Changing Careers After Law School (and Why You May Have To)

If a waitress declared she was thinking about a career change, her friends and family probably wouldn’t raise an eyebrow. But a lawyer?

After years of law school, internships, landing a job at a law firm and climbing the ladder there, a lawyer who wants to call it quits likely would get a few questions.

As in, “Are you crazy?”

Or, “What the heck will you do instead?”

And, of course, “How on earth will you ever be able to pay off your student loan debt?”

But a juris doctorate degree isn’t a ball and chain, and just like workers in other careers, lawyers can sometimes decide to move on to something else.

Fortunately, pivoting after law school may be easier than it used to be, and there are some great alternative careers for lawyers out there—if you know where to look and how to position yourself.

Reasons Lawyers Might Consider Making a Career Switch

It might seem shocking that a lawyer would want to make a career change, after all they’ve spent years studying and preparing for this career, but it’s not all that uncommon. Television and film can make it seem like practicing law is a thrilling blend of opening and closing arguments and life-changing verdicts passed down by the jury, but there are plenty of mundane tasks in the mix.

In some cases, legal work can be relatively dull. Instead of high stakes court cases, it can be a lot of reading, research, and paperwork. Sometimes the work can be isolating as a lot of time is spent thinking of ideas and writing alone.

Beyond that, lawyers can face a ton of pressure at work, which can lead to a stressful day-to-day work environment. Lawyers have a lot on their plates: tracking deadlines, handling client demands, staying on the partner track, keeping up with the changing laws and regulations, and more.

Not only can the stress of the job be exhausting, especially at “big law” firms, getting the job done can require long hours—no matter the firm. Combine that with the fact that oftentimes a lawyer’s schedule is out of their control, dictated by the courts or bosses at a firm, it’s no wonder some lawyers are interested in looking for another career path.

As an editorial from The Young Lawyer Editorial Board for The American Lawyer points out, many employers have expectations for their workers and a method for tracking how they’re doing. It might be a sales goal that’s been set at a car dealer, a punch clock for line workers, or a certain number of clicks for an online content provider.

At most law firms, that measure is billable hours. Not how many hours the lawyers actually work, and not the quality of the work, but how many hours they can bill to a client.

“Used appropriately, billable hour standards can set clear expectations for lawyers and supply a dose of objectivity to measuring their contributions, ensuring that comparable work receives comparable reward,” the editorial board writes. “For instance, a lawyer who has had an extraordinarily busy period of firm or client work should be recognized and compensated accordingly.

“But there can be pitfalls. The legal profession is rife with examples of billable hour requirements gone bad. Too common are the stories of law firms with a published hours ­requirement, and then a de facto set of often much higher hourly expectations to advance or demonstrate commitment.”

In a stressful, highly competitive environment, the editorial continues, “Lawyers burn out, retention suffers, and work quality suffers.”

All worth it if the pay is great, right? Except the U.S. Bureau of Labor Statistics reports the 2018 median pay for a lawyer as $120,910 per year—which means half of the lawyers out there are making less than that.

And some are making far less—including contract lawyers that firms are increasingly hiring to perform the same functions as an associate, but without the expensive commitment.

The truth is, many law school graduates could be making a decent living and enjoying themselves more in a different profession.

So How Can You Prepare Your Exit Strategy?

Leaving a career as a lawyer can be a huge decision. If you’re considering making a career switch you might want to think about preparing an exit strategy. Here are some ideas for planning ahead as you think about making the jump from lawyer to the new career of your choice.

Aggressively Paying Off Student Loan Debt

Having a ton of debt hanging over your head might limit your options. Refinancing student loans could be a good choice for those who have higher interest, unsubsidized Direct Loans, Graduate PLUS loans, and/or private loans. (Federal loans carry some special benefits that are not accessible
if you refinance into a private loan—such as student loan forgiveness and forbearance—so be sure you know what you’ll lose.)

If you have solid credit and a good job (among other factors), you may qualify for a better interest rate and/or terms with a private lender that can help you get out from under that student debt faster. And some private lenders, including SoFi, consolidate and refinance both your federal and private loans into one new loan with one manageable payment.

SoFi also offers other benefits to its members, including career coaching that could help you transition to your next job. There are a few things you can do outside of refinancing to help you be better equipped to move on when and if you wish—or when something better comes along.

Creating a Budget and an Emergency Fund

Lawyers tend to make decent money right out of the gate (the problem comes later when income can start to stagnate), so it may be wise to avoid spending those years letting your lifestyle rise to the level of your income.

If you haven’t already, two ideas for that relatively high-earning time is to start building an emergency fund and putting together a reasonable budget. If you think your salary will take a hit should you leave the law, you can make it a goal to cut some costs now, before you make your move.

