Borrowing From Your 401k: Pros and Cons

Borrowing From Your 401(k): Pros and Cons

A 401(k) loan allows you to borrow money from your retirement savings and pay it back to yourself over time, with interest. While this type of loan can provide quick access to cash at a relatively low cost, it comes with some downsides. Read on to learn how 401(k) loans work, when it may be appropriate to borrow from your 401(k), and when you might want to consider an alternative source of funding.

What Is a 401(k) Loan & How Does It Work?

A 401(k) loan is a provision that allows participants in a 401(k) plan to borrow money from their own retirement savings. Here are some key points to understand about 401(k) loans.

Limits on How Much You Can Borrow

The Internal Revenue Service (IRS) sets limits on the maximum amount that can be borrowed from a 401(k) plan. Typically, you can borrow up to 50% of your account balance or $50,000, whichever is less, within a 12-month period.

Spousal Permission

Some plans require borrowers to get the signed consent of their spouse before a 401(k) loan can be approved.

You Repay the Loan With Interest

Unlike a withdrawal, a 401(k) loan requires repayment. Typically, you repay the loan (plus interest) via regular payroll deductions, over a specified period, usually five years. These payments go into your own 401(k) account.

Should You Borrow from Your 401(k)?

It depends. In some cases, getting a 401(k) can make sense, while in others, it may not. Here’s a closer look.

When to Consider a 401(k) Loan

•  In an emergency If you’re facing a genuine financial emergency, such as medical expenses or imminent foreclosure, a 401(k) loan may provide a timely solution. It can help you address immediate needs without relying on more expensive forms of borrowing.

•  You have expensive debt If you have high-interest credit card debt, borrowing from your 401(k) at a lower interest rate can potentially save you money and help you pay off your debt more efficiently.

When to Avoid a 401(k) Loan

•  You want to preserve your long-term financial health Depending on the plan, you may not be able to contribute to your 401(k) for the duration of your loan. This can take away from your future financial security (you may also miss out on employee matches). In addition, money removed from your 401(k) will not be able to grow and will not benefit from the effects of compound interest.

•  You may change jobs in the next several years If you anticipate leaving your current employer in the near future, taking a 401(k) loan can have adverse consequences. Unpaid loan balances may become due upon separation, leading to potential tax implications and penalties.

How Is a 401(k) Loan Different From an Early Withdrawal?

When you withdraw money from your 401(k), these distributions typically count as taxable income. And, if you’re under the age of 59½, you typically also have to pay a 10% penalty on the amount withdrawn.

You may be able to avoid a withdrawal penalty, if you have a heavy and immediate financial need, such as:

•  Medical care expenses for you, your spouse, or children

•  Costs directly related to the purchase of your principal residence (excluding mortgage payments).

•  College tuition and related educational fees for the next 12 months for you, your spouse, or children.

•  Payments necessary to prevent eviction from your home or foreclosure

•  Funeral expenses

•  Certain expenses to repair damage to your principal residence

While the above scenarios can help you avoid a penalty, income taxes will still be due on the withdrawal. Also keep in mind that an early withdrawal involves permanently taking funds out of your retirement account, depleting your nest egg.

With a 401(k) loan, on the other hand, you borrow money from your retirement account and are obligated to repay it over a specified period. The loan, plus interest, is returned to your 401(k) account. During the term of the loan, however, the money you borrow won’t enjoy any growth.

Recommended: Can I Use My 401(k) to Buy a House?

Pros and Cons of Borrowing From Your 401(k)

Given the potential long-term cost of borrowing money from a bank — or taking out a high-interest payday loan or credit card advance — borrowing from your 401(k) can offer some real advantages. Just be sure to weigh the pros against the cons.


•  Efficiency You can often obtain the funds you need more quickly when you borrow from your 401(k) versus other types of loans.

•  No credit check There is no credit check or other underwriting process to qualify you as a borrower because you’re withdrawing your own money. Also, the loan is not listed on your credit report, so your credit won’t take a hit if you default.

•  Low fees Typically, the cost to borrow money from your 401(k) is limited to a small loan origination fee. There are no early repayment penalties if you pay off the loan early.

•  You pay interest to yourself With a 401(k) loan, you repay yourself, so interest is not lost to a lender.


•  Borrowing limits Typically, you are only able to borrow up to 50% of your vested account balance or $50,000 — whichever is less.

•  Loss of growth When you borrow from your 401(k), you specify the investment account(s) from which you want to borrow money, and those investments are liquidated for the duration of the loan. Therefore, you lose any positive earnings that would have been produced by those investments for the duration of the loan.

•  Default penalties If you don’t or can’t repay the money you borrowed on time, the remaining balance would be treated as a 401(k) disbursement under IRS rules. This means you’ll owe taxes on the balance and, if you’re younger than 59 1 ⁄ 2, you will likely also have to pay a 10% penalty.

