommate, and asking if local establishments have discounts for college students.

Recommended: How to Get Out of Student Loan Debt: 6 Options

5 Things Your Student Loans Should Not Cover

Now that you know what student loans can be used for, you’re likely wondering what they should not be used for as well. Here are five expenses that cannot be covered with funds from your student loans.

1. Entertainment

While you love to do things like go to the movies and concerts and bowling, you should not use your student loans to pay for your entertainment. Your campus likely offers plenty of free and low-cost entertainment like sports games and movie nights, so pursue those opportunities instead.

2. A Vacation

College is draining, and you deserve a vacation from the stress every once in a while. However, if you can’t afford to go on spring break or another type of trip, then you should put it off at this time. It’s never a good idea to use your student loans to cover these expenses.

3. Gym Membership

You may have belonged to a gym at home before you went to college, and you still want to keep up your membership there. You can, as long as you don’t use your student loans to cover it. Many colleges and universities have a gym or fitness center on campus that is available to students and included in the cost of tuition.

4. A New Car

Even if you need a new car, student loans cannot be used to buy a new set of wheels. Consider taking public transportation instead of buying a modest used car when you save up enough money.

5. Extra Food Costs

While you and your roommates may love pizza, it’s not a good idea to use your student loan money to cover that cost. You also shouldn’t take your family out to eat or dine out too much with that borrowed money. Stick to eating at home or in the dining hall, and only going out to eat every once in a while with your own money.

Student Loan Spending Rules

The federal code that applies to the misuse of student loan money is clear. Any person who “knowingly and willfully” misapplied funds could face a fine or imprisonment.

Your student loan refund — what’s left after your scholarships, grants, and loans are applied toward tuition, campus housing, fees, and other direct charges — isn’t money that’s meant to be spent willy-nilly. It’s meant for education-related expenses.

The amount of financial aid a student receives is based largely on each academic institution’s calculated “cost of attendance,” which may include factors like your financial need and your Expected Family Contribution (EFC). Your cost of attendance minus your EFC generally helps determine how much need-based aid you’re eligible for. Eligibility for non-need-based financial aid is determined by subtracting all of the aid you’ve already received from your cost of attendance.

Starting for the 2024-2025 school year, the EFC will be replaced with the Student Aid Index (SAI). The SAI will work similarly to the EFC though there will be some important changes such as adjustments in Pell Grant eligibility.

Additionally, when you took out a student loan, you probably signed a promissory note that outlined what you’re supposed to be spending your loan money on. Those restrictions may vary depending on what kind of loan you received — federal or private, subsidized or unsubsidized. If the restrictions weren’t clear, it’s not a bad idea to ask your lender, “What can I use my student loan for?”

If you’re interested in adjusting loan terms or securing a new interest rate, you could consider refinancing your student loans with SoFi. Refinancing can allow qualifying borrowers to secure a lower interest rate or preferable terms, which could potentially save them money over the long run. Refinancing federal loans eliminates them from all federal borrower benefits and protections, inducing deferment options and the ability to pursue public service loan forgiveness, so it’s not the right choice for all borrowers.

The Takeaway

Student loans can be used to pay for qualifying educational expenses like tuition and fees, room and board, and supplies like books, pens, a laptop, and a backpack. Expenses like entertainment, vacations, cars, and fancy dinners cannot generally be paid for using student loans.

If you have student loans and are interested in securing a new — potentially lower — interest rate, consider refinancing.

There are no fees to refinance a student loan with SoFi and potential borrowers can find out if they pre-qualify, and at what rates, in just a few minutes.

Learn more about student loan refinancing with SoFi.


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 THE END OF JANUARY 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.

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SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

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.
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.
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.
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Fixed Expense vs Variable Expense

Budgeting is the best way to get a better handle on where your money is going — which can help you get a better handle on where you’d like to see your money go.

But before you dive into the nitty-gritty of each individual line item on your ledger, you first need to understand the difference between fixed expenses and variable expenses.

As their name suggests, fixed expenses are those that are fixed, or unchanging, each month, while variable expenses are the ones with which you can expect a little more wiggle room. However, it’s possible to make cuts on items in both the fixed and variable expense category to save money toward bigger financial goals, whether that’s an epic vacation or your eventual retirement.