Using Your Time as a Lawyer to Make Connections

Building professional relationships and keeping them going could pay off when you start putting out feelers. Be professional, respectful, and if you decide to ask someone for help, be clear about what you want—advice, an introduction, or a job.

Planning Ahead

Try moving your focus from what you don’t like about your current job to how you might transfer your knowledge, skills, and passion to a new career. Lawyers can make good researchers and investigators, compliance professionals, business analysts, executives, and entrepreneurs. Some go into law enforcement. Many end up in the media or communications.

Can You Have a Non-Legal Job With a Law Degree?

Absolutely. Employers typically know that a law degree can speak volumes about intelligence and work ethic. It’s likely assumed you must be analytical, organized, and good at project management. Plus, you’re aware of the potential legal ramifications of business decisions, which can be really helpful to a company.

Probably the biggest hurdle for most people is simply giving up the dream of being an attorney. But if you can open your mind and look at all the other options, you may find something that makes you just as happy—if not more so.

Want to get your student debt under control so you can more easily move on to your dream job? Check out SoFi to see how refinancing your student loans can help.


External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF SEPTEMBER 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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Facing a Post-MBA Career Crossroads: How To Pull a Successful Career Pivot

You worked hard to earn your MBA and land a prestigious job upon graduation. But after a couple of years in, you might be thinking, Is this all there is? If you’re unfulfilled because you’re not passionate about the day-to-day reality of your job—don’t worry, you’re not alone. Not by a long shot.

Many MBA alumni face this challenge. While going with the highest salary offer to relieve some of the financial pressures of their student loans (and other debt) made practical sense at first, a taste of financial freedom could offer a path that allows them to explore positions better aligned with their purpose and interests.

Simply put, this could mean focusing less on the ROI, or return on investment, of their MBAs, and more on finding engaging, yet still lucrative work. Others may wish to focus on getting married and starting families; as priorities change, career tracks offering flexibility and work-life balance can become more desirable.

If you’re a few years removed from business school and now at a career crossroads, pull out that crumpled career bucket list you’ve hidden in the drawer of your bedside table. It could be a good time to complete some of your professional goals. Here are some tips on developing expert career management skills that may also help you find a great next step.

Living the (Short-Lived) Dream

The typical pathways from business school to traditional roles in finance, consulting, or technology emerge in large part because of a “herd mentality.” In other words, graduates tend to flock toward the same opportunities because it’s what’s expected of them, and certain companies spend some serious money and time courting MBAs.

As a result, few MBA grads may be able to say they accepted their first position connected to their purpose, passions, and interests. Instead, they may think of that first job as a tour of duty—a stint at a prestigious firm to gain some valuable job experience and transferable skills.

Cashing in on a huge signing bonus with a Big Three consulting firm or being wined and dined by corporate big-wigs on Wall Street can seem great at first, but maybe not so much later down the line when young MBA holders begin to feel let down and burnt out; they just want something different.

The good news is there are many career paths outside of the traditional MBA pathways, such as shifting toward human resources, marketing, or financial advising to applying your knowledge in a start-up setting.

This isn’t your parents’ generation; success doesn’t mean sticking it out with the same company for 30 years. The workforce now is frequently on the move. In fact, a study conducted last year showed that 58% of millennials surveyed planned to change jobs.

So changing jobs initially might not be the only time you change jobs (or even career fields) after obtaining your MBA. Seeking advice, marketing your personal brand, developing soft skills, and learning how to take action could all come into play again a few years down the road.

Turning the Career Corner

If you’re feeling stuck and uninspired in your current job, and you aren’t provided opportunities to learn, grow, and set yourself up for long-term success, it might be time to leave. Here are a few ideas that may help you leverage your MBA smarts to manage your career growth going forward:

Being Honest When Seeking Advice

Working with a career coach or a mentor can be a great way to help you identify your goals, and when seeking a big change, committing to complete honesty will help them guide you. Discuss all the reasons why you’re not fulfilled.

Clarify your skills and aspirations so you can craft a new, ideal job description together, and then think about the company culture you desire—the values, beliefs, and practices of an organization that will fit you best.

SoFi provides complimentary career coaching to all SoFi members. These professionals can help you plan your unique journey to transition careers, search for a new job, build a resume, and build your personal brand. When it comes to your career, a little career advice can have the potential to go a long way.

Defining Your Personal Brand

What is a “personal brand”? The term refers to who you are professionally, separate from who you are as an employee of a certain company. If you can find a way to market who you are, then you can communicate why you’d be a strong worker for a different type of job and/or field.

It can be easier to pivot in your career if you’ve consistently marketed yourself and the skills you bring to the table. If you haven’t polished your LinkedIn profile, learned to negotiate salary, and discovered the best ways to articulate your value proposition to recruiters or other firms, get to it!