•  Leaving your job If you leave your current job, you may have to repay your loan in full in a very short time frame. If you’re unable to do that, you will face the default penalties outlined above.

Alternatives to Borrowing From Your 401(k)

Because withdrawing or borrowing from your 401(k) comes with some drawbacks, here’s a look at some other ways to access cash for a large or emergency expense.

Emergency fund Establishing and maintaining an emergency fund (ideally, with at least three to six months’ worth of living expenses) can provide a financial safety net for unexpected expenses. Having a dedicated fund can reduce the need to tap into your retirement savings.

Home equity loans or lines of credit If you own a home, leveraging the equity through a home equity loan or line of credit can provide a cost-effective method of accessing extra cash. Just keep in mind that these loans are secured by your home — should you run into trouble repaying the loan, you could potentially lose your home.

Negotiating with creditors In cases of financial hardship, it can be worth reaching out to your creditors and explaining your situation. They might be willing to reduce your interest rates, offer a payment plan, or find another way to make your debt more manageable.

Personal Loans Personal loans are available from online lenders, local banks and credit unions and can be used for virtually any purpose. These loans are typically unsecured (meaning no collateral is required) and come with fixed interest rates and set terms. Depending on your lender, you may be able to get funding within a day or so.

The Takeaway

Borrowing from your 401(k) can provide short-term financial relief but there are some downsides to consider, such as borrowing limits, loss of growth, and penalties for defaulting. It’s a good idea to carefully weigh the pros and cons before you take out a 401(k) loan. You may also want to consider alternatives, such as using non-retirement savings, taking out a home equity loan or line of credit, or getting a personal loan.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2023 winner for Best Online Personal Loan overall.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see Equal Housing Lender.

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


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The Ultimate Moving Checklist

So, you’ve decided to move. Be it for a new job, a fresh start, or just for an adventure in an exciting new locale, moving can be a great way to kick off change in your life.

But before you start assembling boxes, folding clothes, and bubble wrapping your most prized possessions, there are a few key steps — some financial and some practical — you might want to take to ensure a seamless transition. Here’s a moving checklist that can help you get from your old home to your new place with relative ease.

3 Months Before the Move

Pick a Date and Make a Moving Budget

Pick a Day to Move

Assuming your new place is ready to go and you’ve already discussed the move with your current landlord (or have sold your current home), a good first step is to decide on a moving day.

The least expensive times to move are typically during the week. Moving companies will often offer better rates on a Monday, Tuesday, Wednesday, or Thursday because they aren’t typically as busy as on weekends.

You might also want to try to schedule your move in the morning. This is helpful during the summer, since temperatures aren’t as hot. Also, if you aren’t moving far, an early move will give you a good portion of the day to start getting settled in your new home.

Choose a Moving Company

Once you’ve picked the day, it’s time to pick the mover. You might start your search by asking people you know who have recently moved for recommendations. You can also check out the reviews online and send out a few quote requests to local movers. It can be a good idea to interview and get estimates from at least three movers before making a choice.

Create a Budget

Moving can be costly, and movers may be one of your biggest expenses. The average per-hour cost for a local move is $25 to $50 per mover, per hour. So if you use a two-person team for four hours, it can run at least $200 to $400, just for labor. You may also have to pay for transportation fees, materials, and gas.

For a long-distance move, costs go up considerably. You may need to factor gas, tolls, and lodging if the trip is more than one day, along with additional fees for drivers. All told, a long-distance move can run anywhere from $600 to $10,000 (or more), depending on the moving company you choose, the distance, and the size and amount of your belongings.

When you create your moving budget, you’ll want to factor in other moving costs, which may include:

•  Any penalties you might incur for leaving a lease early

•  Ending a phone, cable, or internet package early

•  Any and all repairs you need to make for your new home

•  Transportation cost to get to your new place

•  Any additional items you need to buy for your new place

Recommended: Things to Budget for After Buying a Home

Inform the Important People in Your Life

Now might be the time to share the news of your move. Your friends and family may already know, but don’t forget to tell other important people about your departure schedule, such as your children’s school and your employer. That way they have plenty of time to make any necessary arrangements.

You may also want to contact a few government agencies. For example, the U.S. Postal Service recommends setting up mail forwarding about two weeks in advance of a move. The service may be in place in as few as three days, but it’s smart to have some wiggle room.

If you’re moving to a new state, you may also want to set up an appointment at your new state’s department of motor vehicles, as you may be required to get a new driver’s license or register your vehicle in that state. And, if you’re moving during election season, reach out to your new area’s voter registration office to ensure you’re all set up to cast your ballot.