Let’s take a closer look.

What Is a Fixed Expense?

Fixed expenses are those costs that you pay in the same amount each month — items like your rent or mortgage payment, insurance premiums, and your gym membership. It’s all the stuff whose amounts you know ahead of time, and which don’t change.

Fixed expenses tend to make up a large percentage of a monthly budget since housing costs, typically the largest part of a household budget, are generally fixed expenses. This means that fixed expenses present a great opportunity for saving large amounts of money on a recurring basis if you can find ways to reduce their costs, though cutting costs on fixed expenses may require bigger life changes, like moving to a different apartment — or even a different city.

Keep in mind, too, that not all fixed expenses are necessities — or big budget line items. For example, an online TV streaming service subscription, which is withdrawn in the same amount every month, is a fixed expense, but it’s also a want as opposed to a need. Subscription services can seem affordable until they start accumulating and perhaps become unaffordable.

Recommended: Are Monthly Subscriptions Ruining Your Budget?

What Is a Variable Expense?

Variable expenses, on the other hand, are those whose amounts can vary each month, depending on factors like your personal choices and behaviors as well as external circumstances like the weather.
For example, in areas with cold winters, electricity or gas bills are likely to increase during the winter months because it takes more energy to keep a house comfortably warm. Grocery costs are also variable expenses since the amount you spend on groceries can vary considerably depending on what kind of items you purchase and how much you eat.

You’ll notice, though, that both of these examples of variable costs are still necessary expenses — basic utility costs and food. The amount of money you spend on other nonessential line items, like fashion or restaurant meals, is also a variable expense. In either case, variable simply means that it’s an expense that fluctuates on a month-to-month basis, as opposed to a fixed-cost bill you expect to see in the same amount each month.

To review:

•   Fixed expenses are those that cost the same amount each month, like rent or mortgage payments, insurance premiums, and subscription services.

•   Variable expenses are those that fluctuate on a month-to-month basis, like groceries, utilities, restaurant meals, and movie theater tickets.

•   Both fixed and variable utilities can be either wants or needs — you can have fixed-expense wants, like a gym membership, and variable-expense needs, like groceries.

When budgeting, it’s possible to make cuts on both fixed and variable expenses.

Recommended: Grocery Shopping on a Budget

Benefits of Saving Money on Fixed Expenses

If you’re trying to find ways to stash some cash, finding places in your budget to make cuts is a big key. And while you can make cuts on both fixed and variable expenses, lowering your fixed expenses can pack a hefty punch, since these tend to be big line items — and since the savings automatically replicate themselves each month when that bill comes due again. (Even businesses calculate the ratio of their fixed expenses to their variable expense, for this reason, yielding a measure known as operating leverage.)

Think about it this way: if you quit your morning latte habit (a variable expense), you might save a grand total of $150 over the course of a month — not too shabby, considering its just coffee. But if you recruit a roommate or move to a less trendy neighborhood, you might slash your rent (a fixed expense) in half. Those are big savings, and savings you don’t have to think about once you’ve made the adjustment: they just automatically rack up each month.

Other ways to save money on your fixed expenses include refinancing your car (or other debt) to see if you can qualify for a lower payment… or foregoing a car entirely in favor of a bicycle if your commute allows it. Can you pare down on those multiple streaming subscriptions or hit the road for a run instead of patronizing a gym? Even small savings can add up over time when they’re consistent and effort-free — it’s like automatic savings.

Of course, orchestrating it in the first place does take effort (and sometimes considerable effort, at that — pretty much no one names moving as their favorite activity). The benefits you might reap thereafter can make it all worthwhile, though.

Saving Money on Variable Expenses

Of course, as valuable as it is to make cuts to fixed expenses, saving money on variable expenses is still useful — and depending on your habits, it could be fairly easy to make significant slashes. For example, by adjusting your grocery shopping behaviors and aiming at fresh, bulk ingredients over-packaged convenience foods, you might decrease your monthly food bill. You could even get really serious and spend a few hours each weekend scoping out the weekly flyer for sales.