Here are some suggestions for building your personal brand:

•   Create a personal website or portfolio
•   Prepare an “elevator pitch” about what you do
•   Be active on social media platforms like LinkedIn, Twitter, or Facebook
•   Find ways to network
•   Revamp your resume to reflect your brand

Become a pro at illustrating how the skills learned in your MBA program and applied in your career thus far are transferable to your next endeavor. In particular, it may be especially important to highlight the problems and challenges you’ve solved for past employers. Storytelling can be essential to helping employers see your value clearly.

Keeping on Honing the Soft Skills that Complement Your MBA Degree

Sure, you may have learned how to write a cost-benefit analysis at the first job you landed with your MBA. But you’ve likely also developed plenty of soft skills, or less concrete capabilities, such as communication, leadership, or adapting to new circumstances.

You might be at a loss for how your ability to write a budget report in your sleep will help you land a job in public relations, but your talents leading a group sure will.

Some of the top soft skills employers were seeking in 2019 included things like conflict management, emotional intelligence, time management, emotional intelligence, and communication.

A great personality, the ability to foster trust, and top-notch relational skills, such as being a cooperative and engaged team member, are also all attributes of successful professionals.

Do any of those examples sound like soft skills you’ve acquired at your job or in your MBA courses? These abilities help make up your personal brand, and you can highlight them on your resume, list them under “Skills and Endorsements” on your LinkedIn profile, and talk about them in interviews.

If you find you have strong conflict and time management skills, for example, perhaps you could continue to take on responsibilities at your current job that hone those areas of expertise. If you struggle with communication, you might consider working to improve before you switch jobs to make yourself an even more desirable employee.

Act More, Worry Less

Don’t spend months just thinking about what it might be like to work at a new company or in a new industry; instead, do your research so you feel more confident taking action. If you haven’t pinpointed your passion, it might make sense to reach out to people who are doing things you find appealing; maybe you could set up coffee or lunch to listen and learn.

If you’re a consultant, perhaps talk to entrepreneurs to discover what it takes to run a startup. Be inquisitive; have conversations with alumni and people you follow or admire on LinkedIn to discover what their roles entail and what their company culture is like.

Two years post-degree, you probably have peers spread out across a wide variety of enterprises. Try connecting with them to pick their brains about what they find most engaging about their work and get intel about possible job openings. You just might get turned on to a career trajectory you never imagined.

Taking action doesn’t mean you need to rush the process, though. Yes, you can take measurable steps toward starting a new career, but that doesn’t necessarily mean it’s time to address and stamp your resignation letter just yet. Taking steps towards your goal is simply setting yourself up for success so that when that day does come to make a change, you’ll be ready.

Taking a Risk

Remember, people who enjoy a gratifying MBA-supported career have likely taken a leap of faith somewhere along the way. And let’s face it, if you choose to walk away from a substantial salary, you may face some risks.

So you might have to make some sacrifices, specifically financial ones. If you proceed in a carefully thought out way, however, you can protect your finances and protect your mental health. Here are a few options that could help you prepare for the risks you could face in changing careers:

•   Build an emergency fund in case your income takes a temporary hit
•   Secure a new job before leaving your old one, or at least submit several job applications
•   Volunteer in the field you want to enter to obtain relevant experience
•   Avoid rushing the process
•   Attend networking events
•   Take a class related to your new career field
•   Seek out a career coach

If student loans payments are still a factor, include them in your transition plan. One option to consider is student loan refinancing, which could help those with student loan debt lower their interest rate or secure a more manageable payment plan.

Refinancing won’t be the right solution for everyone, especially those who are enrolled in federal student loan repayment programs like income-driven repayment plans, since refinancing eliminates federal student loans from those protections and benefits.

Those interested in refinancing, however, might want to take a look at what SoFi has to offer. Qualified borrowers can secure competitive interest rates with no hidden fees—plus get access to career coaching, which could help those hoping to make a career change in the future. Those interested in learning more can get a quote to see if they pre-qualify in just a few minutes.

Student loans don’t have to keep you from pursuing your dream career. Learn more about how refinancing with SoFi could play a role in your journey to repaying your student loans.


External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Business Oversight under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF SEPTEMBER 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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Typical Small Business Loan Fees

There are plenty of great business ideas out there. Maybe it’s a life-changing mobile app or a service with the potential to make everyone’s life a little bit easier. Regardless of what it is, even though a smart business idea might be free to come up with, it will likely cost money to execute.

No matter how fantastic an idea may be, in most cases it can’t become an actual business without the working capital to get it off the ground. Turning an abstract plan into a viable business strategy that’s able to turn a profit or catch an investor’s eye can sometimes be far from an overnight project, and most aspiring entrepreneurs will require some form of financial support to stay afloat.

So if you’re not yet ready to pitch investors and don’t have the personal funds to bootstrap your business, you may want to learn about the ways a small business loan can help you turn your business idea into a reality.

