Student Loan Forgiveness Programs That Discharge or Reduce Debt

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If you’re living under the crushing burden of student loan debt, it’s natural to wonder how to get rid of it. I know I am. Who wouldn’t want to wake up one morning, log into their account, and see a balance of zero?

I don’t think I’m understating it to say it would change my life, and I’m sure many borrowers would say the same. 

While mass student loan cancellation from the federal government could still be a reality, it also may amount to nothing but wishing and hoping. Fortunately, plenty of programs already exist to help you eliminate your student loans.  


Federal Student Loan Forgiveness Programs

If you’re overwhelmed by student loan debt, forgiveness programs can help ease some of the burden. Forgiveness partially or fully cancels education debt. Forgiveness programs are only available on direct federal student loans. You may have to consolidate other types of federal loans for them to qualify. And private loans don’t qualify at all.


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Forgiveness won’t erase your debt overnight, as many student loan repayment programs take 10, 20, or 25 years before you can get any remaining balance forgiven. But they can reduce your monthly payments in the meantime. There are two types.


Standard Federal Student Loan Forgiveness

Standard forgiveness is available to all borrowers of federal direct loans, including federal direct consolidation loans. It requires you to be on an income-driven repayment plan.

There are four income-driven repayment plans. Each bases your monthly payments on a percentage of your income and your family size. Depending on the plan and whether you have undergraduate or graduate loans, you could qualify for loan forgiveness in 20 to 25 years.

However, be aware you may owe income tax on the forgiven amount. The American Rescue Plan, passed in March 2021, makes all student loan forgiveness tax-free through 2025. And in March 2022, President Biden included a provision in his budget plan to make this policy permanent. But it still has to pass both the House and Senate to become law, so it isn’t a guarantee beyond 2025 yet. 

The best way to know how much of your student loan balance could remain for forgiveness at the end of your repayment term is to use the loan simulator at StudentAid.gov. However, know that your payments and balance could fluctuate if you earn more or less throughout your career.

The Biden administration is also currently working to reform the income-driven repayment plan program. Current changes include recalculating borrowers’ forgiveness timelines to include certain past periods of deferment and forbearance, regardless of loan type or payment plan. 

These future changes could include streamlining income-based repayment so that all enrolled borrowers are paying only 5% of their discretionary income in monthly student loan payments instead of the 10% to 20% they’re paying now.

These changes may not seem like much, but they could be huge for some borrowers. For example, I had to forbear my loans for six years in an attempt to pay off the private loans I took out before grad PLUS loans existed and still afford things like rent, child care, and groceries on my meager teaching salary. 

This change alone puts me six years closer to forgiveness and could save me over $50,000. And the government estimates more than 3.6 million borrowers will get at least three years shaved off their clocks.  

See other changes they’re planning at StudentAid.gov. 


Public Service Loan Forgiveness

Perhaps the best known federal student loan forgiveness program, the Public Service Loan Forgiveness Program is for borrowers working in public service jobs. To qualify, you must:

  • Have federal direct loans
  • Work full-time for a nonprofit or government agency for 10 years
  • Make 120 qualifying payments on an income-driven repayment plan (while working for the nonprofit)

Unlike forgiveness through an income-driven repayment plan, forgiveness through public service loan forgiveness has always been tax-free. So borrowers don’t have to worry about getting hit with a huge tax bill on any forgiven balance.

Additionally, the Public Service Loan Forgiveness Program was the first to announce major changes to the payment counts. As a result of years of mismanagement, a temporary waiver allows past “payments” to count toward the required 120 total. That includes any nonpayments made during deferment or forbearance and even late, missed, or partial payments — pretty much anything as long as you weren’t in default on your loans. 

The only requirement is that you must have been working full time for a qualifying employer (a nonprofit or government agency) during the period for which you want the payment or nonpayment counted. And you must apply for the temporary waiver by Oct. 31, 2022.  


Loan Repayment Assistance Programs

Federal forgiveness is only one option you can leverage to get rid of student debt. Some government and nongovernment organizations offer loan repayment assistance programs.

While they can’t directly forgive your debt (only the loan-holder can do that), they can contribute money on your behalf, which acts as a sort of forgiveness, usually in exchange for your professional contributions to a company or society. Plus, you can use them to pay off any type of loan, including private loans. 

Generally, you have to work for a certain company or in a certain public service field, such as medicine or the military, for a set amount of time. In exchange, they contribute money toward paying off your loans.

The amounts they contribute vary, but they can be anywhere from several thousand to tens of thousands of dollars per year, depending on the program.

If federal forgiveness programs seem unlikely to benefit you, check into these options instead. 


Profession-Specific Loan Forgiveness

Though these exist primarily in public service professions, many career fields qualify for job-specific loan forgiveness programs over and beyond public service loan forgiveness.  

For example, there are organizations that repay student loans for health care professionals in exchange for working in shortage areas, such as for doctors working in rural locations or pharmaceutical scientists performing research in highly needed crisis subjects like opioid addiction. 

Professions with forgiveness programs include:

  • Doctors
  • Teachers
  • Nurses
  • Lawyers
  • Pharmacists
  • Dentists
  • Physicians Assistants
  • Physical Therapists
  • Law Enforcement Officers
  • Psychologists
  • Veterinarians
  • Automotive Workers   

Employer-Sponsored Programs

Even if you don’t work in one of these professions, many employers offer student loan repayment assistance as a job perk. Through 2025, they can offer up to $5,250 per year as a tax-free benefit thanks to COVID-19 pandemic relief measures. So it’s worth checking with your human resources office to see if your company offers this assistance. 

If your current company doesn’t offer this benefit, crunch the numbers to see if it’s worth changing jobs. If the benefit is high enough, it could even offset a salary decrease or the extra cost of driving further to work. 

Do an online search to find companies that repay student loans. Examples include Google, Ally Bank, and Fidelity Investments.  

But don’t give up if you can’t find this benefit info on a prospective employers’ webpage. Student loan repayment is a top sought-after perk. Thus, more and more employers are beginning to offer it. It never hurts to ask during a job interview if it’s an option. 


State-Sponsored Programs

Although most borrowers think of federal programs when they think about student loan forgiveness, all U.S. states and the District of Columbia have at least one forgiveness assistance program. State forgiveness programs typically take the form of loan repayment assistance programs, which states design to attract high-need professionals to shortage areas. 

Thus, they’re always for specific professions and typically require a work commitment for a specified period.

For example, the Massachusetts Loan Repayment Program for Health Professionals awards up to $50,000 ($25,000 per year for two years) to health professionals working in shortage areas. And the Rural Iowa Veterinarian Loan Repayment Program awards up to $60,000 ($15,000 per year for four years) to veterinarians who work in rural Iowa communities.

To discover what programs are available in your state, do an online search or contact your state’s department of higher education.


Military Programs

Every branch of the military offers various forms of student loan forgiveness, including programs for doctors, dentists, psychologists, veterinarians, and lawyers as well as both current members of the armed forces and veterans.

However, not all branches offer the same benefits or programs, and in some cases, benefits only apply to service members in certain fields. Examples include:

  • Army College Loan Repayment Program. The Army’s College Loan Repayment Program pays one-third of your loans every year up to $65,000 in exchange for a three-year commitment. There are also repayment benefits of up to $50,000 for those who join the Army Reserves or Army National Guard.
  • JAG Corps. JAG stands for “judge advocate general.” It’s essentially the military’s law firm. Law school graduates who join a JAG Corps in a participating branch, such as the Army or Air Force, can get up to $65,000 of their student loans repaid in exchange for a three-year commitment.
  • Health Professions Loan Repayment Program. The Navy repays up to $40,000 per year (minus 25% for income taxes) toward student loans for qualifying medical professionals through the Health Professions Loan Repayment Program in exchange for an agreed-upon commitment. And the Air Force repays $40,000 per year (minus 25% for income taxes) for a maximum of two years in exchange for a two-year commitment. 
  • Sign-On and Retention Bonuses. Professionals are often eligible for sign-on and retention bonuses they can use to repay student loans. For example, the Army Medical Department offers a $50,000 sign-on bonus, and the Navy JAG Corps offers $60,000 in total retention bonuses payable at the four-year, seven-year, and 10-year marks.   

Other programs may be available, and offerings may change without notice, so contact a recruiter for the branches you’re considering for more information. 


Other Types of Student Loan Relief

If you’re wondering about the difference between forgiveness, cancellation, and discharge, the answer is: not much. The only real difference is implementation. 

Forgiveness and cancellation apply when you’re no longer required to make payments because you fulfilled your program requirements. Discharge happens when your loans are eliminated because of your circumstances — for example, if you become permanently disabled and can no longer work or you win a bankruptcy or lawsuit. 

The other important difference is timing. If you qualify for one of the many cancellation or discharge programs for federal student loans, you won’t have to wait decades to see your loan balance disappear. Instead, you can be free of the burden as quickly as the Department of Education processes your case. 