If you have a spendy habit like eating out regularly or shopping for clothes frequently, it can also be possible to find places to make cuts in your variable expenses. You can also find frugal alternatives for your favorite spendy activities, whether that means DIYing your biweekly manicure to learning to whip up that gourmet pizza at home. (Or maybe you’ll find a way to save enough on fixed expenses that you won’t have to worry as much about these habits!)

The Takeaway

Fixed expenses are those costs that are in the same amount each month, whereas variable expenses can vary. Both can be trimmed if you’re trying to save money in your budget, but cutting from fixed expenses can yield bigger savings for less ongoing effort.

Great budgeting starts with a great money management platform — and a SoFi Money® cash management account can give you a bird’s-eye view that puts everything into perspective. You’ll also have access to the Vaults feature, which helps you set aside money for specific savings purposes, no matter which goals are the most important to you, all in one account.

Check out SoFi Money and how it can help you manage your financial goals.

Photo credit: iStock/LaylaBird


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What Is a Federal Direct Subsidized Loan?

Federal Direct Subsidized Loans are available to students who demonstrate financial need. The federal government subsidizes this type of loan by paying the interest that accrues while the student is enrolled at least half-time and during qualifying periods of deferment, such as the grace period.

It’s one of three federal student loans available to student borrowers. The others include Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans. Read on for more information about the benefits of Direct Subsidized loans and details about other types of student loans available to eligible students.

What Are the Benefits of a Federal Direct Subsidized Loan?

Like any other student loan, you will be responsible for paying back your Federal Direct Subsidized Loan after you finish school, but unlike many other student loans, you won’t be responsible for paying interest while you are in school or during your grace period. The government subsidizes this type of loan by paying the interest on your behalf.

Since the government is paying the interest, it is not capitalized on the loan when you graduate. When interest is capitalized, it means it is added to the principal value of the loan. This becomes the new principal value and interest will accrue based on this new balance. Since there is no interest to capitalize, the amount you originally borrowed and the amount you’ll have to repay after your grace period ends will be the same.

Recommended: Understanding Capitalized Interest on Student Loans

Interest on a Direct Subsidized Loan won’t start accruing until the grace period is over. This might sound like a minor detail, but not having to pay interest while you are in school can drastically cut down the overall cost of your loan.

Other benefits of a Federal Direct Subsidized Loan? Like other federal student loans, you are not obligated to make payments during school.

How Do You Apply for a Federal Direct Subsidized Loan?

In order to apply for a Federal Direct Subsidized Loan, you will need to complete the Free Application for Federal Student Aid, more commonly known as FAFSA®. The FAFSA is available for free online, and contains questions about you and your family’s financial circumstances.

The information you submit through the FAFSA is transmitted to your school, and is used to determine what types of aid and how much for which you may be eligible. The FAFSA must be completed annually.

How Is Your Eligibility for a Federal Direct Subsidized Loan Determined?

After the FAFSA has been reviewed, you will receive a Student Aid Report , which will explain your eligibility for the various types of federal financial aid. What type of aid and how much aid you are eligible for depends on many different circumstances, including the amount the federal government expects you and your family to contribute to your educational costs, your current enrollment status in school, and the cost of attending your particular college.

The financial aid staff at your school is responsible for determining exactly how much and what type of federal loans you are eligible for.

Because Federal Direct Subsidized Loans are a need-based form of federal financial aid, you must meet certain eligibility requirements to qualify. These requirements are largely based on your expected family contribution, or how much the federal government expects that you and your family can put towards your educational expenses.

There are also limits on the amount of subsidized loans you can borrow each year, regardless of your financial need. For the 2021-2022 school year, the limit on subsidized loans was $3,500 for first-year undergraduates, $4,500 for second-year undergraduates, and $5,500 for third-year undergraduates and beyond.

Graduate and professional students are not eligible for Direct Subsidized Loans.

Paying Back a Direct Subsidized Student Loan

Like other types of student loans, you will need to start paying back your Federal Direct Subsidized Loan if you leave school or after graduation. After graduation, borrowers with Federal Direct Subsidized Loans are eligible for a six-month grace period before repayment is required.