It’s important to note that small business loans are for more than just startups. Whether you are looking to hire more employees, purchase more equipment or inventory, or just scale your idea from your bedroom to a coworking space, small business loans can provide the capital to make it happen.

In 2018, the average Small Business Administration (SBA) loan from the 7(a) loan program was for $417,316 . If you find yourself wondering how much money your business might need in order to get to the next level, you may want to begin by taking a thorough look at the needs of the business you are trying to grow.

This might look like defining your goals and accomplishments so far, analyzing your future goals, and mapping out what kind of capital you need to close the gap.

Do you need heavy equipment or specialized technology? How much space or staff will you employ? These are some of the questions you may want to ask yourself when considering the kind of financial support your small business is currently lacking.

It’s generally recommended to look at all aspects of your proposed business in order to get a clear understanding of the bigger financial picture.

The next step may be to look at past sales projections and confirm that you can afford the loan payments and fees associated with that loan amount. Though loans can be a big help, you may want to ensure that your investment in your business is one that you’re able to handle.

Like most financial decisions, a small business loan is not one you should take lightly. There’s more to the loan than just the loan itself—the rates and fees that can be associated with a small business loan might make it much costlier than you expected.

If you find yourself in a position to take on a loan to help you scale and strengthen your business, then it may be a sound decision. Still, you may find that by examining your specific situation and getting clear on your goals and expectations may help.

Since every business is different, it might be a good idea to consider the main reasons why you may be looking to take out a small business loan in the first place and understand how it could possibly help you get where you’re trying to go.

Why Choose a Small Business Loan?

A small business loan may be right for you if:

•   You want to build business credit, potentially allowing you to qualify for larger loans in the future.
•   You want to scale your business.
•   You want to make your business more efficient with new equipment.
•   You have the financial foundation to manage your loan debt.

Small Business Loan Rates and Fees

Here are some common fees associated with small business loans:

Application Fee

Lenders incur certain fees when processing your application (e.g., credit checks and property appraisals). This fee covers those costs.

Origination Fee

Lenders use origination fees to cover their administrative costs, such as phone calls, emails, and interviews necessary to finalize a small business loan. This fee varies from lender to lender.

Check Processing Fee

If you make your loan payments via check, you may be charged a fee to cover the time and personal labor it takes to process a check. You may want to keep this in mind when deciding how you’ll make your loan payments.

Guaranty Fee

If you’re taking out a loan through the Small Business Administration (SBA), you’ll likely have to pay a guaranty fee. While the SBA guarantees loans, it doesn’t make loans, and thus generally assesses a fee for its involvement.

Late Payment Fee

Like many loans, small business loans typically charge a fee when you make a late payment. You may want to ensure you set up a plan to make your loan payments on time.

Underwriting Fee

The process of underwriting can be tedious. Your lender needs to comb through your business’ finances and review market research and historical trends. The underwriting fee covers the cost of performing this task.

Prepayment Fee

Some lenders charge you for paying your loan off too early. They may do this for a variety of reasons, but one might be because they lose money in interest charges when you pay your loan principal before it’s due. This is an important fee to be aware of when mapping out your payment plan.

Additional Funding Options

If these fees don’t sit well with you, there are other options to consider that may make funding your business more accessible to you.

Family and Friends

Many people start their business with money borrowed from family and friends. Using them as initial investors can help you stay out of commercial debt, meaning that you can wait to apply for a small business loan when you might need to borrow a larger sum.

However, going into business with loved ones could be a risk in that it might potentially sour the relationship if things go south.

Crowdfunding

A number of small businesses have successfully been funded through sites like Kickstarter , GoFundMe , and Indiegogo . A great idea with a strong marketing plan could generate enough excitement and financial support to get things going. However, crowdfunding sites require a percentage of the funding received and there could be a risk of idea theft or plagiarism.

Credit Card

Credit cards have been used as a quick route to getting capital for your business without a lengthy application process. However, interest rates may be high and carrying significant credit card debt could potentially impact your credit score.

Getting Your Finances Ready for Small Business Ownership

Getting ready to open your own small business or scale your current business? Of course, everyone’s situation is different, but there are ways to make sure you’re prepared for the ups and downs of small business ownership.

First , you may want to ensure that you are diligently saving an emergency fund with at least three to six months of expenses. If you have a family or dependents, you may want to consider saving even more to cover various family emergencies (knock on wood).

You may also consider taking care of existing credit card debt so that you aren’t carrying any when you start your small business. Paying down your credit card debt could potentially mean one less thing to worry about when you’re trying to make your business turn a profit.

If you are carrying a higher rate or variable-rate credit card debt, consolidating with an unsecured personal loan could also help you pay it off faster and at a potentially lower interest rate. (Although it’s important to note here that personal loans cannot be used for business expenses.)

Learn more about how SoFi personal loans can be used to consolidate credit card debt.


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

External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s
website
.

Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Business Oversight under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

SoFi Home Loans
Terms, conditions, and state restrictions apply. SoFi Home Loans are not available in all states. See SoFi.com/eligibility for more information.

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Finding Unemployment Resources In Your State

Although it’s been said that nothing in this world may be certain but death and taxes, there is another unfortunate reality: at some point in your life, you may lose your job.

No matter how good of an employee you are, it’s possible that, through no fault of your own, you may find yourself unemployed—and unable to find another job immediately, or even for some months.

And, just like death (and taxes), being unemployed can be a frightening situation to contemplate.

Although hopefully you have taken precautions in the form of creating and maintaining an emergency fund, there are fortunately other resources available to assist you, especially when it comes to unemployment insurance. Here, we’ll break them down, state by state.

Alabama

The Alabama Department of Labor has an Unemployment Compensation (UC) division with various links to help claimants, job seekers, and employers looking for resources.

The division answers the top 10 frequently asked questions to help residents better understand the process. Unemployed workers can get started filing unemployment insurance in Alabama here.

Alaska

The Alaska Department of Labor has multiple resources, including a myAlaska portal where residents can access crucial information regarding the status of their claim. Citizens can file a claim by phone, but the number varies by area.

Arizona

The Arizona Department of Economic Security has a step-by-step guidance for residents filing for unemployment insurance. Due to the increase in call traffic, the Unemployment Insurance Call Center is extending its hours Monday through Friday, 7am-6pm.

Find important answers about which documents a resident may need to file a claim, or when and how to apply here .

Arkansas

The Arkansas Division of Workforce Services provides a step-by-step guide for citizens seeking to file an unemployment claim. Citizens can also find out how/when to file a claim by phone using the ARKline .

California

The Employment Development Department of California pays benefits to workers who become unemployed or partially unemployed, and has offered a guide to eligibility requirements .

UI Online is recommended for filing claims, as UI Online Mobile has been experiencing long wait times. However, the department has promised to add staff resources to keep up with demand.

Colorado

The Colorado Department of Labor and Employment has provided a brief and accessible guide to the benefits packages that the state offers. To file a claim by telephone, residents can contact the Denver Metro office at (303) 813-2800.

Connecticut

The Connecticut Department of Labor has created a page with a guide and resources for those looking to file for unemployment. This site also provides updates and news regarding the Department’s activities.

Delaware

The Delaware Department of Labor provides various resources and tools for residents to understand the unemployment filing process. This page directs residents to an online form , where they can easily file a claim for unemployment.

District of Columbia

The DC Department of Employee Services provides relevant issues regarding the unemployment compensation process. Residents can file a claim online through the Unemployment Insurance Center for Claimants , or by phone at (202) 724-7000.

Florida

The Florida Department of Economic Opportunity has the Reemployment Assistance Service Center for those recently unemployed. To file for unemployment the center uses a service called CONNECT .

However, the site has been reportedly experiencing major glitches as a result of increased traffic and a consequence of delayed action, according to audits dating back to 2015.

Georgia

The Georgia Department of Labor website provides various links where residents can find out more information specific to their own situation. Residents can file a claim through an online Unemployment Insurance Claim Application , or by phone at (404) 232-3180.

Hawaii

The Hawaii Department of Labor has created an Unemployment Insurance web page where users can find various resources, facts and tools to help them file an unemployment claim and stay up to date on the process. Residents can file a claim directly using the Unemployment Insurance online form .

Idaho

The Idaho Department of Labor provides various resources, including a claimant portal, FAQ and background information regarding the unemployment filing process. Residents can file claims through the online claimant portal or by calling (208) 332-8942.

Illinois

The Illinois Department of Employment Security provides various resources and information for citizens seeking to file an unemployment claim. Residents can use an online form or call (800) 247-4984 to file a claim. Additionally, residents can find the nearest office to file a claim in person by using this reference page .

Indiana

The Indiana Department of WorkForce Development has resources available for all seeking unemployment insurance, including UI video tutorials, a general one-pager on basics for claimants and FAQs listed on the Indiana Unemployment homepage .

Due to high call volume and long wait times, the department recommends learning more information here before calling.

Iowa

The Iowa State Government has a Workforce Development page where residents can find crucial information regarding their eligibility for unemployment insurance benefits. Citizens can file a claim using the Unemployment Benefits On-line Application System .

Kansas

The Kansas Department of Labor has created an Unemployment Benefits Page where residents can find out relevant information and file a claim. This page also provides ways for citizens to file a claim by phone or check the status of their claim.

Kentucky

The Kentucky Career Center offers a schedule depending on last names for when residents can file for unemployment benefits. That schedule can be found on its website, along with hours of operation and the information those applying will need to be considered. Residents can file their UI claims here .