Cancellation Programs

The term “cancellation” only applies to federal Perkins loans. A Perkins loan is a discontinued type of federal student loan that featured a low, fixed interest rate and was for low-income borrowers. Additionally, they were typically a school loan. Your school, and not the government, was the lender. 

Those who work in various public service fields can qualify to have some or all of their Perkins loans canceled under certain circumstances. These typically include working in shortage areas and high-need specialties, such as math or special education for a teacher.   

Perkins loan cancellation happens a little at a time. For each year of service, you get a percentage of your loan canceled. It can take up to five years to wipe out 100% of your loans.

Professions eligible for Perkins loan forgiveness include:

  • Preschool teacher
  • Employee at a child or family services agency
  • Faculty member at a tribal college or university
  • Firefighter
  • Law enforcement officer
  • Librarian with a master’s degree at a Title I school
  • Military service member
  • Nurse or medical technician
  • Provider of early intervention disability services
  • Public defender
  • Speech pathologist with a master’s degree at a Title I school
  • Volunteer with AmeriCorps VISTA or the Peace Corps

Discharge Programs

Meeting eligibility requirements for a student loan discharge is rare. But if you qualify, you can get some or all of your loans eliminated. 

There are many situations in which you could qualify for a federal student loan discharge. These include: 

  • Closed School. If your college or school closes while you’re enrolled or within 180 days of your graduation or withdrawal, you’re entitled to a discharge of your debt.
  • Total and Permanent Disability. If you become permanently disabled to the extent that you can no longer work, you’re entitled to a disability discharge.
  • Death. If you die, the government can’t collect against your estate. And if you borrowed parent PLUS loans, and your child dies, you no longer have to pay the debt.
  • Bankruptcy. This one’s tough to do, but if you can prove repaying the loans would cause undue financial hardship, you can get your student loans discharged in bankruptcy.
  • Borrower Defense to Repayment. If your school broke the law, such as lying to you to get you to enroll, you can get your loans discharged.
  • False Certification. If you had your identity stolen and someone took out the loans under your name without your knowledge or forged your signature on the documents, you’re entitled to have them discharged.
  • Unpaid Refund. If your school owed you a balance but never paid it to you or returned it to the U.S. Department of Education, you can have that amount discharged.

Final Word

If you’re searching for ways to wipe out your student debt, you may be susceptible to student loan forgiveness scams. So-called debt relief companies prey on desperate borrowers by charging high upfront fees and then failing to deliver the promised forgiveness. 

Be forewarned: Legitimate student loan forgiveness, cancellation, and discharge programs will never charge you a fee to apply. And you never have to pay to sign up for an income-driven repayment plan. 

Be skeptical of anything that sounds too good to be true. Additionally, never give out your personal information over the phone or pay fees to companies whose names you don’t recognize or programs you’ve never heard of. 

If you’re unsure if a program is legit, always ask for information in writing and contact your student loan servicer, who can tell you what programs your loans actually qualify for. 

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Sarah Graves, Ph.D. is a freelance writer specializing in personal finance, parenting, education, and creative entrepreneurship. She’s also a college instructor of English and humanities. When not busy writing or teaching her students the proper use of a semicolon, you can find her hanging out with her awesome husband and adorable son watching way too many superhero movies.

Source: moneycrashers.com

Applying for No Interest Student Loans

No-interest loans or interest-free loans, also known as scholarship loans, are offered by nonprofit organizations, state governments, private companies, religious organizations, and even some sororities or fraternities. Unlike grants and scholarships, an interest-free loan is still a loan at the end of the day, and will need to be paid back over time, even if you aren’t paying interest on the initial amount.

While they can be somewhat tricky to find, and not so simple to apply for, no-interest student loans do exist and may be worth looking into for the potential savings.

What Is a No Interest Student Loan?

Interest-free loans are loans that do not accrue interest. Unlike grants and scholarships, the loan amount must be repaid. Because there are no interest charges the amount repaid by the borrower remains the same as the original amount borrowed. Traditional student loans, whether federal or private, all come with interest rates that are either fixed or variable.

For the 2022-2023 school year, the interest rate on Direct Subsidized or Unsubsidized loans for undergraduates is 4.99%, the rate on Direct Unsubsidized loans for graduate and professional students is 6.54%, and the rate on Direct PLUS loans for graduate students, professional students, and parents is 7.54%. The interest rates on federal student loans are fixed and are set annually by Congress.

Private loans have a much larger range of interest rates, and may range anywhere from around 1% to up to 13% APR.

No-interest loans might help you get out of debt faster. On a standard 10-year federal student loan repayment plan, with $30,000 in debt and a 5% interest rate, you would end up paying more than $8,000 in interest alone.

Federal student loans accrue interest daily. So, on that same $30,000 loan with 5% interest rate, every day $4.11 is added to the amount you owe. So with a traditional loan, the amount of interest that adds up between your monthly payments is determined by the daily formula:

Daily Interest Rate = (Interest Rate / 365) x Principal Balance Due

Interest is charged on the principal balance, meaning the initial amount you owe for the loan.

While it’s not as common as a traditional loan, a no-interest student loan is an intriguing option, since it will never accrue interest.

Applying for Interest Free Student Loans

The application process for most interest-free loans resembles the application process for grants or scholarships more closely than a traditional loan application.

Students will generally still want to fill out the Free Application for Federal Student Aid (FAFSA®), even if you want to focus on loans without interest. Some interest-free loans use the FAFSA to determine financial need. And while federal loans generally accrue with interest, they typically have lower rates than private lenders, and federal loans come with benefits such as income-based repayment that private lenders don’t often offer.

Interest-free student loans are often local and state-based, rather than national. They may require proof of residency in a certain state. Some may also have an essay requirement, as well academic requirements, and might even require an interview.

The process is more intense than a regular student loan because funds are limited. Some state agencies and philanthropic organizations use the term “scholarship loan” to refer to interest-free loans. Scholarship loans may also be repaid through public service.

Keep in mind though that those organizations are still separate from the government, and do not offer the same repayment plans as the loans offered through the U.S. Department of Education.

Subsidized Loans: No Interest Until After Graduation

Interest-free loans are relatively rare, so it’s possible that students will still need to rely on federal student aid. There are two types of federal Direct loans available to undergraduate students: subsidized and unsubsidized.

Subsidized loans are available to undergraduates who demonstrate financial need. The U.S. Department of Education pays the interest accruing on the loans while you’re in school, during your six-month grace period, and when your loans are in deferment.

Recommended: Comparing Subsidized vs Unsubsidized Student Loans

On the other hand, unsubsidized student loans are available to grad students and undergrads, and they don’t require that students demonstrate need in order to qualify for these loans. Interest accrues while you’re in school, and during grace periods, deferment, or forbearance — and you’re responsible for paying the interest.

Federal student loans also offer a few different payment plans, including income-driven repayment plans, so that borrowers can find the option that works best for them. There are also borrower protections like deferment or forbearance, that may act as a safety net for borrowers who find themselves facing financial difficulties down the road.

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The Takeaway

No-interest loans, sometimes called scholarship loans or interest-free loans, are loans awarded to students that do not accrue interest at all. While rare, there are some nonprofits, corporations, and religious organizations that may offer interest-free loans to students. In the case that students don’t qualify for a no-interest loan, they may want to see what aid they were offered by the federal government or their college.

Sometimes, financial aid and scholarships don’t provide enough funding to pay for college. In that case, some students may look into private student loans as an option. While private student loans can be helpful tools when it comes to paying for college, they do not have the same borrower protections as federal student loans, so should only be considered after all other aid options have been reviewed.

Another option is to refinance your student loans to improve your interest rate and possibly change your loan term. Refinancing federal student loans into private student loans would be that you have to give up federal benefits like income-driven repayment and loan forgiveness.

Interested in using a private student loan to pay for college? You can find out what a SoFi student loan could look like in two minutes or less.


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How to Get a Free Credit Score Report

Save more, spend smarter, and make your money go further

A credit report is a detailed overview of your credit history, including your payment history, lines of credit, and how consistent you’ve been with paying off your credit balances. Three national credit bureaus issue credit reports: Equifax, Experian, and TransUnion. While your credit report doesn’t contain your credit score, they help lenders understand your risk tolerance and eligibility for things like loans, insurance policies, jobs, and credit cards.

Your credit score, on the other hand, is a three-digit number that shows lenders how risky a borrower you are and is a crucial component of your financial health. Your credit score plays a key role in determining what loans you qualify for and the interest rate you will pay on all types of things, from mortgages to renter’s insurance to car loans. Your credit score comes from the information contained in your credit report, such as your payment history, credit utilization ratio, and age of credit, and is calculated using an algorithm. As critical as this little number is, many Americans are in the dark when it comes to their credit scores.

Fortunately, federal law entitles citizens to get a free credit report every year from the three major credit bureaus. Below, we’ll cover how to get a credit report, so you can understand where your financial health lies. Read end-to-end to learn how to get a free credit report and FICO score, or use the provided links to jump to a section of your choosing.