Some people with Direct Student Loans may potentially qualify for Public Service Loan Forgiveness (PSLF). PSLF is available to qualifying college graduates who work in certain fields like government, the nonprofit sector, or healthcare, and allows some federal student loans to be forgiven after 10 years of qualifying payments.

Actually getting approved for PSLF can be extremely challenging due to stringent requirements. In October 2021, the the Department of Education announced plans to overhaul the program in order to improve upon the program’s accessibility.

Beyond Subsidized Loans: Other Options Available to Student Borrowers

Since borrower eligibility for Direct Subsidized Loans is based on borrower need, and there are annual borrowing limits, students may be interested in learning about other loan options available to them. There are three other types of federal loans and some borrowers may consider private student loans.

The three types of federal loans available outside of Direct Subsidized Loans are:

•   Direct Unsubsidized Loans. These loans are available to undergraduate and graduate students. Unlike Direct Subsidized Loans, borrowers are responsible for paying the interest on these loans while they are enrolled in school and during their grace period. Eligibility is not based on financial need.

•   Direct PLUS Loans. PLUS Loans are options for graduate and professional students, or parents of students who are interested in borrowing a loan to help their child pay for college. Eligibility for this type of loan is not based on need, but the application process does require a credit check.

•   Direct Consolidation Loan. This federal loan isn’t awarded to borrowers as a part of their financial aid package. Instead, a Direct Consolidation Loan allows borrowers with multiple federal loans to combine (or consolidate) them into a single loan. The loan’s new interest rate is the weighted average, rounded up to the nearest one eighth of a percent, of the interest rates on the existing loans.

Private student loans are offered by private lenders. They are not required to offer the same borrower benefits or protections — think of things like PSFL or income-driven repayment plans — as federal student loans. Because of this, private loans are generally considered after borrowers have reviewed all of their other financing options.

Recommended: A Guide to Private Student Loans

To apply for private student loans, potential borrowers will need to fill out an application directly with the lender of their choice. The loan’s terms and interest rates will be influenced by factors including the borrowers financial situation and credit history, among others.

The Takeaway

Borrowers with Federal Direct Subsidized Loans are not responsible for the interest that accrues while they are enrolled in school at least half-time or during the grace period or other qualifying periods of deferment. The interest is subsidized by the U.S. government. To qualify for this type of federal student loan, borrowers must be qualifying undergraduate students who demonstrate financial need.

Other options for students looking to pay for college may include Direct Unsubsidized or PLUS Loans, scholarships and grants, or work-study. After reviewing those options, borrowers still looking for resources to pay for school may consider private student loans as an option.

SoFi offers private student loans for undergraduate and graduate students or their parents and there are no fees — that means there are no late fees, no application fees, or origination fees.

Interested in learning more about using a private student loan to pay for college? See what SoFi has to offer.


SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . 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.

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.
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.
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.
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Source: sofi.com

How to Talk to Your Children About Student Loans: 6 Key Points

Many parents lecture — er, talk to — their teenagers about being responsible. Don’t text and drive. Do try to spend that summer job money wisely. As children approach college, talking about student loans might be a smart idea.

For one, the topic is pretty complicated.

And second, even if you plan to help repay any student loans, most qualified education loans are taken out in the student’s name, and there’s usually no escape: Even bankruptcy rarely erases student loan debt.

Maybe your student-athlete or scholar is counting on a full ride. While confidence is a wonderful thing, full rides are exceedingly rare.

Here are six student loan concepts you can discuss with your aspiring college student.

1. Here’s What We Think We Can Contribute

It might be uncomfortable to talk frankly about your family finances, but they almost always determine the amount and types of financial aid your child may qualify for.

It can be important for parents to discuss what they’re able to contribute in order to help their young adults wrap their heads around the numbers, too.

2. Let’s Forge Ahead With the FAFSA

The first step to hunt for financial aid is to complete the FAFSA®, the Free Application for Federal Student Aid. It takes most people less than an hour. Students helping their parents fill it out will get a look at the expected family contribution: the family’s taxed and untaxed income, assets, and benefits.

Based on financial need, a college’s cost of attendance, and FAFSA information, schools put together a financial aid package that may be composed of scholarships and grants, federal student loans, and/or work-study.