Louisiana

The Louisiana Department of Labor has created a page called HiRE , where residents can check their eligibility and file a claim. Additionally, residents can file a claim by phone by calling (866) 783-5567.

Maine

The Maine Department of Labor has a page dedicated to helping residents find out their eligibility for unemployment benefits and additional guidance on how to file a claim.

To file a claim online, residents can access the state’s Unemployment Services Portal .

Maryland

The Maryland Department of Labor’s Division of Unemployment Insurance has provided resources and information for residents seeking to file a claim. Citizens can file a claim online through their main website.

Massachusetts

The Executive Office of Labor and Workforce Development in Massachusetts has The Department of Unemployment Assistance with resources to apply for unemployment insurance online and through a TeleCert line with automated assistance. Residents can download a guide to benefits and employment services here.

Michigan

The Department of Labor and Economic Opportunity in Michigan has created a schedule based on last names for those filing for unemployment benefits, due to the amount of traffic on its phone lines.

Therefore, the agency encourages residents to use The Michigan Web Account Manager (MiWAM) and has provided a toolkit for step-by-step instructions.

Minnesota

The Minnesota Unemployment Insurance Program has an accessible guide for those looking to file for unemployment benefits. Residents can file a claim directly using an online form and can check to see the best way to get in touch via phone.

Mississippi

The Mississippi Department of Employment Security has an informative website where residents can figure out which kind of claim they qualify for and learn about how to apply.

Missouri

The Missouri Department of Labor lists general information for those looking to file for unemployment benefits. Residents can file a claim directly using the UIneract portal or by calling the relevant office.

Montana

The Montana Department of Labor and Industry has a page called Montana Works , where residents can find relevant information regarding their eligibility or file a claim. Additionally, citizens can file a claim by phone by calling (406) 444-2545.

Nebraska

The Nebraska Department of Labor has resources listed on its website for those looking to file for unemployment insurance at NEworks. The portal also provides access to information on the labor market and a link to an app with job listings.

Nevada

The Nevada Unemployment Insurance self service website allows residents to file an unemployment benefits claim online. Citizens can also find the relevant office to contact by phone using the Claimants Contact page.

New Hampshire

The New Hampshire Department of Labor has an Employment Security website where residents can find general information regarding unemployment benefits claims.

Residents can file a claim online using Workforce Connect or by contacting (800) 266-2252. If citizens would like to file their claim in person, they can find the relevant office to do so using the Office Locations page .

New Jersey

The New Jersey Department of Labor and Workforce Development lists various options and general information for those seeking to file for unemployment benefits. Residents can apply online using the How To Apply page and can find the relevant telephone number using the contact reference page .

New Mexico

The New Mexico Department of Workforce Solutions has a page called My Workforce Connection where residents file for a claim online. Additionally, residents can file a claim by phone using (877) 664-6984.

New York

The New York State Department of Labor provides a multitude of resources and information for residents looking to file an unemployment benefits claim online. Those looking to file a claim online can do so directly through the website .

However, The New York State Department of Labor website has crashed repeatedly. Governor Cuomo has publicly apologized , citing an increase of 900% of traffic compared to a typical week. Residents can also file a claim by phone by calling (888) 209-8124.

North Carolina

The North Carolina Department of Commerce website has numerous resources for residents who want to file for unemployment benefits. Residents can file a claim directly online using the Employment Security portal or via phone, by calling (888) 737-0259.

North Dakota

The North Dakota Job Service has created a guide for residents looking to file for unemployment. Residents who want to file a claim online or want to see additional resources can do so through the Resources page . Additionally, claims can be filed by telephone by calling (701) 328-4995.

Ohio

The Ohio Department of Job and Family services provides general information about the state’s unemployment insurance program.

Those looking to file a claim online or access additional resources can do so through the Office Unemployment Insurance Operations . If residents wish to file a claim by telephone, they can do so by calling (877) 644-6562.

Oklahoma

The Oklahoma Employment Security Commission lists crucial information for those looking to file for unemployment benefits. Residents looking to file a claim online can do so using this portal . Those who prefer to speak to an unemployment claim representative can also call (800) 555-1554.

Oregon

The Oregon Employment Department provides general information for those interested in filing an unemployment claim. Residents can file an unemployment insurance claim online or by telephone through the Online Claim System .

Pennsylvania

The Pennsylvania Office of Unemployment Compensation has several resources for those filing for unemployment benefits, like quick tips and step-by-step guide to filing. The site also links to an FAQ with answers related to the impact of federal programs as well.

The unemployment site crashed on Saturday due to increased traffic, but according to an update from the PA Department of Labor and Industry , the site is currently back up and running. The UC Live Chat is also an option for those seeking to file a claim at (888) 313-7284.

Rhode Island

The Department of Labor and Training has helpful tips and resources for those seeking unemployment claims, including specific guidelines for gig economy workers , job seekers, employees and employers.