The Importance of Your Credit Report

Your credit report houses all sorts of pertinent information about your financial background, including your credit payment history, credit utilization ratio, and age of credit. Credit scores have become such a huge influence in the lives of consumers that millions are greatly disadvantaged by their lack of knowledge about their scores. In fact, roughly 26 million Americans are “credit invisible,” meaning they don’t have a credit report with one of the three national credit bureaus. On top of that, an additional 19 million Americans have credit scores that are unscorable by a credit-scoring model. Not having a credit score can make it difficult to get approved for a loan for a mortgage, car, or home improvement project because lenders will have no way to assess your risk level as a borrower. 

Knowing how to get a credit report can help you gain a better understanding of your financial health. As important as the information on your credit report is, you need to make it a priority to get your hands on it to help you not only find out what your current score actually is, but what is affecting it, and if there are any errors on it that are unfairly dropping your score.

Why is Your Credit Score Report So Helpful?

Considering the importance of credit scores on your financial portfolio, it makes sense to have a clear understanding of your credit’s health, which can only be identified on your credit score report. The information in your credit report is used to generate your credit score, which is what your potential lenders will see before they decide to approve you for a loan.

Your credit report includes important financial information, such as:

  • The types of credit that you use
  • How long your accounts have been open
  • How much money you owed
  • Whether you’ve paid your bills in full and on time
  • How efficiently you paid your bills
  • Late payments

It gives lenders information about how much credit you have used, and if you are looking for new sources of credit. There are a variety of lenders you might come across that look at your credit report to conduct business, such as:

  • Banks and financial institutions
  • Landlords
  • Car dealers
  • Credit card companies
  • Insurance companies
  • Department stores
  • Cell phone and cable providers
  • Utility providers
  • Employers

Your credit score has a huge influence on lenders’ decisions to approve or deny your loan applications. Many facets of your borrowing habits will be outlined on your credit report. Lenders use the information on your credit report to gauge their credit decisions on their applicants and customers from credit reporting agencies, including Equifax, TransUnion, and Experian. Lenders and other companies use the information in your credit score report to assess your applications for credit, loans, insurance, and even renting a residence.

How to Get a Free Credit Report

Many consumers wonder how to get a free credit score report. According to FTC.gov, the Fair Credit Reporting Act requires the three national credit bureaus—Experian, Equifax, and TransUnion—to provide free copies of credit reports once every 12 months to consumers who request one. They must also set reasonable prices for scores for consumers who need to retrieve their credit report more than once per year.  Here are some guidelines on how to get a credit report:

  • One way to access your credit report for free is by visiting the official government website AnnualCreditReport.com or by calling their toll-free number at 1.877.322.8228. Through this website, you can request your free credit report from one of the three bureaus, or have one of each credit report sent at the same time, depending on your intended use. For example, if you want to verify that all of your information, such as name, address, credit accounts, and amount owed, is accurate, you might want to request all three at once to compare. Or, you can spread out each credit report by requesting one every four months, for example.
  • Aside from obtaining a free credit score from one of the three national credit bureaus, you can also gain access to your credit report for free through other means, such as through Mint. At Mint, we team up with TransUnion to provide free credit scores. Mint’s free credit report and score simply requires you to verify your identity and once verified, you’ll have your free credit report summary within minutes. Through Mint, you can also enjoy credit monitoring, which provides credit alerts whenever TransUnion receives new credit information from any of your creditors.

For those wondering how to get a free credit score report, you can use the government’s free website AnnualCreditReport.com, or get your free credit report from websites like Mint.

taking out a home mortgage, you might want to view your credit report right away. There are three ways you can request a credit report: online, through the phone, and by mail. Here’s how long each method takes:

  • Requesting a free credit report online: When you request a free credit report online, such as through AnnualCreditReport.com or through Mint, you can get your credit report immediately. 
  • Requesting a free credit report through phone: If you order your free credit report by calling 1.877.322.8228, your credit report will be processed and mailed to your address within 15 days.
  • Requesting a free credit report through mail: You can write a letter requesting your annual credit report or fill out and mail the Annual Credit Report Request Form to the following address:

Annual Credit Report Request Service

P.O. Box 105218

Atlanta, GA 30348-5281

Requesting a free credit report through mail will be processed and mailed to your address within 15 days of receipt, which can bring your total wait time up to two to three weeks for delivery.

What to Do While You’re Waiting for Your Credit Report

Whether you called to request a free credit report or mailed in an annual credit report request form, you can take a few actions to pass the time.

Check your credit score

Checking your credit score is important for a variety of reasons. It gives you an overview of your financial health, can help you spot any errors, and can show you areas of improvement. As you review your credit score, you may come across two different types: FICO and Vantage.

  • FICO Credit Score: Fair Isaac Corporation created the FICO scoring model to provide an industry-standard for determining credit-worthiness that was fair for both consumers and lenders. FICO is the most widely used credit score and uses credit scoring models that are bureau specific, meaning there is a separate scoring model for Experian, Equifax, and TransUnion. Because each credit bureau has different information on file, your credit score might not be the same. However, in most cases, your score only differs by a few points—anything more might be due to a mistake. 

Most FICO scores range between 300-850— the higher the score, the less risky you may seem to lenders. A “good” credit score, according to FICO, is anywhere between 670-739. In order to get a FICO credit score, you need to have at least one account open for at least six months or longer, along with at least one account that has been reported to a credit bureau within the last six months.

  • Vantage Credit Score: The VantageScore Model was created by the three credit reporting companies— Experian, Equifax, and TransUnion. Together, industry-leading experts created a credit scoring model using credit report information from each credit bureau. Earlier versions of the VantageScore have a credit range between 501 and 990. The new VantageScore 3.0 uses the same credit score range as the FICO credit score, which is 300-850. Similar to the FICO credit score, a “good” credit score is anywhere between 670-739.

Unlike the FICO credit score, Vantage’s credit score accepts consumers who are new to the credit market, who would otherwise be invisible to lenders. Because lenders from all three credit bureaus can use the VantageScore, credit scores should remain fairly consistent. The only time a change would occur is if a lender provides a new piece of data to a credit bureau.

With Mint, you can check your credit score for free as many times as you’d like without hurting your credit score. Mint works by using the VantageScore model, which is determined by six different factors: age and types of credit, credit utilization, payment history, total balances and debt, recent credit inquiries, and available credit. Check your free credit score with Mint today to see where your credit score stands.

Understand your credit score

Before you work on increasing your credit score, it’s important to know what your credit score looks at. There are a variety of credit score myths out there that you might believe, which is why understanding what can impact your credit score can help you make thoughtful actions to improve your score.

Here’s a list of what most credit scores measure:

  • Payment history: Your payment history is just one piece of your credit history. Your payment history looks at your past credit payments and whether they’ve been paid on time. Missed or late payments can tell lenders that it might be risky to lend to you because you may miss a future payment. Paying off your credit balance on time in full, every time can help keep your credit score in check.
  • Age of credit: The longer the credit history, the higher your credit score might be. This is because the age of your oldest account provides more data and shows lenders you have more experience managing credit. 
  • Types of credit: Your credit mix, such as credit cards, loans, mortgages, and retail accounts, can show lenders you have experience managing and paying off multiple types of credit.
  • Credit utilization: Credit utilization is the amount of money you owe compared to your available line of credit. Often expressed as a ratio, high credit utilization may make lenders view you as risky because you’re borrowing close to your limit. For example, if your credit line is $10,000, and you bought a used car for $7,000 with a credit card, your credit utilization ratio will be 70%. Experts believe you should have a credit utilization ratio of no more than 30 percent of your credit limit.
  • New credit accounts: Opening a new credit account can result in a hard inquiry, which can hurt your credit score because it shows that a lender is looking at your credit report.

Understanding what credit scores measure can help you make smart financial decisions, such as making credit card payments on time, maintaining a low credit utilization ratio, and effectively managing different types of credit.

What to Do If There’s an Error on Your Credit Report

An error on your credit report can deal a significant blow on your credit score and report. An error on your credit report can happen for a variety of reasons, such as a careless mistake, inputting wrong information, or even identity theft. Regularly checking your credit score can help you look for any discrepancies that can damage your credit score. Thanks to the Fair Credit Reporting Act, you can issue a credit dispute for any information you think is incorrect without negatively impacting your score. If you notice an error on your credit report, follow these steps:

  • Step 1: Submit a letter in writing or online to the credit reporting company that details the information you think is inaccurate. With your letter, provide any copies (not original files) that support your claim, and information such as your name, address, and the information you want to be removed or corrected on your credit report.
  • Step 2: Wait for the credit reporting company to respond. A response typically takes around 30 days from the day they receive your letter. During this time, they will investigate your claim and send the information you sent to the lenders that provided the information. If the lender finds there was a mistake, they must inform all three credit bureaus.
  • Step 3: Write a letter to the lender or information provider that may have made a mistake detailing the item you think is wrong in your credit report. Provide any copies of important information that supports your dispute and have them review your claim.
  • Step 4: Review your results. Each credit reporting company is required to provide you with the results of your investigation. If the dispute wasn’t resolved, you can have the credit bureau make a note on your future credit reports that there was a dispute.