Awards based on merit (scholarships) or need (grants) are free money. When they don’t cover the full cost of college, that’s where student loans can come in.

If your income is high, should you bother with the FAFSA? Sure, because there’s no income cutoff for federal student aid. And even if your student is not eligible for federal aid, most colleges and states use FAFSA information to award nonfederal aid.

About 400 colleges and scholarship programs use the CSS Profile, a financial aid application in addition to the FAFSA. It determines eligibility for institutional scholarships and grants.

3. Interest Rates: Fixed and Not

Your soon-to-be college student may not know that there are two types of interest rates: fixed and variable.

Fixed interest rates stay the same for the life of the loan. Variable rates go up or down based on market fluctuations.

You can explain that all federal student loans borrowed after July 2006 have fixed interest rates, which are set each year, and that private student loan interest rates may be variable or fixed.

4. Federal vs Private Student Loans

Around now your young person is restless. But press on.

Anyone taking out student loans should learn that there are two main types: federal and private. All federal student loans are funded by the federal government. Private student loans are funded by some banks, credit unions, and online lenders.

If your child is going to borrow money for college, it’s generally advised to start with federal student loans. Since federal student loans are issued by the government, they have benefits, including low fixed interest rates, forbearance and deferment eligibility, and income-based repayment options.

Private student loans have terms and conditions set by private lenders, and don’t offer the generous repayment options or loan forgiveness programs of federal loans, but some private lenders do offer specific deferment options.

Private student loans can be used to fill gaps in need, up to the cost of attendance, which includes tuition, books and supplies, room and board, transportation, and personal expenses. A student applicant often will need a cosigner.

5. Another Wrinkle: Subsidized vs Unsubsidized

Financial need will determine whether your undergraduate is eligible for federal Direct Subsidized Loans. Your child’s school determines the amount you can borrow, which can’t exceed your need.

The government pays the interest on Direct Subsidized Loans while your child is in college, during the grace period (the first six months after graduation or when dropping below half-time enrollment), and in deferment (postponing repayment).

With federal Direct Unsubsidized Loans, interest begins accruing when the funds are disbursed and continues during grace periods, and the borrower is responsible for paying it. Direct Unsubsidized Loans are available to both undergraduate and graduate students, and there is no requirement of financial need.

Borrowers are not required to pay the interest while in school, during grace periods, or during deferment (although they can choose to), but any accrued interest will be added to the principal balance when repayment begins.

There are annual and aggregate limits for subsidized and unsubsidized loans. Most dependent freshmen, for example, can borrow no more than $5,500.

6. Soothing Words: Scholarships and Grants

It’s important to not overlook the nonloan elements of the financial aid package. They can (hooray) reduce the amount your student needs to borrow.

Scholarships and grants are essentially free money.

While some schools automatically consider your student for scholarships based on merit or other qualifications, many scholarships and grants require applications.

You may want to assign a research project to your college-bound young adult to look into all of the scholarship options they may qualify for.

The Takeaway

Debt isn’t the most thrilling parent-child topic, but college students who will need to borrow should know the ins and outs of student loans: interest rates, federal vs. private, subsidized vs. unsubsidized, and repayment options.

If federal aid doesn’t cover all the bases of college, your student can consider a private student loan with SoFi.

SoFi Private Student Loans come with competitive rates, flexible repayment options, and no fees. A student can apply entirely online, with or without a cosigner.

See your interest rate in three minutes. No strings attached.


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.

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.
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.
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.
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Source: sofi.com

Options for When You Can’t Afford Your Child’s College

Every parent wants to help their child succeed. But when it comes to paying for college, it’s not always possible.

Fortunately, depending on the circumstances, you and your child may have several options to help them pay for school. First off, there are a variety of resources for students designed to help them pay for college. This includes things like federal student loans, scholarships, and grants.

Beyond that, students could look into getting a part-time job or paid internship. This could potentially boost their resume while offering an opportunity to earn money to pay for college.

From there, parents can consider options including borrowing a loan to help pay for college.

Options for Parents and Students

Parents and students can work together to create a plan to help pay for college. Here are some ways you can both work together to pay for college.