Need help financing your move?
Check out SoFi’s relocation loans.

1 Month Before the Move

Evaluate Your Belongings and Declutter


You might want to do a walkthrough of your current home and look at each and every item you own. Then grab two sticky note pads with different colors, one to represent the things you want to keep and one to represent the things that must go. Every single item should get a sticky note.

Start Selling

Instead of simply throwing away the things you no longer want, you could try to sell them online. After all, your trash could certainly be another person’s treasure. And this way you could have a few dollars in your pocket to spend on buying new things for your new home.

Donate Unwanted, but Still Usable, Items

If you’d prefer to donate some or all of your gently used but no-longer-needed possessions, you may want to reach out to The Salvation Army, Goodwill, Habitat for Humanity, a local thrift store, or a nearby homeless shelter to arrange for a pickup or delivery.

Recommended: 23 Easy Ideas to Pay It Forward

Call Your Cable, Internet, and Utility Providers

Now might be a good time to call your current cable, internet, and utility providers to let them know when you will be cutting off service. You’ll also want to reach out to providers that service your new home to set up services. That way, you’ll have electricity, WiFi, and everything you need up and running as soon as you get there.

Cancel Other Subscription Services

If you belong to a gym, community supported agriculture (CSA), or any other local group or subscription service, you’ll want to be sure to cancel your membership so you don’t continue to get charged after you move.

Three Weeks to One Week Before the Move

Collect Boxes and Start Packing

Collect Boxes

As the moving date gets closer, it’s time to acquire boxes. You can buy them or, to save money, start hunting down free boxes. Good sources include local restaurants, liquor stores, coffee shops, and supermarkets. Simply call or stop in and ask what days they typically get deliveries and if you can come to take the used boxes off their hands. Then, over the week or so, stop in and collect as many boxes as you can.

Buy the Moving Supplies You Need

You’ll also need to pick up some other items for packing, including heavy-duty packing tape, a marker for labeling things, and bubble wrap for fragile items. If you’re not hiring a moving company, you might consider renting a dolly, which can make moving heavy items much easier, plus furniture pads to protect your belongings from scratches and dings. Sheets and towels can also be used to protect furniture and as padding inside of boxes.

Start Packing

At this point, it’s probably safe to start packing the things you aren’t currently using — out of season clothes, most of your dishes, extra blankets, towels, framed photos, and decorations. You’ll want to leave out the essentials so you’re not looking through boxes to find things you use on a daily basis.

Recommended: How to Move Across the Country

1 Week Before the Move

Tie Up Any Loose Ends

Finalize Important Details

By now, you’ve likely already canceled your local services, subscriptions and memberships, but there will likely still be a few loose ends to tie up. Think about how you can make the transition into your new life as seamless as possible. For example, do you need to switch banks? If you have a pet, you may want to select a vet in your new neighborhood in case your pet needs care soon after you move.

Confirm Bookings

You’ll have a lot of things to do before moving, but it’s important to take some time to double check all of your bookings. Confirm when your movers are coming, what time your flights are booked (if applicable), and that you’ve arranged for your new utilities to turn on. There are a lot of moving parts that come with a move, so it’s easy to get booking details mixed up or to let things fall through the cracks.

1 Day Before the Move

Pack Your Final Belongings and Say Goodbye

Pack Up

Pack up any of the remaining items you’ve left out for day-to-day living and make sure all your boxes and suitcases are ready to go for the move.

Create a Folder of Important Documents

Have a folder ready for the move that includes your old lease (if you’re renting), along with the new signed lease, the contract for the movers, and all receipts from the move.

Say Goodbye — Your Way

Consider ordering your favorite local takeout, having friends over for a farewell drink, and giving thanks to everything this home has provided for you. It deserves it.

Move-In Day Checklist

Embrace a Blank Slate

Make Sure Everything Arrived

On move-in day, you’ll want to focus on finalizing your move. There will be plenty of time later to rearrange furniture and to organize your new walk-in closet. Instead, you may want to concentrate on making sure all of your belongings made it from your old home to your new one, so you can start fresh tomorrow without making a trip back to grab that last box you forgot.

Clean Up

As tempting as it can be to start unpacking right away, this can be a great time to give your new home a deep clean. Once you unpack, it won’t be so easy to clean the inside of every cabinet and to vacuum every inch of carpet. This may not be one of the most fun things to do when moving, but it can be a good way to make your new house more homey.

Recommended: 32 Inexpensive Ways to Refresh Your Home Room by Room

Unpacking Checklist

Unpack and Get To Know Your New Home


Now that the hustle and bustle of the move is over, you can focus on unpacking and taking your time to find the right spots for all of your belongings. Unpacking in the reverse order of how you packed allows you to access your most-needed belongings first.