As stated, disputing a credit report doesn’t hurt your credit score. If you believe there is an error on your credit report, take the time to resolve the error. Not doing so can lower your credit score, which can make it challenging to get approved for a loan or urge lenders to tack on higher interest rates for loans.

Mint.com is the Best Place to Go for Your Credit Score Report

Credit scores are an essential component of your financial portfolio. Now Mint offers a new feature that allows you to access your free credit report summary to help you understand what is influencing your credit score so you can learn how to improve it. You’ll be able to find out your credit score for free without ever having to use a credit card.

This new feature is just an extension of Mint’s commitment to giving consumers like you access to critical information that influences your financial health. All you have to do to get your free credit score from Mint is log into your Mint account and get started. With Mint, you can also work toward improving your credit and financing standing overall, create a budget, and stay on top of bills. If you’re not yet a member of Mint, learn more at Mint.com about becoming a member to gain access to all their helpful financial tools today!

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Examining the Different Types of Student Loans

With the average annual cost of college for the 2021-2022 school year $10,740 for public four-year in-state and $38,070 for private non-profit four-year schools, it’s not uncommon for students to use loans to help pay for their education.

The two major umbrellas to consider are federal student loans and private student loans. Federal student loans are those backed by the U.S. Department of Education, while private student loans are offered through financial institutions such as banks, online lenders, and credit unions.

Knowing what types of student loans are available to you and understanding your student loan statement can help you figure out the best way to save money in the long run.

What Are The Different Types of Student Loans?

One of the first things to understand is the difference between federal and private student loans.

Federal student loans are loans offered by the government, at a fixed interest rate and with certain restrictions. Depending on borrower needs, students could qualify for either subsidized or unsubsidized federal loans (more on those, later). Federal student loans come with protections for borrowers’ loans like income-driven repayment options, deferment, forbearance, and access to the Public Service Loan Forgiveness (PSLF) program. Most federal student loans also have annual lending limits .

For some students, federal student loans aren’t enough to cover the cost of a college education. Some turn to scholarships, grants, or a part-time job to fill in the gaps. Other students rely on private student loans, offered by lenders and financial institutions, to cover the cost of college.

Applying for Federal Student Loans

The first step in the federal student loan process is to fill out the Free Application for Federal Student Aid (FAFSA®). That will involve compiling some family financial history. Even students who don’t think they’ll qualify for financial aid will likely still want to fill out a FAFSA. All federal student loans require a FAFSA first. And some schools use information from the FAFSA to determine eligibility for other types of aid like scholarships or grants.

All federal student loans require a FAFSA first.

After filling out the FAFSA, students will receive a financial aid package which includes any federal aid awarded to the student including grants, work study, and loans. Depending on financial circumstances, the loans will either be subsidized or unsubsidized.

The Different Types of Federal Student Loans

Think of federal student loans as an overarching category. There are different types of federal student loans, each of which have different eligibility requirements, borrower maximums (or not), and interest rates. Understanding all your options means you’ll be better prepared to determine the best way to finance your education.

Recommended: Private Student Loans vs. Federal Student Loans

For the 2022-2023 school year, the interest rate on Direct Subsidized or Unsubsidized loans for undergraduates is 4.99%, the rate on Direct Unsubsidized loans for graduate and professional students is 6.54%, and the rate on Direct PLUS loans for graduate students, professional students, and parents is 7.54%. The interest rates on federal student loans are fixed and are set annually by Congress.

Direct Subsidized vs. Unsubsidized Loans

Federal Direct loans, also known as Stafford Loans, can be either subsidized or unsubsidized. With a subsidized student loan, the government will cover the accrued interest while the borrower is enrolled in school, during the grace period, and during any periods of deferment. Not having to pay interest on your loans during school can really help—especially since interest accrues and capitalizes, or gets added to the principal loan amount, and then accrues more interest. There are no subsidized federal loans for graduate students—only for undergrads.

The government does not pay the interest on unsubsidized Direct loans. That means, even while you’re in school, the loans are accruing interest. You don’t have to make payments on the loans while you’re a full-time student, but interest is building up. As the interest accrues, it is added to the loan’s principal.

Recommended: Student Loan Grace Periods: What You Need to Know

That’s why it’s possible to have a higher remaining loan balance than the initial loan amount after graduation. Individuals with an unsubsidized student loan do have the option to make interest-only payments on the loan during periods of deferment, including while they’re in school, but are not required to do so.

Federal loans have fixed interest rates (that are set annually), meaning they don’t change over the life of the loan.

Federal student loan borrowing limits vary depending on factors like your year in school and whether or not you are a dependent student. For example, first-year undergrads who are considered independent or whose parents are not able to take out parent loans have a maximum borrowing amount of $9,500 (of which only $3,500 can be subsidized) annually. The maximum for dependent students is $5,500 in their first year, with the same $3,500 cap on subsidized loans.

PLUS Loans

Direct PLUS loans can be borrowed directly by a graduate student, or Parent PLUS loans can be taken out by an undergrad’s parents. PLUS loans, in both forms, have the same benefits as other federal loans in that the interest rate is fixed and there are flexible repayment options.

Unlike other federal loans, PLUS loans require a credit check. They’re designed for graduate and professional students, who have had more time to build up a credit score. The maximum PLUS loan amount you can borrow is the full cost of tuition less any other financial assistance.

When taking out student loans for college, a lot of the options depend on your FAFSA and what’s determined to be your family’s financial need or ability to pay. If you’re a dependent student , then there will likely be some expectation of parental contribution and your parents may be offered the option of taking out Parent PLUS loans.

Parent PLUS loans are similar to Direct PLUS loans, except parents are expected to begin repaying the loan while the student is still in school—though they can request a deferment until graduation.

Direct Consolidation Loans

After graduation, students might have a number of different federal student loans. That can obviously be confusing. If you want to consolidate all federal loans into one place, then you may be able to pool them into a Direct Consolidation Loan. This allows you to only make one monthly payment towards all your federal student loans.

A Direct Consolidation loan will not lower your overall interest rate.

A Direct Consolidation loan will not lower your overall interest rate. The interest rate on your new Direct Consolidation Loan is simply a weighted average of the interest rates, rounded up to the nearest eighth of a percent, of your existing federal loans. Consolidation could also wipe out any history of payments you were making toward PSLF. Only federal loans can be consolidated with a Direct Consolidation Loan.

Related: A Look Into the Public Service Loan Forgiveness Program

Repay your way. Find the monthly student loan
payment and rate that fits your budget.

Private Student Loans

Students who don’t receive enough funding from the federal government, may look to private student loans as an option to finance their education. Private loans are offered by lenders such as banks, online lenders, and credit unions.

Applying for Private Student Loans

Private lenders do not use the FAFSA to determine a potential borrower’s creditworthiness. Instead, students interested in borrowing private loans will fill out a loan application directly with a lender. Before applying, lenders will generally allow people to get a quote to see if they pre-qualify and at what rates. This can be helpful when evaluating different lenders.

The terms, interest rates, and borrowing limits on private loans may vary by lender. Lenders will use factors like the borrower’s credit score to determine the interest rate they qualify for. When borrowing a private student loan you’ll generally have the option to choose between a fixed or variable interest rate.

Student loan repayment options will be determined by your lender. Some offer deferment plans while the borrower is enrolled in school and others require payments to start as soon as the loan is disbursed.

Another private student loan option is to consolidate or refinance your existing student loans after graduation. This might be beneficial if it lowers your interest rate and saves you money over the life of your loan. Federal student loans offer unique borrower benefits and protections like income-driven repayment plans. Refinancing federal loans eliminates them from these benefits.

Understanding the Student Loan Statement

When you take out a loan, you sign a promissory note, which outlines the interest rate, loan amount, and repayment terms. If you hold federal student loans, when you graduate you select a repayment plan. If you don’t do anything, you’ll automatically be put on the Standard Repayment plan.

For most federal loans, the Standard Repayment plan is a set monthly payment for up to 10 years. There are a few other repayment plans to choose from, including four income-driven repayment plans. The different plans allow you to pay back your loan over different time periods. The longer the repayment term, the more you’ll pay in interest over the life of the loan.

When you look at your student loan statement, you’ll see each loan listed as the total loan amount, how much principal remains, how much interest has accrued since your last payment, your current interest rate, and how much your current monthly payment is—in addition to any fees, such as late fees, you might owe.

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The Benefits of Refinancing Student Loans

It’s possible to consolidate both federal and private student loans into one new loan when you refinance your student loans with a private lender. If an applicant qualifies for a lower interest rate and a shorter term, it could reduce the amount of money paid in interest over the life of the loan.

Make sure to weigh the benefits that come with your federal loans against the value of refinancing. When you refinance federal loans they will no longer be eligible for federal borrower protections.

Some private lenders offer similar borrower protections. For example, borrowers who refinance with SoFi may qualify for Unemployment Protection. This can help eligible borrowers pause their loan payments if they unexpectedly lose their job through no fault of their own. To see what refinancing could mean for you, take a look at SoFi’s student loan refinancing calculator.