Fill Out the FAFSA

If your student is a dependent, the FAFSA® or Free Application for Federal Student Aid requires both your child’s information and yours as their parent. Work together to fill out the form. The FAFSA is used to determine eligibility for federal student aid including federal student loans, some scholarships and grants, and the federal work-study program.

The FAFSA needs to be filled out annually.

Choose a More Affordable School

Enrolling in a more affordable school may relieve some of the financial burden facing your family. Depending on your child’s interests and career goals, they may be able to enroll in a community college for the first two years of study to cut down on tuition costs.

Living at Home

If your child’s school is local, you can also offer to have them stay home, so room and board are covered. If your child’s school is not close to home, you can still review housing costs. While some schools require first-year students to live on-campus, after, students may find that living in off-campus housing may be more affordable than paying on-campus rates. Explore the realities for your student.

Options for Students

There are a variety of funding sources available to students. When triaging, focus first on the options that don’t need to be repaid, such as scholarships or grants. Then, there are things like part-time work and student loans that can be used to pay for college. Here are a few options to consider.

Applying for Scholarships and Grants

Depending on the school your child is planning to attend and their grades and activities in high school, they may be able to qualify for an academic or merit-based scholarship .

Grants, on the other hand, are generally based on your child’s financial need. Students typically aren’t required to repay scholarships or grants, so they’re a great option if you can’t pay for college on your own and want to avoid debt as much as possible.

It’s also possible to get scholarships through private organizations. Websites like Scholarships.com and FastWeb allow you to search through thousands of scholarships, making it easier to find one for which your child might qualify.

There are also scholarships available for current college students, so your child can continue to apply for those options even after he or she is enrolled.

Work-Study Program

When filling out the FAFSA, you can specify whether you are interested in participating in the work-study program. This program offers part-time jobs to students who demonstrate financial need. Depending on the school, students may be assigned a job or have the option to apply for a job.

One major perk of the work-study program is that the money earned won’t count toward income totals when filling out the FAFSA for the next school year.

Part-Time Job

Attending classes, doing homework, and establishing a social life are all important elements of a college experience. But working a few hours a week can help relieve some of the stress of dealing with the expenses that come with that experience.

For example, let’s say your child gets a job working eight hours a week and earns $10 per hour. Over the course of four years, assuming they don’t change their schedule, they could earn around $16,640. Even after taxes, that might help reduce the amount they would need to borrow or spend for college by thousands of dollars.

Borrowing Student Loans

Both federal and private student loans are available to students. The U.S. Department of Education provides student loans to college students without requiring a credit check (except for PLUS loans). And federal loans come with relatively low fixed interest rates, plus access to some special benefits — such as income-driven repayment plans or the option to pursue Public Service Loan Forgiveness.

As mentioned above, to apply students need to fill out the FAFSA each year. Undergraduate students may qualify for two types of federal loans: subsidized or unsubsidized. Direct Subsidized Loans are awarded to students based on financial need. The government subsidizes, or pays for, the interest on these loans while the borrower is enrolled in school and during the grace period and other qualifying periods of deferment.

Direct Unsubsidized Loans are not awarded based on financial need and borrowers are responsible for paying all of the interest that accrues on this type of loan.There is no credit check when applying for these types of federal student loans.

Recommended: Private vs Federal Student Loans

Students can also look into borrowing a private student loan, though it’s worth noting that these loans may lack the benefits and protections afforded to federal student loans (like income-driven repayment plans) and are therefore generally considered as a last resort option.

Private student loans are offered by private lenders and to apply, students will have to fill out an application directly with their lender of choice. Each lender may have different terms and rates so it can be worth shopping around to find the best option for your personal situation. Lenders will generally evaluate a borrower’s financial situation and creditworthiness when determining how much to lend and at what rates. If a student does not qualify for a private loan on their own, they may be able to add a cosigner to the loan.

Options for Parents

As a parent, it can be frustrating and stressful when you feel like you can’t afford your child’s college tuition. Take the time to consider what you can afford without sacrificing your own important goals, including retirement.

Here are a few actions that could help you assist your child pay for their college education.