Think Ahead

While you’re unpacking, you’ll get a lot more familiar with your new home and all of its needs. Keep a pen and paper at hand so you can create a post-moving to-do list. Take note of any repairs you want to make now and create a maintenance checklist you can refer back to in the future.

The Takeaway

Moving can be stressful, but you avoid ever feeling completely overwhelmed by making a moving checklist well ahead of your move date, then tackling each project one at a time.

Moving can also be costly, so you may also want to make a plan for how you’ll pay for your move well in advance. This gives you time to save up what you’ll need or, if necessary, explore financing options. You may be able to get an unsecured personal loan to cover the cost of a move. Sometimes referred to a moving or relocation loan, this type of financing typically comes with fixed rates and set repayment terms, and rates tend to be much lower than credit cards.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2023 winner for Best Online Personal Loan overall.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see Equal Housing Lender.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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


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5 Things to Consider When Choosing a Mortgage Lender

Buying a home is likely one of the biggest moves you’ll make in your personal and financial life, and your home may represent one of your largest assets.

If you take out a mortgage to help you buy it, you will end up making mortgage payments — and if your lender ends up servicing your loan after closing — you will make payments to that lender, possibly for decades. That’s why it’s important to shop around before committing to a mortgage lender and loan program that’s right for you.

Today, borrowers have more choices than ever. With the rise of online and marketplace lenders, there’s increased competition, which fuels improvements in process, service, and cost — and can mean a much better experience for you.

With so much choice, however, finding the right lender can feel overwhelming. To help simplify the process, we’ve listed five key things you may want to consider when shopping for a mortgage lender.

1. Does the lender offer competitive interest rates?

A good first step is to get the lay of the land by looking at various lenders and the rates and fees they advertise. Taking this step may help you understand what the market looks like overall and who may be offering competitive rates.

Remember that the rates and programs you are ultimately eligible for will likely depend not only on the lender you choose but also your needs and financial situation. However, this initial comparison can give you a baseline to start working from.

You’ll also want to look at the common loan types offered. Interest rates for fixed-rate loans do not change over the life of the loan. Interest rates for adjustable-rate mortgages (ARMs) can change over the life of the loan and are influenced by benchmark interest rates.

Hybrid adjustable-rate mortgages are mortgages that offer an initial fixed rate for a certain period of time. These hybrid ARMs often offer a low introductory rate for either 1, 3, 5, 7 or 10 years. Some hybrid ARMs will also offer an interest-only payment option for a specified period of time such as 10 years.

When the initial fixed-rate period is over, the interest rate is normally reviewed on an annual basis for adjustment. Although the benchmark index tied to the ARM rate may have moved much higher, these loans typically have yearly and annual interest rate caps to control rate and payment fluctuations.

When talking to a lender about their mortgage offerings, it’s a good idea to not only ask about interest rate, but also about APR, or annual percentage rate. This figure takes into account certain fees like broker fees, points, and other applicable credit charges, giving you an easier way to compare loan offers.

2. Does the lender offer loan products with terms that suit your needs?

Your needs and financial situation can play a large part in which mortgage programs you choose and are eligible for. For example, some lenders require a 20% down payment to qualify for a mortgage.

If you can’t pay 20%, lenders may require that you have private mortgage insurance (PMI), which covers them in case you default on your mortgage payments. Mortgage insurance premiums vary depending upon many factors.

It’s a good idea to ask your chosen lender how much insurance payments will add to your monthly payment. Also keep in mind that, in certain circumstances, PMI does not apply, such as with some jumbo loan programs. In addition, PMI can be eligible for removal from your home loan later if certain criteria is met.

If you can’t afford a 20% down payment, you can look for lenders who offer more flexible down payment requirements. Also, consider what term — the length of time you’ll be paying off your loan — works best for you. See what kinds of terms lenders offer and the interest rates that accompany those terms.

A shorter term will likely come with higher monthly payments, but lower interest rates that result in lower interest charges over time. Not everyone can afford those higher monthly payments, however, in which case a longer term may be preferable. Note that longer terms usually mean that you end up paying more in interest over the life of the loan.

Once you’ve found a loan with rates and terms that work for you, you can typically obtain a rate lock from your lender, generally for the time it takes to close on the transaction, such as 30 or 45 days.

You may have to pay a fee if you want to lock in the rate for a longer extended period of time. However, once you do, it will guarantee that you have access to the mortgage at a specific rate during the lock-in period, even if interest rates rise while your loan is being processed.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

3. What type of origination, lender, and other fees might you be responsible for?

We’ve already alluded to the fact that you’ll likely be on the hook for other costs in addition to your down payment. One good idea is to request a Loan Estimate (LE) for any mortgage you’re considering to see a solid estimate of what costs you may be on the hook for.