The Takeaway

The two main categories of student loans are private and federal. Federal loans are awarded to students based on information they provide in their FAFSA annually. Federal loans have a fixed interest rate and are eligible for a variety of repayment plans, as determined by the U.S. Department of Education.

Undergrads may qualify for unsubsidized or subsidized federal loans, depending on their financial need. Graduate students may qualify for unsubsidized loans or PLUS loans. Parents of undergraduates may also borrow Parent PLUS loans.

Private student loans are offered by private financial institutions. In order to borrow a private student loan, individuals will generally need to file an application with a lender. The lender will review factors like the applicant’s credit history, among others, in order to determine the terms they qualify for.

Check out what kind of rates and terms you can get in just a few minutes.


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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.

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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.


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8 Risky Jobs That Pay Big Bucks

Often with dangerous jobs, the pay doesn’t come close to compensating for the risk. In fact, plenty of perilous jobs pay paltry sums compared to other options. Take fishermen and loggers. They can expect median salaries of under $35,000 a year, $23,000 less than the mean for all workers. Yet the fatality rate for fishermen is nearly 39 times the rate for all occupations, the highest of any profession, in fact. Loggers, at nearly 28 times the overall fatality rate, rank second.

The COVID-19 pandemic shook up the risk scenario in the workplace. Overall, workplace injuries and illnesses were down 5.7% in 2020, compared to the previous year. But a closer look at the numbers reveals that while injuries dropped significantly, illnesses went way up. 

The pandemic also made a new group of low-paying jobs among the riskiest in the nation. Nursing assistants had the highest number of days of any profession away from work in 2020, the most recent year available, according to the Bureau of Labor Statistics. They had 1,024 days away from work per 10,000 workers in 2020, an increase of 14 times the rate in 2019. Yet nursing assistants make a mean wage of just over $30,000.

Going back the last few years before the pandemic, there were generally between 10,000 and 11,000 respiratory illnesses among U.S. workers each year. In 2020, however, there were nearly 429,000. Conversely, the days away from work decreased slightly for heavy and tractor-trailer truck drivers, whose mean wage was just over $50,000, between 2019 and 2020.

As perilous as work has become for many during the pandemic, fewer people were injured on the job in 2020 than in any year since 2013, according to the most recent data from the Bureau of Labor Statistics. Still, those data showed an American worker died every 111 minutes from a job-related injury. The most common cause of death on the job was transportation-related incidents, which resulted in 1,778 deaths that year, more than 37% of all work-related deaths.

Not surprisingly, workers in jobs that involved transportation and moving material accounted for the biggest proportion of occupational deaths at a total of 2,258, accounting for more than 47% of the total work-related deaths in the U.S.

We believe that if you’re going to take a risky job, you should at least get compensated handsomely for it. So we crunched the numbers on injuries, fatalities and salaries to identify eight occupations offering paychecks that make up for the elevated risks by paying more than the national median of about $58,000. Top earners in many of these fields can enjoy six-figure salaries, in some cases even without college degrees. Plus, many of them won’t be replaced by technology, which spells job security. 

Take a look at these risky jobs that pay well.

Data sources: All data provided by the U.S. Bureau of Labor Statistics, unless otherwise noted. Most statistics from 2020, unless otherwise indicated. That year, the fatality rate for all occupations was 3.4 deaths per 100,000 workers.. “Top pay” represents the annual salary of a worker in the 90th percentile of an occupation, unless otherwise noted. We used the most updated data provided by BLS. In some instances, that was as far back as 2019 or older. Also, in some instances, the bureau provided median salary information, while for other occupations, it provided average salary information.

1 of 8

Airline Pilot

Photo of a man in an airplane cockpitPhoto of a man in an airplane cockpit
  • Number of workers: 42,770
  • Rate of injuries/illnesses: 34.3 (3.4 for all workers). 
  • This represents a decrease of the 2019 rate of 61.8 per 100,000 FTEs
  • Median annual salary: $115,080
  • Top pay: $197,400*
  • Annual fatalities: 4

Flying may be safer than driving, with crashes exceedingly rare, but pilots still manage to get hurt. The most common injury to pilots is back strain, no doubt exacerbated by countless hours spent in flight decks. Still, the pay might well make the risks worthwhile. Annual median wages for airline pilots, copilots and flight engineers are the highest of all our risky jobs.

You can save yourself the cost of college by heading straight to flight school, though most airlines prefer to hire degree-holders. You’ll need the edge. Competition for openings can be fierce, given industry consolidation and the job market’s overall weakness. You’ll also have to clock the flight hours necessary to even apply for an airline job. The Federal Aviation Administration requires applicants for pilot and first officer positions to have a minimum of 1,500 hours of total flight time.

But if you rack up enough experience and airborne hours, annual pay with the major airlines can soar to $200,000 or more, according to AirlinePilotCentral.com. Similarly plump salaries can be had if you land an offer from one of the flying freight giants. FedEx and UPS pay their captains at least $212,000 and $233,000 a year, respectively, starting in just their second years. Bonus: no whiny passengers.

*According to Airline Pilot Central, United offers its 12th year captains of Boeing 777 planes the highest minimum annual salary of all the legacy airlines.

2 of 8

Private Detective

Photo of a man in sunglasses behind the wheel of a car holding a cameraPhoto of a man in sunglasses behind the wheel of a car holding a camera
  • Number of workers:  33,700
  • Rate of injuries/illnesses: 122.6 per 10,000 workers
  • Median workdays missed due to injury/illness: 43
  • Mean annual salary: $60,970
  • Top pay: $98,070
  • Annual fatalities: 1

Digging up information can be pretty strenuous work. Gumshoes sustain most of their injuries in car accidents and physical altercations. But even those tallies are relatively low, so the above-average pay for private eyes may be worth the slightly elevated risk.

Most detective work does not have an education requirement, but the ability to learn on the job is a must, and previous related work experience is a plus. You’ll also need a license in most states; requirements vary. And if you specialize in certain fields, say insurance fraud or computer forensics, a related bachelor’s degree might be necessary for some corporate investigators.

That expertise can not only help you solve whodunits but also push up your pay. Investigative agencies, both large and small, are by far the biggest employers of detectives. Distant runner-ups are law firms and state and local governments.

3 of 8

Registered Nurse

photo of a nurse and a patientphoto of a nurse and a patient
  • Number of workers: 3 million
  • Rate of injuries/illnesses: 1023.8 per 10,000 workers
  • Median workdays missed due to injury/illness: 8
  • Median annual salary: $75,330
  • Top pay: $103,000
  • Annual fatalities: 12

Registered nurses were among those most affected by COVID; they endured a whopping 78,740 injuries and illnesses in 2020, an increase of more than 290% over 2019 when there were 20,150 injuries and illnesses among registered nurses, according to the Bureau of Labor Statistics. In 2020, the number of cases in which registered nurses had days away from work increased by 58,590 cases (290.8 percent) to 78,740 cases, according to the Bureau of Labor Statistics.

The states with the largest increase in cases among nurses who had days away from work were Michigan, where cases rose more than 1,000% and Iowa, which had an increase of more than 900%. .

Typical wages about 88% above the national median might help compensate for  the pain. California registered nurses earn a particularly comfortable wage, into six figures in nine West Coast metro areas.

You need a bachelor’s or associate’s degree in nursing or a diploma from an accredited nursing program in order to become an RN. If you extend your education to a master’s degree, you can earn even more; median annual pay for nurse practitioners is nearly $90,000, and top earners make $120,500 a year.

According to Indeed.com, the average base salary for a registered nurse is nearly $89,000 as of May 2022. That ranges from $80,266 for nurses with less than a year of experience to $104,907 for those with more than 10 years of experience. New York is the highest paying city where registered nurses earn an average of nearly $103,000 a year. But Iindeed says just 62% of registered nurses in the U.S. think their salaries are enough for the cost of living in their area.

4 of 8

Professional Athlete

Photo of a baseball, football and basketball playerPhoto of a baseball, football and basketball player
  • Number of workers: 16,700
  • Rate of injuries/illnesses: 1,542.1 per 10,000 workers
  • Median workdays missed due to injury/illness: 10
  • Median annual salary: $77,300
  • Top pay: $107.5 million
  • Annual fatalities: 10

When your job is to exercise and physically compete on a regular basis, your body is bound to get a little run down. More than half of the injuries reported by athletes are sprains, strains and tears. But what’s becoming a little worse for wear when you get to play the game you love for a living?

The above-average pay doesn’t hurt, either. It would behoove players to save that extra income. Athletic careers offer little stability and are often short-lived. According to Indeed.com, the average professional athlete base salary as of April 20222 was $115,429, including $222,275 for the NFL. The highest paying city for professional athletes was New York, where the average salary is $133,762.

According to the job website Ladders, the top-paid American athlete is Dallas Cowboys quarterback Dak Prescott who earns a jaw-dropping $107.5 million a year.

But just 45% of professional athletes in the U.S. report being satisfied that their salaries are enough for the cost of living in their area.