Residents can file an online claim here or residents can also reach the Unemployment Insurance Service Center at (401) 243-9100.

South Carolina

The South Carolina Department of Employment and Workforce has created a claims process guide for residents to reference for general information. To file a claim, residents can login in to the SUITS Portal or by calling (800) 529-8339.

South Dakota

The South Dakota Department of Labor and Regulation has a dedicated site for residents seeking reemployment assistance benefits. To file a claim online, residents can find out how to do so through the dedicated Reemployment Assistance Benefits page . Citizens can also file a claim via phone by calling (605) 626-3179.

Tennessee

The Tennessee Department of Labor and Workforce Development dedicated a webpage to unemployment resources for those seeking to file a claim, like eligibility requirements , an online application link and what to expect after you file . Residents can track UI claims here .

Texas

The Texas Workforce Commission has a subpage of its website titled Unemployment Benefits Services with a list of links for residents. The list links to multiple resources including an FAQ and more information for job seekers and employees. All unemployment claims will be filed through TWC using existing or created User IDs.

Utah

The Utah State Government Workforce Services website provides important information for those seeking to file for unemployment benefits. Residents can file a claim online using the dedicated Unemployment Insurance Benefits web page or by contacting the relevant office by phone .

Vermont

The Vermont Department of Labor has a subpage dedicated to important information regarding unemployment insurance. To establish a claim, residents can do so through electronic form or by calling (877) 214-3331.

Virginia

The Virginia Employment Commission ’s website provides guidance on requirements to file an Unemployment Insurance Claim in Virginia. Residents can file a claim online , or via phone by calling 866-832-2363.

Washington

Washington State’s Employment Security Department provides guidance and information specifically geared towards COVID-19 affected workers and businesses.

They have launched a new daily webinar with more information regarding setting up a Secure Access Washington (SAW) account and submitting a claim for benefits online . You can also submit a claim via phone by calling 800-318-6022, and subscribe for COVID-19 updates here.

West Virginia

The West Virginia Department of Commerce ’s subpage WorkForce West Virginia has multiple resources for those looking for unemployment insurance benefits including information on eligibility and how to apply online . Among the resources are the top 10 things residents need to know about filing for unemployment compensation.

Wisconsin

The Wisconsin Department of Workforce Development’s website provides critical information for those looking to apply for unemployment benefits. Residents can apply online through an electronic form or by calling (414) 435-7069.

Wyoming

The Wyoming Department of Workforce Development offers information for claimants, employers and service providers, in addition to FAQs . Residents can file a claim online through electronic form with WYUI or by calling (307) 473-3789.

Additional Resources

These state resources are not the only assistance available to you if you find yourself without work and income—which may be especially concerning if you have monthly loan repayments to consider. Your specific lender may offer protections as well.

SoFi, for instance, offers unemployment protection for borrowers, meaning that if you lose your job through no fault of your own, and your loan is in good standing, you can request to enroll in the Unemployment Protection program.

If approved, your loans will go into forbearance, and your loans payments will be paused without penalty. (Note: the program is offered in increments of three months, and is only offered for 12 months in aggregate over the life of the loan.)

Additionally, if you have been impacted by COVID-19 and have concerns about not being able to make your payments, SoFi has a few different options to help. To get more information about these options for your student, home, or personal loans with SoFi click here.

SoFi members also have complimentary access to career coaches who provide support, helping them get back on track and move on to the next great opportunity.


External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Explaining 401k Early Withdrawal Penalties

Do you dream about a retirement where you escape away to your cabin in the woods, or one where you’re flying your grandkids to Europe for an epic vacation? Making this dream a reality requires tucking money away for the future. And for many people, the place to do that may be within a 401(k) account.

A 401(k) account is designed for retirement saving. One of the reasons Investors may prefer it over saving and investing in a brokerage account is because it is not subject to federal income taxes until distribution.

You might be trying to keep the money in your 401(k) until retirement, but sometimes, life happens, and there may be situations where you need some extra cash. It is only natural to look at all of the available options, and that may include the option of tapping into your 401(k) funds.

You may want to proceed with caution, though. Because of the special taxation of this account type, the 401(k) has an early withdrawal penalty. Therefore, it may be worth exploring other options.

To answer the question, “what is the penalty for withdrawing from a 401(k)?” it helps to understand how a 401(k) works in the first place. Here’s some good things to know about the 401(k) early withdrawal penalty, along with some ideas on how to access cash without using funds from your 401(k) account.

How Does a 401(k) Work?

A 401(k) is an account designed to hold money and investments for retirement. Why does it have such a funky name? Well, it’s named after a line in the tax code that gives the 401(k) it’s special taxation. It’s a reminder that rules regarding 401(k) accounts are set by the IRS and generally have to do with taxation.

Essentially, the IRS allows investors to stash a certain amount of money away each year for retirement, without having to pay income taxes on those contributions.