Keep your eye out for things like:

•   Commissions Mortgage brokers are paid on commission, which is either paid by you, your lender, or a combination of both.
•   Origination fees These fees may cover the cost of processing your loan application.
•   Appraisal fees Appraisal fees cover the cost of having a professional come in and put a value on the home you want to buy. You must have a property valuation of some type in order to borrow money to buy a home and in most cases a full appraisal is required.
•   Credit report fee This covers the cost of the bank obtaining your credit report from the credit reporting bureaus.
•   Discount points Optional fee the borrower can pay to reduce or buy down their interest rate.

Unless you receive a seller or lender credit towards closing costs, the added fees will impact the overall cost of buying the home, so doing your research and reading the fine print up front might pay off.

Depending on the loan terms and fees charged, some will be paid upfront at the beginning of the application process (such as credit report and appraisal), while other fees might be paid at loan closing (such as lender fees and title insurance).

In some cases, under certain loan programs, you can borrow the money to cover these fees, which will increase your overall mortgage payment(s). Therefore, having a clear understanding of what fees you’ll owe is critical to understanding how much you’ll end up paying.

It’s a good idea to request from your lender a quote on all the costs and fees associated with the loan. A Loan Estimate (LE) is a typical form used to disclose loan fees to a borrower. Ask questions about what each fee covers. Have your lender explain any fees you don’t understand, and then find out which ones may be negotiable or can be waived entirely.

4. How much of the process is online vs. on paper or in person?

How much facetime you have to put in to apply for a mortgage can vary by lender. Some online banks will have you complete the process entirely online, while brick and mortar banks may require an in-person visit.

In the past, applying for a mortgage required a lot of physical paperwork. But much of this has now been replaced by online interactions. For example, you are now likely able to send your financial information like bank statements and W-2s electronically.

Lenders who complete much, or all, of the mortgage application process online may be able to offer lower rates or fees, since they don’t have the cost of brick and mortar bank locations and their employees to maintain.

That said, if you’re someone who likes face-to-face help, you may consider a lender that allows you to apply in person or a lender who utilizes facetime.

5. How quickly can the lender close once you’re in contract?

Once you’ve found the home you want to buy and you’re under a purchase contract with the seller, the amount of time it takes to close on a loan can vary. Depending on the situation, you may have to wait for inspections, appraisals, and all sorts of paperwork to go through before you can close.

However, your lender may offer you ways to speed up the process. For example, you may be able to get preapproved for a loan, which takes care of a lot of potentially time-consuming paperwork upfront before you’ve even started shopping for a home.

Ask your lender how much time their closing process usually takes and what you can do to expedite it. Especially if you’re crunched for time, their answer can have a big impact on which lender you choose. After all, the faster you’re financed, the sooner you’ll be able to move in.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

SoFi Mortgages
Terms and conditions apply. Not all products are offered in all states. See for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see Equal Housing Lender.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.


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How Much Does a Surrogate Cost?

Using a surrogate, also known as a gestational carrier, involves an arrangement in which a woman carries and gives birth to a child for another couple or individual.

Surrogacy can allow would-be parents an opportunity to have a baby with whom they have a biological link. But gestational carrying can also be complicated, with complex laws and medical procedures that can make the process expensive.

The cost of using a surrogate can run anywhere from $100,000 to $225,000, depending on where you live, whether you need an egg donor, and how many rounds of IVF your surrogate will go through before she conceives.

Read on to learn more about potential fees involved in using a surrogate, as well as some ways to make the process more affordable.

Why is Surrogacy so Expensive?

The lump sum of surrogacy can seem overwhelming. But it’s important to keep in mind that the estimated overall cost is based on averages.

Because surrogacy is unique for all families, your expenses may differ. But knowing the various elements of surrogacy can help you see how each cost plays into the overall price. Here are some typical surrogacy costs that aspiring parents should anticipate.

💡 Quick Tip: Need help covering the cost of a wedding, honeymoon, or new baby? A personal loan can help fund major life events — without the high interest rates of credit cards.

Agency Fee

Because fertility clinics do not find surrogates, would-be parents typically need to find a carrier through a personal connection or an agency. Surrogacy agencies, which have a network of surrogates who have met certain requirements, charge fees that can run $30,000-plus.

The fee covers all of the services provided by the agency, including background checks, screenings, support and education, advertising, marketing, and more.

Agency fees should remain fixed, regardless of how long it takes to complete the surrogacy process.

Recommended: Exploring IVF Financing Options

Surrogate Fee

Working with a gestational carrier can be expensive, running somewhere between $30,000 and $70,000. This fee is paid to the surrogate as compensation for undergoing tests and fertility treatments, carrying and delivering the child, taking on the medical risks involved, and putting themselves through the physical and emotional challenges that surrogacy and pregnancy can involve.