5 of 8

Police Officer

Photo of a torso of a police officer holding a firearmPhoto of a torso of a police officer holding a firearm
  • Number of workers: 665,000
  • Rate of injuries/illnesses: 121.7 per 10,000 workers
  • Median workdays missed due to injury/illness: 15
  • Median annual salary: $64,610
  • Top pay: $102,530
  • Annual fatalities: 105 

Police work is truly risky business. Exhibit A: The number of work-related deaths for cops is the greatest of all the occupations on this list. Still, the fatality rate is just 18.6 per 100,000 workers, about on par with taxi drivers.

If you don’t mind mixing it up with the occasional physical altercation or high-speed chase, paychecks 59% higher than the national median may be worth sustaining some sprains, strains and tears (the most common injuries for police officers). You can enter the police academy after graduating from high school or getting your GED, though many agencies require some college coursework or a college degree. But you have to be at least 21 years old to become an officer (younger recruits can be cadets and do clerical work until they’re of age). A college degree can help fatten your paycheck, however. A B.A. in criminal justice can push salaries into six figures, according to Payscale.

Indeed.com reports the average base salary for a U.S. police officer is $55,390. This ranges from $46,900 for officers with less than a year of experience to $76,650 for those with more than ten years of experience. The highest paying city is San Jose, California, where officers make an average of $131,000. According to Indeed, 53% of police officers report being satisfied that their salaries are enough for the cost of living in their area. 

Note that while the Bureau of Labor Statistics data for wages for police officers refer to 2021, the most currently available injury and illness information dates to 2018.

6 of 8

Railroad Conductor/Yardmaster

Photo of a trainPhoto of a train
  • Number of workers: 48,030 
  • Rate of injuries/illnesses: 180 per 10,000 workers
  • Median workdays missed due to injury/illness: 22
  • Median annual salary: $63,960
  • Top pay: $82,460
  • Annual fatalities: 11 in 2019

Train-track tragedies are as uncommon as they are heartbreaking. Overall, railroad safety has improved dramatically over the past decade. Heading the crews of freight and passenger trains and rail yards, railroad conductors and yardmasters have the highest rates of injury of all rail transportation workers, but they have the potential to score the biggest paychecks, too. You need just a high school diploma or the equivalent to get started, and you have to be certified by the Federal Railroad Administration to become a conductor. Most employers require one to three months of on-the-job training. Amtrak and some freight companies offer their own training programs, while smaller railroads may send you to a central facility or community college to prep you for the job.

7 of 8

Mining Machine Operator

Photo of a construction vehicle in a minePhoto of a construction vehicle in a mine
  • Number of workers: 14,740
  • Rate of injuries/illnesses: 248.0 per 10,000 workers
  • Median workdays missed due to injury/illness: 23 for surface mining, 46 for underground and 60 for continuous Median annual salary: $60,300
  • Top pay: $78,060
  • Annual fatalities: 5 for surface mining, 7 for underground

Not surprisingly, pumping the Earth for its resources can really suck the life out of you. Extraction workers, a broad category of workers who mine and drill for oil, gas, coal and the like, recorded a total of 92 deaths and 3,990 injuries in 2011. And while some extraction jobs offer scant compensation for such risks, pay for certain mining machine operators is more tempting.

Education requirements are minimal to get started (some jobs don’t even require a high school diploma). But if you go into mining with a college degree, you stand to earn a fatter paycheck and added safety as a mining engineer. Indeed says mining engineers, who inspect mining areas and design underground systems of entries, exits and tunnels, make an average national salary of more than $97,000 as of April 2022. Their job is also dangerous as they are often close to heavy machinery and are exposed to air pollution and in danger of being hurt in a cave-in.

8 of 8

Electrician

Photo of a hand and a screwdriver working on wiresPhoto of a hand and a screwdriver working on wires
  • Number of workers: 729,600 in 2020
  • Rate of injuries/illnesses: 122.2 per 10,000 workers
  • Median workdays missed due to injury/illness: 15
  • Median annual salary: $60,040
  • Top pay: $82,930
  • Annual fatalities: 68 in 2019

With high demand to plug in our various devices at home and work, electricians are practically guaranteed prosperous careers. 

But this profession comes with its stumbling blocks — literally. Electricians’ injuries are most often caused by falls. That’s not surprising, considering they often spend lots of time at construction sites and on ladders. If you watch your step, you typically stand to enjoy paychecks 43% higher than the national median.

You can start your career as an electrician with a high school diploma (or the equivalent) and a paid four-year apprenticeship, which you can find through the U.S. Department of Labor. But having a Bachelor’s degree can help boost your income; according to Payscale, a college-educated electrician can earn up to about $93,000 a year. Most states also require you to be licensed.

According to Indeed.com, the average base salary for an electrician is about $56,800 as of May 2022.

Source: kiplinger.com

What Is the Principal Amount of a Loan?

A personal loan can be a helpful financial tool when someone needs to borrow money to pay for things like home repairs, a wedding, or medical expenses, for example. The principal amount of a loan refers to how much money is borrowed and has to be paid back, aside from interest.

Keep reading for more insight into what the principal of a loan is and how it affects repayment.

Loan Principal Meaning

What is the principal of a loan? When someone takes out a loan, they are borrowing an amount of money, which is called “principal.” The principal on a loan represents the amount of money they borrowed and agreed to pay back. The interest on the loan is what they’ll pay in exchange for borrowing that money.

Does a Personal Loan Have a Principal Amount?

Yes, personal loans do come with a principal amount. Whenever a borrower makes a personal loan payment, the loan’s principal decreases incrementally until it is fully paid off.

Recommended: What Is a Personal Loan?

Loan Principal vs Loan Interest

The loan principal is different from interest. The principal represents the amount of money that was borrowed and must be paid back. The lender will charge interest in exchange for lending the borrower money. Payments made by the borrower are applied to both the principal and interest.

Along with the interest rate, a lender may also disclose the annual percentage rate (APR) charged on the loan, which includes any fees the lender might charge, such as an origination fee, and the interest. As the borrower makes more payments and makes progress paying off their loan principal amount, less of their payments will go towards interest and more will apply to the principal balance. This principal is referred to as amortization.

Recommended: What Is the Average Interest Rate on a Personal Loan?

Loan Principal and Taxes

Personal loans aren’t considered to be a form of income so the amount borrowed is not subject to taxes like investment earnings or wages are. The borrower won’t be required to report a personal loan on their income tax return, no matter who lent the money to them (bank, credit card, peer-to-peer lender, etc.).

Recommended: What Are the Common Uses for Personal Loans?

Loan Principal Repayment Penalties

As tempting as it can be to pay off a loan as quickly as possible to save money on interest payments, some lenders charge borrowers a prepayment penalty if they pay their personal loan off early. Not all charge a prepayment penalty. When shopping for a personal loan, it’s important to inquire about extra fees like this to have a true idea of what borrowing that money may cost.

The borrower’s personal loan agreement will state if they will need to pay a prepayment penalty for paying off their loan early. If a borrower finds that they are subject to a prepayment penalty, it can help to calculate if paying that fee would cost less than continuing to pay interest for the personal loan’s originally planned term.

How Can You Pay Down the Loan Principal Faster?

It’s understandable why some borrowers may want to pay down their loan principal faster than originally planned as it can save the borrower money on interest and lighten their monthly budget. Here are a few ways borrowers can pay down their loan principal faster.

Interest Payments

When a borrower pays down the principal on a loan, they reduce how much interest they need to pay. That means that each month as they make a new payment they reduce their principal and the interest they’ll owe in the future. As previously noted, paying down the principal faster can help the borrower pay less interest. Personal loan lenders allow borrowers to make extra payments or to make a larger monthly payment than planned. When doing this, it’s important that borrowers confirm that their extra payments are going towards the principal balance and not the interest. That way, their extra payments work towards paying down the principal and lowering the amount of interest they owe.

Shorten Loan Term

Refinancing a loan and choosing a shorter loan time can also make it easier to pay down a personal loan faster. Not to mention, if the borrower has a better credit score than when they applied for the original personal loan, they may be able to qualify for a lower interest rate which can make it easier to pay down their debt faster. Having a shorter loan term typically increases the monthly payment amount but can result in paying less interest over the life of the loan and paying off the debt faster.

Cheaper Payments

Refinancing to a new loan with a lower interest rate may reduce monthly loan payments, depending on the term of the new loan. With lower monthly scheduled payments, they may opt to pay extra toward the principal and possibly pay the loan in full before the end of the term.

Other Important Information on the Personal Loan Agreement

A personal loan agreement includes a lot of helpful information about the loan, such as the principal amount and how long the borrower has to pay their debt. The more information the borrower has about the loan, the more strategically they can plan to pay it off. Here’s a closer look at the information typically included in a personal loan agreement.

Loan Amount

An important thing to note on a personal loan agreement is the total amount the borrower is responsible for repaying.

Loan Maturity Date

A personal loan’s maturity date is the day the final loan payment is due.

Loan Interest Rates

The loan’s interest rate and APR should be listed on the personal loan agreement.