Borrow a Loan

Parents can consider borrowing a private student loan or a federal student loan. Parent PLUS or private student loans.

Parent PLUS Loans are federal loans that are available to parents. The interest rate on these loans is a bit higher than for Direct Subsidized or Unsubsidized Loans and a credit check is required. In order to qualify, parents must not have an adverse credit history . In the case that a potential parent borrower does not qualify for a Parent PLUS loan on their own, they may be able to add an endorser to their application.

If you need extra help funding your children’s
education, you can look into private
parent student loans from SoFi.

Private lenders may also offer parent student loans. Parents can apply directly with the lender, and as mentioned above, it can be worth shopping around to see what types of rates and terms for which you may qualify. SoFi offers parent loans that can be applied for directly online and are fee free.

Cosign a Student Loan

If you do not want to borrow a loan to pay for your child’s college education and your child has exhausted their federal student loan options, you could cosign a private student loan with them. Keep in mind that, as already noted, private student loans are generally considered an option only after all other sources of aid and funding have been exhausted. This is because they don’t offer the same borrower protections as federal student loans.

Cover What You Can

Another way is to find other expenses you can cover. You may consider footing the bill for their textbooks every semester, or maybe you have enough income to help with their monthly rent or college-provided room and board fees. While covering a smaller expense may feel anticlimactic, it can still make a difference to your student.

The Takeaway

If you’re struggling to pay for tuition costs, you’re not alone. As you consider ways to help your child pay their way through college resources like scholarships, grants, work-study, and federal student loans are all options to consider. In some situations, you and your child may consider transferring or enrolling in a less expensive school or cutting costs by living at home.

If those options aren’t enough — some students and their families may consider private student loans. In the spirit of complete transparency, if you do need to resort to student loans, we want you to know that we believe you should exhaust all of your federal grant and loan options before you consider SoFi as your private loan lender.

If you do decide a private student loan is the right fit for your education, know that SoFi’s private student loan process is trusted, easy, and fast. We offer flexible payment options and terms, and there are no hidden fees.

Learn more about SoFi’s private student loans; get a rate quote to see what kind of terms you might qualify for.


SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . 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.

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.
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.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
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.
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.
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Source: sofi.com

Should I Use the Standard 10-Year Repayment Plan?

Whether you’re considering taking out a federal student loan to pay for school, you’re in college and in debt, or you’ve just graduated, you may go with the default repayment plan of 10 years.

That isn’t the only option, however.

By learning more about the Standard Repayment Plan, you can decide if it’s the right choice for you or you want to go a different route.

What Is the Standard Repayment Plan for Student Loans?

Upon graduation from college or dropping below half-time enrollment, you’ll have a six-month grace period for a Direct Loan program loan (nine months for a federal Perkins Loan) when you don’t have to make payments.

Once that ends, you’ll begin the Standard Repayment Plan, the default for all federal student loan borrowers once they have left school, unless you choose a different plan, perhaps one where you make lower monthly payments, extend your repayment period, or both.

The standard plan sets your monthly payments at a certain amount so that you will have your loans paid off within 10 years.

Standard Repayment Plan Eligibility

As you explore student loan repayment plans, you can make sure you are eligible for the standard plan if it sounds fine.

Loans That Are Eligible

Federal Family Education Loan (FFEL) Program loans and Direct Loans qualify for the Standard Repayment Plan. They include:

•   Direct Subsidized and Unsubsidized Loans

•   Direct PLUS Loans

•   Direct Consolidation Loans

•   FFEL consolidation loans

•   FFEL PLUS loans

Keep in mind that you will only be able to use the Standard Repayment Plan if you have federal student loans, not private student loans.

How Does the Standard Repayment Plan Work?

The Standard Repayment Plan features fixed monthly payments for up to 10 years. Because the plan offers a relatively short repayment period and monthly payments don’t change, it will save you more money in interest than longer repayment plans at the same rate.

If you just graduated with the average student loan debt of $39,400 at 5% interest, you’ll pay $10,748 in total interest. Expanding to 25 years at the same rate will lower your monthly payment, but you’ll end up paying nearly $29,700 in total interest.