Fertility Clinic Fee

You will also need to work with a fertility clinic to produce embryos. In many cases, couples have already done this before pursuing surrogacy. This can range from $20,000 to $50,000.

Recommended: How Much Does IVF Cost?

Pregnancy Costs

The cost of carrying and delivering a baby can vary in the U.S., depending on location, type of birth, and whether there are any complications, but tends to average around $14,000. The surrogate’s insurance may or may not cover any of this cost. If the surrogate doesn’t have health insurance, the would-be parents may need to purchase a short-term or maternity-only policy for them.

Legal Fees

Surrogacy can involve several psychological, ethical, and legal complexities, and typically requires legal contracts that outline each parties’ responsibilities and compensation.

The intended parents and surrogate typically each need an attorney to negotiate and draft this contract, as well as complete other necessary services. The Intended parents typically pay for everyone’s legal expenses, which can cost from $7,000 to $15,000.

Other Potential Costs

Other expenses that can come up include travel, pregnancy clothing, lost wages, payment for breast milk, and counseling fees.

Recommended: How Much Does it Cost to Raise a Child to 18?

Is Surrogacy Covered by Insurance?

Surrogacy is not typically covered by health insurance, but the situation isn’t always cut and dry. Some health insurance plans include language that clearly specifies the plan does not cover costs for a woman for surrogacy, while a few plans state that they do provide coverage.

Many insurance plans, however, don’t make it entirely clear whether they do or don’t cover surrogacy. Surrogacy agencies, however, can often help intended parents evaluate the surrogate’s health insurance plan to determine whether or not the pregnancy will be covered.

In some cases, the would-be parents will need to purchase outside insurance for the surrogate from a comprehensive surrogacy insurance agency, which can run $12,000 to $30,000.

💡 Quick Tip: With lower fixed interest rates on loans of $5K to $100K, a SoFi personal loan for credit card debt can substantially decrease your monthly bills.

What To Know About Surrogacy Fees

Surrogacy fees are a large portion of the overall surrogacy price tag. But there are ways to possibly minimize these fees.

One common route is using what’s called a “compassionate” surrogate. This is someone — perhaps a friend or relative — who does not want a fee for surrogacy. While the would-be parents will be responsible for expenses, eliminating a carrying fee can make surrogacy much more affordable.

Another option is to search for a surrogate independently instead of going through an agency. This can minimize fees, but can also potentially be complicated because of the complexities involved in surrogacy.

Some families choose a surrogate who lives outside the United States as a way to save on potential costs. International surrogacy may be facilitated by an agency in the home country of the potential surrogate. This too, however, may come with risks including legal risks and travel complications.

Regardless of whether a family uses an agency, a connection, or pursues a surrogate through an independent channel, they will still likely need to use a reproductive lawyer to craft a legal agreement, as well as psychological counseling for all parties to make sure everyone has a place to explore the complex emotions that can come from surrogacy.

How to Pay for Surrogacy

Many people don’t have an extra six figures sitting around in a bank account that they can tap to pay for using a surrogate. But there are some ways that hopeful parents can find funds. Here are some options you may want to consider.

Employee benefits and health insurance. It’s not very common for companies to offer a surrogacy benefit, but it can’t hurt to inquire. There are some companies that offer a maximum family-planning benefit that could be used for processes such as surrogacy. It can also be worthwhile to check your own health insurance benefits. While it may not cover the surrogate’s pregnancy, it may cover procedures would-be parents need to undergo.

Saving up in advance. If you are planning surrogacy for some time in the future, you may want to start putting cash away every month into a savings account, ideally with an above-average interest rate, set up specifically for surrogacy. You can also automate savings by setting up a recurring monthly deposit into this account so it happens no matter what.

Considering financial resources. Some aspiring parents may want to reach out to their family for financial help, or even crowd-source funds through their social media networks. Others may tap into equity, such as a home equity line of credit (HELOC) or borrowing from their 401(k). Of course, it can be a good idea to explore the pros and cons of these types of loans, including a timeline to pay them back.

Taking out a personal loan. Taking out a personal loan, sometimes referred to as a family planning loan, can be a good option for some would-be parents. Unlike a credit card, a fixed-rate personal loan gives transparency over interest rate and exactly how much money you’ll need to pay back for the life of the loan.

Personal loans can also come with significantly lower interest rates than credit cards. Prior to applying for a loan, it can be a good idea to understand any fees and penalties. Surrogacy agencies and fertility centers also may have loans available.

Applying for a grant. There are some national, regional, and local grants available for some families pursuing surrogacy. Qualifying for a grant may depend on income, location, and personal situation.