Monthly Loan Payments

The monthly loan payment amount will be listed on the personal loan agreement. Knowing how much they need to pay each month can make it easier for the borrower to budget accordingly.

The Takeaway

Understanding how a personal loan works can make it easier to pay one-off. To recap — What is the principal amount of a loan? The principal on a loan is the amount the consumer borrowed and needs to pay back.

Consumers looking for a personal loan may want to consider a SoFi Personal Loan. With competitive interest rates and a wide range of loan amounts available to qualified borrowers, there may be a personal loan option that works for your financial needs.

Learn more about SoFi Personal Loans today

FAQ

What is the principal balance of a loan?

The principal balance of a loan is the amount originally borrowed that the borrower agrees to pay back.

Does the principal of the loan change?

The original loan principal does not change. The principal amount included in each monthly payment will change as the amortization period progresses. On an amortized loan, less principal than interest is paid in each monthly payment at the beginning of the loan and incrementally increases over the life of the loan.

How does loan principal work?

The loan principal represents the amount borrowed. Usually, this is done in monthly payments until the loan principal is fully repaid.


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.

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

How Much Does It Cost to Adopt a Child?

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Additional Resources

Adoption is a life-changing journey. Whether the choice to adopt comes after years of expensive infertility treatments or is a route you’ve always wanted to take, the choice to welcome a new family member is rarely a financial one, but rather a decision of the heart.

But at some point, prospective adoptive parents have to consider the costs. It’s unlikely your decision to adopt will boil down to numbers. But it helps to know what to expect. 

The figures can vary depending on your adoption journey, from almost nothing to upward of $70,000. But you can use them as a baseline to help you financially prepare for starting a family and to make an informed decision about which type of adoption makes the most sense for you.


How Much Does It Cost to Adopt a Child?

There are three basic types of adoption: domestic infant adoption (sometimes called private adoption), international adoption, and public adoption. 


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But if you’re looking to adopt a baby, private and international adoption are the only two real options. Because of the way the foster care system operates, it’s exceedingly rare to be able to adopt an infant through public adoption. Their primary goal is reunifying families whenever possible, which can take years.     

But regardless of your adopted child’s age, some costs are common to all three, such as the expense of a home study, which involves visits by a social worker and background and financial checks. Other costs are unique to the adoption route you choose, such as the travel expenses involved with international adoption.

And the costs vary wildly, so it’s crucial you understand the ins and outs of each adoption type.


Domestic Infant Adoption

When adopting a baby in the United States, you have two options: adopting through an agency or independent adoption.

Costs of Adopting an Infant Through an Agency: $25,000 – $70,000 

Adopting through an agency is more expensive, but there’s also a higher success rate. Also, some agencies offer a sliding scale for those who need help affording adoption, which can potentially save you a few thousand dollars, depending on your income. However, each state has its own laws that regulate adoption fees, including sliding scale fee structures. 

Average Costs of Domestic Agency Adoption

Agency Fees $15,000 – $45,000
Legal Fees $2,500 – $6,000
Birth Mother Expenses $4,000 – $16,250
Home Study Fee $2,750

Adoption agencies are typically full-service operations. Thus, their fees generally include everything involved in the adoption process, which can be complex. The journey to bring a child home involves many parties, including attorneys, social workers, physicians, counselors, government administrators, and adoption specialists. 

There are also costs associated with matching birth parents and adoptive parents. For example, there are advertising expenses to find expectant mothers. And then there are medical expenses and court costs to ensure the health of the mother and child during pregnancy as well as the safety and security of the child after placement.

When you adopt through an agency, it typically completes the entire process from beginning to end, hence the expense. 

Adoption agencies that charge more include more services. For example, if you find an agency with fees at the lower end, it’s likely because their fee doesn’t include the costs of hiring an attorney, unlimited advertising for birth parents, certain birth mother expenses, or adoption disruption insurance (a guarantee you won’t lose your money if the birth mother changes her mind).

So always ask for a written, line-by-line breakdown of the agency’s costs to see what services its rate covers before signing with it. 

Costs of an Independent Adoption With an Attorney Only:  $10,000 – $40,000

If agency adoption is too expensive but you’d still like to adopt a newborn, you can save a lot of money by hiring an attorney to facilitate an independent adoption. Independent adoption happens when prospective parents locate a birth parent on their own and use an attorney to process the necessary paperwork.

Average Costs of Independent (Attorney) Adoption

Legal Fees $3,000 – $6,000
Advertising Fees $0 – $1,000
Birth Mother Expenses $6,000 – $30,000
Home Study Fee $1,000 – $4,000

The cost of an independent adoption can range from $10,000 to $40,000, though it could go higher based on your circumstances. The final bill depends on how much you need to spend to find an expectant mother and how much you pay for medical and living expenses, which may be regulated by state law. 

Further, adopting independently is a bit like trying to sell a house without a realtor. You must find a birth mom on your own, which means advertising for and vetting birth moms without help. 

So, while it can be cheaper, you still have to go it alone. And if you have trouble finding a birth mother, your costs can quickly add up. Agencies give a flat rate no matter how much advertising it takes. If you have trouble finding someone, you could quickly blow past the $40,000 mark.

Another reason independent adoption costs can vary more widely than those through a private agency is because in most states, adoptive parents won’t have their costs reimbursed if a birth mother changes her mind, what’s commonly called a disrupted adoption. Most adoption agencies build disruption insurance into their fee structures. 


International Adoption: $26,500 – $73,000

Those unfamiliar with the adoption process often believe it’s less expensive to adopt a child from another country. But the reverse is more often true. 

Average Costs of International Adoption

Agency Fees $15,000 – $30,000
Legal Fees $500 – $6,000
Immigration Application Fee $1,000 – $2,000
Dossier Preparation and Clearance $1,000 – 2,000
Home Study Fee $1,000 – $4,000
In-Country Adoption Expenses $2,000 – $10,000
Travel Expenses $5,000 – $15,000
Child’s Passport, Visa, Medical Exam $1,000 – $4,000

The cost of an international adoption can range from just over $20,000 to more than $70,000. The wide variance is due to the different requirements of each country. 

International adoption (also called intercountry adoption) has some similarities to domestic adoption. But it has its own unique steps and expenses that can quickly escalate beyond the cost of domestic adoption.

The costs of international adoptions can include immigration processing and court costs (both in the foreign country and the U.S.), travel expenses, foreign and domestic legal fees, foreign agency fees, passport and visa fees, medical examinations, and in-country adoptions expenses (such as foster care for the child, donations to the orphanage, and payments for the in-country adoption liaisons).

The costs also depend on whether a government or private agency, orphanage, nonprofit organization, attorney, or a combination of entities is managing the adoption. 

Additionally, some international adoptions are finalized in the child’s country of origin, while others must be finalized in the U.S., depending on the laws of your state, further adding to the total cost. And depending on the country’s regulations, you may have to plan an extended stay, which means time off work and (potentially) lost wages.


Public Adoption: $0 – $2,500

The least expensive route to growing your family is unquestionably public adoption, or adopting through the foster care system. It’s very difficult to adopt a baby, though. So this option is best for those who wish to adopt an older child.

Public adoption costs next to nothing because the government subsidizes many associated fees and expenses. 

Average Costs of Public Adoption

Agency Fees Usually $0
Legal Fees $0 – $2,000
Home Study Fee $0 – $500

Federal and state financial adoption assistance programs exist to encourage the adoption of children with special needs that make them difficult to place, such as older children, sibling groups, or those with physical or mental disabilities. 

Thus, most prospective parents who are adopting through public agencies will find their state is often willing to waive most or all of the fees associated with adopting through the foster care system, including both the home study fee and attorney fees. 

Additionally, if you become a foster parent and apply to foster-to-adopt, the government subsidizes some of your future adopted child’s living expenses while you await finalization. 

But if you have your heart set on adopting a newborn, foster care adoption isn’t the route for you. It’s nearly impossible to adopt an infant that way. 

Some babies in the foster care system were abandoned by their biological parents or taken by the state due to abuse, neglect, or drug addiction. But no child in the system — infant or otherwise — is immediately available for adoption. 

The state’s No. 1 priority is to reunite children with their biological families. That includes extensive sessions with counselors and social workers. If that effort ultimately proves unsuccessful, the state next tries to place the child with a biological relative. 

Only after these efforts — which could take several years — are children placed for adoption. Thus, by the time babies in foster care become eligible for adoption, they’re no longer babies. But if they were placed with a foster family, that family gets the first chance at adoption. 
However, if you’re interested in adopting an older child and are prepared to help them work through the trauma, the rewards can be immense. My parents adopted my little brother from foster care at the age of 6, and his presence has enriched our family in myriad ways.

Happy Family Son Saving Money In Piggy Bank Budgeting Teaching Saving

Factors That Influence Adoption Costs

Every adoption is unique, and though adoption agencies typically try to work within your budget, unforeseen costs can occasionally raise the base projected cost. And that can have a significant impact on your overall family budget.