In 2020, that contribution maximum amount is $19,500 per year , with additional catch up contributions allowed for those 50 and older. Additionally, the investments within the account are allowed to grow tax-free.

401(k) participants can’t avoid paying income taxes forever, though. When retirees go to pull out money in retirement, they must pay income taxes on the amount withdrawn.

So, while you have to pay income taxes eventually, the idea is that maybe you’ll pay a lower effective tax rate as a retired person than as a working person. (Although, none of this is guaranteed because we can’t predict future tax rates.)

The IRS classifies 59½ as the age where a person can begin withdrawing from their 401(k). Before this age and without an exception, it is not possible to do a 401(k) withdrawal without penalty.

What is the Penalty for Withdrawing from a 401(k)?

When a 401(k) account holder withdraws money from a 401(k) before age 59½, the IRS may charge a 10% penalty in addition to the ordinary income taxes assessed on the amount.

Unqualified withdrawals from a 401(k) are considered taxable income. Then, the 10% penalty is assessed on top of that. This could result in a hefty penalty.

Is a 401(k) Withdrawal Without Penalty Possible?

There are some exceptions to the 401(k) early withdrawal penalty rule. For example, an exception may be made in the event that a participant has a qualifying event such as a disability or medical expenses, and must use 401(k) assets to make payments under a qualified domestic relations order, has separated from service during or after the year they reached age 55, or that a distribution is made to a beneficiary after the death of the account owner.

Additionally, it may be possible to avoid the 401(k) withdrawal penalty through a method known as the Substantially Equal Periodic Payment (SEPP) rule. These are also called 72(t) distributions.

To do this, the account owner must agree to withdraw money according to a specific schedule as defined by the IRS. The participant must do this for at least five years or until they have reached age 59½.

Under the 72(t) distribution, a participant will systematically withdraw the total balance of their 401(k). While this is technically an option in some instances, it does mean taking money away from retirement. Consider this while making your ultimate decision.

Alternatives to an Early 401(k) Withdrawal

Because of the steep penalty involved, you may feel inclined to shop around for some alternatives to early 401(k) withdrawal.

Participants can consider taking a loan from their active 401(k). The money is removed from the account and charged a rate of interest, which is ultimately paid back into the account. The interest rate is generally one or two points higher than the prime interest rate set by the IRS, but it can vary.

While this loan may come with a competitive interest rate that is repaid to the borrower themself and not a bank, there are some significant downsides. First, taking money from a 401(k) account removes that money from being invested in the market. A participant may miss out on the market’s upside and compound returns.

Though a 401(k) loan might seem like an easy option now, it could put a person’s retirement at risk.

It is easy to imagine a scenario where the loan does not get repaid. If the loan is not repaid, the IRS could levy the 10% penalty on the distributed funds.

Additionally, money that is repaid to a 401(k) is done with post-tax money. The money that is borrowed from the 401(k) would have been pre-tax money, so replacing it with money the borrower has already paid taxes on may make a 401(k) loan more expensive than it initially seems.

In addition, if a person were to leave their company before the loan is repaid, the loan would need to be repaid by the time you file your taxes for that year or penalty and income tax could be due. Participants should proceed down this route with caution.

A second option is to consider withdrawing funds from Roth IRA assets. Under IRS rules , any money that is contributed to a Roth IRA can be removed without penalty or taxes after 5 years .

Unlike with a 401(k), income taxes are paid on money that the account holder contributes to the account. Therefore, these funds aren’t taxed when the money is removed. (This only applies to contributions, not investment profits.)

Again, common advice states that removing money from any retirement account should generally be considered a last-resort option. The average person is already behind in saving for retirement, so even Roth IRA funds should only be considered after all other options are exhausted.

Another option to consider could be a personal loan. An unsecured personal loan can generally be used for any personal reason

By using a personal loan, the participant is able to avoid a 401(k) early withdrawal penalty and leave all of the money invested within the account to grow uninterrupted.

A personal loan also puts the borrower on an amortized payback schedule that has a defined end-date. Having a defined payback period may be beneficial during debt repayment—it provides a goal, and it is clear how progress is made throughout the life of the loan.

Compare the set amortization of a personal loan to a revolving credit card, where it can be quite tempting to add to the balance, even as the person is attempting to pay it off in full.

When charges are added to a credit card, the end-date can be pushed out further, especially in the event that the borrower is only making minimum payments. This is not the case with a personal loan where a lump sum loan amount is disbursed and paid back within a set timeframe.

With all of the above options, it is recommended to sit down and map out the cost of each. To do this, you may want to consider using a personal loan calculator and/or working with a tax advisor or financial advisor to help identify the best course.Ultimately, it will be up to you to research the best option given your needs.

Thinking about taking out a personal loan? Get your rate from SoFi in as little as two minutes.


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.
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