Recommended: 5 Tips for Saving for a Baby

The Takeaway

Surrogacy is a process that can help would-be parents have a baby, but it typically comes with considerable costs. These expenses include the medical, legal, and insurance fees that come with contracting a surrogate.

While costs can vary widely based on your location and the type of surrogacy you choose, the total can run around between $100,000 and $225,000.

Because this family-building option is pricey, aspiring parents may want to try to save up in advance, tap certain financial resources, explore grants, and find ways to trim costs, such as asking a friend or family member to be their surrogate.

Another way to help pay for surrogacy is to take out a personal loan, which often comes with a lower interest rate than credit cards.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2023 winner for Best Online Personal Loan overall.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see Equal Housing Lender.

This article is not intended to be legal advice. Please consult an attorney for advice.


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Paying for College: A Parent’s Guide

Many parents want to do whatever they can to help pay for their child’s higher education, which can be quite expensive. In-state education can top $100,000 for four years, and a private education can total $224,360 on average, according to figures from the Education Data Initiative.

Starting to plan and save early and consistently can be vital. But knowing how much to save and where to stash those funds, plus pay for any balance due, is equally important.

Need guidance? Here, what parents need to know about paying for their child’s college education.

How Much Will I Need to Save?

The answer to this question is subjective. Do you plan to try to cover 100% of your child’s college costs, or will student loans, if needed, be palatable? Will your child likely qualify for need-based or merit aid? Might your high achiever be eligible for a college that meets some or all of demonstrated need?

Have you carved out your own retirement savings plan and an emergency fund, and have you focused on paying down your own debt? It’s smart financial planning to get your house in order first, so you can save for your offspring’s college.

The cost of attendance, or “sticker price,” on every college website that estimates the total cost of a year of school can cause, well, sticker shock. But most students do not pay sticker price. They pay the net price, which is that number minus scholarships, grants, and financial aid.

The College Board reports that the average published tuition and fees for full-time students for 2022-23 were:

•   Public four-year college, in-state student: $10,950

•   Public four-year college, out-of-state student: $28,240

•   Private nonprofit four-year college, any student: $39,400.

Remember that the above numbers cite tuition and fees, not the total cost of attendance, which also includes the estimated annual cost of room and board, books, supplies, transportation, loan fees, miscellaneous expenses (including for a personal computer), and eligible study-abroad programs.

The upshot: Anticipating the cost of attendance of various colleges, your family’s eligibility for merit and need-based aid, and borrowing tolerance can help you prepare.

If you put a number on a savings target, another key question is: How can I start saving for college?

What Are Some Strategies for Saving?

Here are a few options to consider:

Automating savings. You could set up automatic transfers to a designated college savings account, so you won’t even have to think about it. You can transfer from your checking account or, if it’s an option, opt to direct deposit a portion of your paycheck directly to your savings account.

Putting windfalls to work. Another way to boost savings comes from the planned and unplanned windfalls in life. Getting a tax refund or receiving an inheritance? Keeping an eye out for unexpected money can help you achieve your savings goals.

Pruning expenses. If you haven’t already trimmed your expenses, you can use the natural course of time to turn expenses into savings. For example, once your child no longer needs diapers, you can put that cost toward college savings. When they no longer need daycare, you could funnel what you were paying into your account. If piano lessons end, it’s yet another chance to increase how much you can save.

Finding scholarship matches. Once children get closer to high school graduation, you can help them find scholarships. FastWeb and are two popular sites among many that will help you search for opportunities. Many allow you to set up a profile for your child that may include interests, intended majors, and even preferred schools — data points that will be used to help match your child with scholarships.

It’s usually more cost-effective to save than borrow, of course. Every dollar you borrow can cost you more than that dollar once you add interest.

Many parents use a mix of sources to fund their children’s education. For example, you could save a third of your target, pay a third during your child’s time in college, and borrow the last third.

💡 Quick Tip: You can fund your education with a low-rate, no-fee private student loan that covers all school-certified costs.

Which Savings Plan Is Right for Me?

If you have your target goal and a plan to make regular contributions, you’re ready to weigh which investment vehicles will fit your needs. Here are some common savings tools.

529 Plans

The 529 college savings plan is a tax-advantaged account to save for higher education costs, and it has become popular with parents saving for college. Anyone, even non-family members, can set one up and make contributions on behalf of a beneficiary. Some details:

•   Contributions to 529s are made with after-tax dollars, but they grow tax-free, and capital gains are tax-free as long as withdrawals are used to pay for qualified education expenses.

•   Any withdrawals that are not used for higher education expenses may be subject to penalties and taxes.

•   If your child doesn’t go to college, the funds still need to be spent on education to avoid taxes and penalties. But you have the ability to change the beneficiary of a 529 account to another family member.