There’s a variation on the 10-year theme: the graduated repayment plan, which keeps repayment costs low for recent graduates who may have lower starting salaries but who expect to see their pay increase substantially over 10 years.

Payments on the Standard Plan

What may make the Standard Repayment Plan less appealing to some borrowers is that payments will likely be higher than on any other federal repayment plan, thanks to the short term.

For people with a large amount of student debt or high interest rates, the monthly payments can be daunting or unmanageable. You might face sticker shock when you receive your first bill after your grace period, so don’t let it come as a surprise.

To determine if the Standard Repayment Plan is a good option for you, you could use the federal Loan Simulator to calculate student loan payments. Or contact your loan servicer before your first payment is due to see what you will owe each month.

Changing Your Repayment Schedule

If you want to change your repayment schedule or plan, call your loan servicer and see what they can do.

You’ll need to contact each loan servicer if you took out more than one loan and want to change repayment schedules.

What Are the Pros and Cons of the Standard Repayment Plan?

There are upsides and downsides to weigh when considering the Standard Repayment Plan.

Pros

You will pay off your loans in less time than you would with other types of federal repayment plans, which would allow you to set aside money for things like purchasing a home.

You’ll save money on interest, since you’re paying your loan back faster than you would on other federal plans.

The plan offers predictability. Payments are the same amount every month.

Cons

Your monthly payments will probably be higher than payments made under other student loan repayment plans with extended repayment periods.

And monthly payments are going to be based on the number of years you’ll take to repay the loan, not on how much you can afford, as with income-based repayment plans.

The Takeaway

The federal Standard Repayment Plan of 10 years could be right for you if you’re able to keep up with payments and you want to pay off your debt quickly.

An option is to refinance your student loans to improve your interest rate and possibly change your loan term. Just realize that refinancing federal student loans into a private student loan means giving up federal benefits like income-driven repayment and loan forgiveness.

SoFi offers enticing interest rates on refinancing and charges no application or origination fees. Look for special offers.

It’s easy to check your rate on a SoFi refi.


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 THE END OF JANUARY 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.
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.
SLR18234

Source: sofi.com

In 2 Minutes, Credit Sesame Can Help Improve Your Chances of Getting a Home in This Market

If you’ve been trying to buy a house in this chaotic pandemic housing market, you know you could lose an opportunity from right under your feet in an instant.
But there’s one thing that you do have control over — and that’s making sure you get approved for a mortgage, at a rate you can afford. Home sellers want to sell to someone who won’t give them any trouble during the closing process — and having a pre-approval for a mortgage loan is a great selling point. But without a good credit score, you might not stand a chance.
Source: thepennyhoarder.com
And with a poor credit score, you might not get a pre-approval at all — meaning just putting an offer on a home is out of the question.

A Bad Credit Score Can Deny You a Pre-Approval — Or Cost You Thousands

Get the Penny Hoarder Daily
Ready to stop worrying about money?
A higher interest rate on your mortgage could cost you tens of thousands of dollars more over the life of your loan. In just 90 seconds, Credit Sesame will show you your free credit score, plus what’s impacting it. It’ll even tell you if there are any mistakes on your credit report — one in five people have one, according to the FTC. Then, they’ll give you customized advice to get your credit score back on track, which could make you more appealing to lenders — and home sellers.
Credit Sesame does not guarantee any of these results, and some may even see a decrease in their credit score. Any score improvement is the result of many factors, including paying bills on time, keeping credit balances low, avoiding unnecessary inquiries, appropriate financial planning and developing better credit habits.
The market is as competitive as we’ve ever seen it, and cash buyers are snatching up houses left and right. Bidding wars start within hours of a house being listed, and it’s not uncommon to see people offering ,000 over asking price. Some things are just out of your control.
Make sure your dreams of homeownership don’t get squashed by bad credit. Get your free credit score here (it only takes about 90 seconds) and see how much you could improve your score. You could be that much closer to getting the keys to your new home.
Kari Faber is a staff writer at The Penny Hoarder. <!–

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60% of Credit Sesame members see an increase in their credit score; 50% see at least a 10-point increase, and 20% see at least a 50-point increase after 180 days.