Birth Mother Expenses

Depending on your state’s adoption laws, a birth mother may be eligible for coverage of certain expenses. You may have to pay medical expenses related to the pregnancy, including insurance coverage if she’s not already covered or eligible for Medicaid.

If you work with an agency, they should take care of helping her find coverage. But you may still be responsible for some medical expenses, such as doctor copays. Once you’re matched with a birth mother, her medical expenses become your medical expenses. 

Adoption agencies typically work these into their overall fee structure but allow for variances that could affect your cost. For example, you may pay more or less depending on what stage of pregnancy the mother’s in when the agency matches you. If you’re matched in the ninth month, there will be fewer expenses.

And if you’re adopting independently, some or all of the medical costs the birth mother incurs as a result of the pregnancy may be your responsibility as defined by the laws of your state. Consult with an adoption lawyer for more information.  

Additionally, in some states, you may need to cover other birth mother expenses. Birth mother expenses are court-approved funds adoptive families provide to help prospective birth mothers with pregnancy-related expenses. In addition to medical care, costs could include living expenses like maternity clothing, groceries, rent, and transportation. 

Some states that allow birth mothers to request living expenses cap the total amount. For example, Ohio caps the amount birth mothers can be reimbursed for living expenses at $3,000 and Connecticut at $1,500. Other states have no cap but permit a judge to set one on an individual basis. 

Thus, these expenses can vary widely from one adoption to another.


Advertising

The longer you have to wait for a birth mother match, the more money an agency must pay toward advertising to find you one. Ask the adoption agency how they deal with this variable cost. Some charge one flat fee regardless of the amount of advertising required; others set a variable cost.

And if you’re doing an independent adoption, you’ll be covering this expense on your own. If you don’t already know a birth mother to adopt from, you’ll need to find one. That means drawing on your personal connections, using social networks or community organizations, utilizing adoptive family websites, posting print ads, or seeking referrals from adoption attorneys. 

It could take a long time to find a birth mother if you don’t have extensive networking options. And that can substantially drive up your adoption costs. Depending on how long it takes you to find someone, fees for print and online advertising can range from several hundred dollars to tens of thousands. 


Attorney Fees

Lawyers are necessary for dealing with the legal aspects of any adoption. These include the original consent to adoption and termination of parental rights as well as the court proceedings to finalize the arrangement. 

However, the fees can vary considerably based on the type of adoption you opt for. Attorney fees can also vary depending on other factors, including:

  • The Complexity of the Case. Will they need to represent you multiple times in court? All adoptions must eventually be finalized before a judge. But some adoptions — such as international adoptions or those in which birth mother expenses must be court-ordered — could require more paperwork or court appearances than others.
  • The Number of Hours the Attorney Works on the Case. Lawyers charge by the hour. Even if you don’t have to appear in court more than once, adoption can involve a lot of paperwork.
  • The Number of Additional Attorneys or Support Staff Needed. Depending on the complexity of your case or who you hire, you may be represented by a law firm rather than a single attorney. Additionally, your lawyer may use a support team to fulfill basic tasks like clerical work.

Depending on your case, rates are often negotiable. And while attorneys often charge by the hour, many offer a flat fee for certain types of cases. 

For example, a family law attorney might charge a flat fee for a straightforward adoption case that requires a simple filing of paperwork and one court appearance. But they might charge by the hour for a more complex case, such as an international adoption.

Regardless, most lawyers offer payment options so clients can find an arrangement that works for their budget. And all lawyers have fee agreements informing clients of costs upfront. So ensure you thoroughly read the agreement beforehand. 


Time Off

Unfortunately, in the U.S., paid parental leave isn’t guaranteed by law, and many workplaces don’t have this benefit. Even when they do, it may not apply to adoptive parents. So check with your human resources department about whether your workplace offers adoption benefits. 

Whether your employer offers paid time off, all adoptive parents are entitled to up to 12 weeks (three months) of leave through the Family Medical Leave Act. The act equally guarantees maternity and paternity leave for biological and adoptive parents.

But it only guarantees your job and health insurance. It doesn’t guarantee paid time off. If your company doesn’t provide paid parental leave, you need to plan for lost wages.


Final Word

The costs of adoption may feel formidable, especially if you have your heart set on adopting an infant through domestic or international adoption. But they don’t have to be insurmountable.

Many resources are available to help families afford to adopt, including options for post-placement reimbursement, like the adoption tax credit. Talk with adoption professionals to explore your options before completely ruling it out. 

Also, talk with other families who’ve adopted. Many are happy to share stories of how they were able to afford adoption, especially if it helps others fulfill their dreams of a family.

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Sarah Graves, Ph.D. is a freelance writer specializing in personal finance, parenting, education, and creative entrepreneurship. She’s also a college instructor of English and humanities. When not busy writing or teaching her students the proper use of a semicolon, you can find her hanging out with her awesome husband and adorable son watching way too many superhero movies.

Source: moneycrashers.com

Should You Consider a Roth Conversion While the Market is Down?

While a down market may not be a fun time for investors, there are some bright spots and opportunities to be had. Stock market drops like we’ve seen recently might make a Roth IRA conversion more appealing as a strategy for investors.

Should you consider converting a traditional IRA to a Roth during a down market? There are a few things to consider before pulling the trigger.

What is a Roth Conversion?

Before you embark on a Roth conversion, you need to fully understand what it is. When you have a traditional IRA, those are pre-tax dollars that you’re investing. While the money grows tax-free, when you later go to take a withdrawal, every dollar you pull will be taxed.

With a Roth IRA you are investing post-tax dollars, and when you convert a traditional IRA to a Roth, you pay the full tax during the year that you convert, at ordinary income rates. Then, the dollars that you’ve converted will grow tax-free for the remainder of the time that they sit within the investment. When you later take money out of a Roth, it’s all tax-free, as long as you are 59½ or older and follow a few other rules.

What You Need to Know About a Roth Conversion in a Down Market

When you trigger a Roth conversion, you’ll be responsible for paying the tax due on any pre-tax contributions or earnings within the traditional IRA. The benefit here is that if the market has dropped, it’s likely that your IRA value has dropped along with it – so your full value has gone down, and you’ll be paying taxes on the current value (which is lower, due to the market being down than it was months ago). So, in theory, you can convert a larger portion of your IRA in a down market and pay less in taxes than you could in years when the market is up.

Here’s an example: If you had a traditional IRA with $100,000 at the start of the year, and due to the market, it is now down to $85,000, you could choose to convert that entire IRA to a Roth and only pay tax on the $85,000 instead of the $100,000 that it was months ago. Assuming that these dollars will rebound in the market in the future, you’ve picked a good opportunity to convert.

It’s important to work with both a financial adviser and your tax professional to determine not only the amount of tax you’ll owe during the year that you perform the Roth conversion, but also how long it would potentially take you to break even.

What are the Pros of a Roth Conversion?

Converting from a traditional IRA to a Roth has many potential benefits for investors. Because a Roth IRA allows for dollars to grow tax-free, all the growth is also tax-free. There are also no RMDs, or required minimum distributions, on a Roth IRA once you turn 72. With a traditional IRA or 401(k), you have a set minimum you must withdraw each year once you hit RMD age, but Roth IRAs do not adhere to this rule.

Tax rates are still relatively low, historically, which means now is as good of a time as any for a Roth conversion, from a tax perspective. Tax parity is another benefit of Roth IRAs because you have different “buckets” of income to pull from at retirement in an effort to keep your taxes low during retirement. Roth IRAs also benefit your spouse and heirs at inheritance time, as the tax-free benefits pass along to them in various ways, depending on the time limit and amount, and their relationship with you, the deceased.

A Few Cautions on Conversions

Roth IRA conversions aren’t all benefits though, there are a few things to be aware of. There’s the five-year rule, where you must wait five years after a conversion before making a withdrawal or else you could incur a 10% penalty. Keep in mind that this five-year rule only applies to those who are younger than 59½. After you reach that age, the five-year rule and its penalties no longer apply.

Triggering a Roth conversion may also increase your adjusted gross income (AGI), which could compound other issues, such as Medicare premiums. This may also increase your tax rate.

The best way to determine if a Roth conversion is the right move for you during the down market is to work with a financial adviser and a tax professional so you can get feedback on your specific financial situation.

Diversified, LLC does not provide tax advice and should not be relied upon for purposes of filing taxes, estimating tax liabilities or avoiding any tax or penalty imposed by law. The information provided by Diversified, LLC should not be a substitute for consulting a qualified tax adviser, accountant, or other professional concerning the application of tax law or an individual tax situation.
Nothing provided on this site constitutes tax advice. Individuals should seek the advice of their own tax adviser for specific information regarding tax consequences of investments. Investments in securities entail risk and are not suitable for all investors. This site is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.

President, Partner and Financial Adviser, Diversified, LLC

In March 2010, Andrew Rosen joined Diversified, bringing with him nine years of financial industry experience.  As a financial planner, Andrew forges lifelong relationships with clients, coaching them through all stages of life. He has obtained his Series 6, 7 and 63, along with property/casualty and health/life insurance licenses. 

Source: kiplinger.com