This means that if your oldest child does not use the funds for college, you can change the beneficiary on the 529 to a sibling or even a family member in the next generation.

•   If your child receives a scholarship for college, you can withdraw the amount of the scholarship from the 529 plan penalty-free. If you decide to withdraw it for another purpose, you’ll pay a 10% penalty, plus regular income taxes.

•   Annual contributions to a 529 plan are not limited, but any amount you give the beneficiary will be part of your annual $17,000 gift tax exclusion. The IRS will let you (and your spouse, if you elect to split gifts) make five years of contributions at once without paying gift taxes.

•   Many states offer these plans, so you’ll want to start by finding out if your state offers any tax incentives to participate in your own state’s sponsored plan. If you discover that your state does not offer additional tax benefits for contributions, you can shop around for the lowest fees.

Then there are 529 prepaid tuition plans , offered by a dwindling number of states, that allow parents, grandparents, and others to prepay tuition and mandatory fees at today’s rates at eligible colleges and universities.

•   Currently, nine states offer them: Florida, Maryland, Massachusetts, Michigan, Mississippi, Nevada, Pennsylvania, Texas, and Washington.

•   Most state prepaid tuition plans require you or your child to be a resident of the state offering the plan when you apply. Most allow the funding to be transferred to a sibling.

•   Qualified distributions from prepaid 529 plans are exempt from federal income taxes and might also be exempt from state and local taxes.

•   The Private College 529, not run by a state, offers guaranteed prepaid tuition at many participating colleges and universities, with no residency requirements.

Coverdell Education Savings Account

A Coverdell education savings account can also be used to pay for qualified education expenses.

The annual contribution limit is $2,000. Contributions are made with after-tax dollars, but they grow tax-free, and withdrawals for qualified expenses are tax-free.

The account is limited to certain incomes. The current limit is a modified adjusted gross income (MAGI) over $110,000 per person or $220,000 if filing jointly.

💡 Quick Tip: Need a private student loan to cover your school bills? Because approval for a private student loan is based on creditworthiness, a cosigner may help a student get loan approval and a lower rate.

UTMA and UGMA Accounts

A Uniform Transfers to Minors Act (UTMA) or Uniform Gift to Minors Act (UGMA) custodial account can be set up to pay any expense that benefits a minor. Here’s more intel on how these work:

•   When your child reaches the age of majority, 18 or 21, depending on the state, they will be able to use the money for whatever they want, so many parents are wary of using these to plan for college. (However, the funds could become an investment plan for your child if they didn’t go to college.)

•   The flip side is your child won’t be limited to just paying for education expenses and can use the money for living arrangements, a car, or other necessary purchases.

•   There are no contribution limits for UTMA and UGMA accounts, and they can be funded with any combination of cash and investments. Annual gift tax exclusions apply.

•   Because contributions are made with after-tax dollars, there are no taxes on withdrawals, but there may be taxes on capital gains.

What About Student Loans?

Students can have access to scholarships and grants, which can help make college more affordable. In addition, your student may have to take out federal student loans to make it to graduation day. You can also shoulder some of the load.

Parent PLUS loans can be one way to help your child afford college. They are student loans offered by the U.S. Department of Education, and parents become the borrower. You can borrow up to the amount of education expenses not covered by other financial aid. It’s easier to qualify if you don’t have a good credit history.

Parent PLUS loans have a fixed interest rate, currently 8.05%, with a typical term of 10 years that may be extended to 25 years. However, unlike federal student loans, Parent PLUS Loans come with a fairly high origination fee — it’s currently 4.228%.

Even with savings, federal student loans, grants, and scholarships, your child may still have unmet needs. Private student loans, offered by private lenders, are often used to fill those gaps.

•   Depending on your situation, student loan refinancing can also lower your monthly payment. Many online lenders consider a variety of factors when determining your eligibility and loan terms, however, including your educational background, earning potential, credit score, and other factors.

•   With private parent student loans, you, the parent, take responsibility for the loan. Another option can be undergrad private student loans that allow a cosigner. If you cosign, you and the student are responsible for the loan.

•   It’s important to know that federal student loans come with benefits, including income-driven repayment options and student loan forgiveness, that private lenders do not offer.

Recommended: Student Loans Guide

The Takeaway

Paying for a child’s college education involves two key things: saving early and consistently. Most students will still end up borrowing in order to pay for the many expenses of higher education.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see Equal Housing Lender.

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

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

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.

Student Loan Refinancing
If you are a federal student loan borrower you should take time now to prepare for your payments to restart, including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. (You may pay more interest over the life of the loan if you refinance with an extended term.) Please note that once you refinance federal student loans, you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans, such as the SAVE Plan, or extended repayment plans.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.


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