Dec
14
2025
A smiling couple sits on a couch with their arms around each other, looking out an open window.

Using a Co-Borrower on a Joint Personal Loan

By | Debt Payoff, Home Ownership, personal_loan | No Comments

If your credit is not quite up to a lender’s preferred level to get favorable interest rates and terms on your own, you might consider a joint personal loan. With this type of loan, you would have a co-borrower, an additional borrower who is obligated to repay the debt alongside you, the primary borrower. A co-borrower who has solid credit, income, and other financial credentials can help you qualify for a personal loan.

Here are key things to know about using a co-borrower on a personal loan.

Key Points

•   Joint personal loans involve two borrowers (a primary and a co-borrower) who share equal responsibility for repayment and ownership of the loan funds.

•   Using a co-borrower with strong credit can help improve approval chances, secure lower interest rates, and potentially qualify for a larger loan amount.

•   Unlike cosigners, who are only responsible for repayment if the primary borrower defaults, co-borrowers have equal ownership and repayment responsibilities throughout the life of the loan.

•   Common uses for joint personal loans include debt consolidation, funding large expenses, or managing shared financial responsibilities, particularly among couples or family members.

What Are Joint Personal Loans?

Joint personal loans are loans that take into account multiple borrowers’ creditworthiness in the approval process. There are typically two borrowers on this type of loan — a primary and a secondary borrower — to establish joint personal loan eligibility.

Being a co-borrower on a loan comes with different rights and responsibilities than being a cosigner on a loan.

•   Co-borrowers, along with the primary borrower, have equal ownership of loan funds or what is purchased with the loan funds and are equally responsible for repayment of the loan over the life of the loan.

•   Cosigners have no ownership of the loan funds or what they’re used to purchase, and they are responsible for repayment only if the primary borrower fails to make payments.

How to Use Joint Personal Loans

If you don’t feel confident about qualifying for a loan, or have concerns about a potentially higher interest rate due to your overall creditworthiness or other reasons, finding a reliable co-borrower might help improve your chances of approval, along with the interest rate and terms you’re offered.

Couples can use a joint personal loan for a wide variety of purposes, including consolidating high-interest debts, paying for a large expense or event (like a wedding), or funding a remodeling project.

Recommended: Using Collateral on a Personal Loan

Why Do People Use Joint Personal Loans?

One common reason why someone might consider a joint personal loan is that they cannot qualify for a loan on their own, or they would like to snag a lower interest rate or qualify for a larger loan amount than they could on their own.

Some reasons people may seek a co-borrower are:

•   They don’t have a long credit history.

•   They’ve just entered the workforce.

•   They’re in the process of rebuilding their credit.

•   They are seeking a larger loan than they could on their own.

How Much Can You Save With Joint Personal Loans?

Having two borrowers on one personal loan may help you to qualify for a more favorable interest rate than if just one person’s income and credit are considered. Different lenders will have different qualification requirements, though, so it’s a good idea to compare lenders.

Using a joint personal loan for debt consolidation can be one way to lower the amount of interest paid on outstanding debt. Again, how much savings is accomplished depends on multiple factors, such as the interest rate offered and how long it takes to pay down the debt.

Factors That Affect Joint Loan Approval

Here are some important points about applying for a loan with a co-borrower and understanding what impacts your odds for approval.

Combined Income and Debt Obligations

When your application for a joint personal loan is reviewed, the lender will look at your combined income and debt obligations. Perhaps the primary borrower has a relatively low income and high debt load. By adding a co-borrower who has a strong salary (say, a spouse’s salary in the six figures) and minimal debt, the odds for loan approval could be enhanced.

Say that the primary applicant has a debt-to-income ratio, or DTI, of 48%, which is above the 36% many lenders prefer. If a co-borrower has a DTI of 22%, the couple’s DTI as a whole is 35%, bringing it to a level that may gain approval.

Credit History of Both Applicants

Similarly, lenders will take into account both applicants’ creditworthiness. Perhaps the primary borrower has what’s known as a thin file, meaning they don’t have a very deep credit history, or has a fair credit score. If their co-borrower has a credit score in a higher range (very good or exceptional), that could convince a lender to approve the loan and potentially at a lower rate and with more favorable terms. The co-borrower could help assure the lender of the duo’s creditworthiness.

What Credit Score Is Required for a Joint Personal Loan?

There is no definite answer to this question, but, in general, applicants with higher credit scores qualify for loans with lower average personal loan interest rates. And, vice versa, applicants with lower credit scores generally qualify for loans with higher interest rates.

Lenders tend to be risk-averse and prefer to lend money to people who they believe will repay it in full and on time. An applicant’s credit report — a summary of how responsible they are with credit that has been extended to them in the past — and credit score are tools lenders use to assess risk.

Before applying for a joint personal loan, it’s a good idea to review your credit report. If there are errors or discrepancies, you can file a dispute with the credit reporting agency. If you have poor credit or a limited credit history, you might consider taking some time to improve your credit profile before applying for a loan. Lenders will look at both applicants’ credit reports during the joint personal loan approval process, so it’s worth it for your credit to be in good shape.

Recommended: What Credit Score Do You Need for a Personal Loan?

Individual vs Joint Loan Applications

The basic process of applying for a loan is the same, no matter the number of applicants. Lenders will typically request the same information on either an individual or a joint loan application: proof of identity and address and verification of employment and income, in addition to any lender-specific information. For an individual loan application, there is just one person’s information to verify. Joint loan applications require information for each applicant.

Individual

 Joint
Only one applicant’s creditworthiness is considered in the approval process. Creditworthiness of both applicants is considered in the approval process.
One income is considered in the approval process. Combined incomes of all applicants are considered in the approval process./td>
Only one applicant signs the loan application. The loan application is specifically for more than one applicant, and both must sign it.
One borrower is responsible for repaying the loan. All borrowers are responsible for repaying the loan.

Cosigned Loan vs Joint Personal Loan: The Advantages

Arguably, the primary borrower on either a cosigned loan or a joint personal loan has a bigger advantage than the cosigner or co-borrower. Depending on one’s perspective, however, all parties involved can reap benefits from these partnerships.

The Advantages of Choosing a Cosigned Loan

The advantage lies almost exclusively with the primary borrower on a cosigned loan. If they default, the cosigner is responsible for repaying the loan, although the primary borrower’s credit will likely be negatively affected. Ownership of the loan funds or what they purchased with the money is solely the primary borrower’s.

A personal loan cosigner’s main advantage may be in the form of a benevolent feeling from helping a close friend or family member.

The Advantages of Choosing a Joint Personal Loan

The main advantages of a joint loan are two-fold. There is equal ownership of the loan funds or the property purchased with those funds. Choosing a joint loan also means you may be able to present a more positive financial profile when applying than you could alone, signaling to lenders that it’s more likely the monthly loan payments will be made. This could pay off with a lower interest rate and more favorable terms.

Because joint loans give both co-borrowers equal rights, they are well-suited for people who already have joint finances or own assets together.

Cosigned Loan vs Joint Personal Loan: The Disadvantages

Both cosigned and joint loans include an additional borrower. However, a co-borrower taking out a joint loan has different rights and responsibilities than a cosigner, which can be risky.

The Disadvantages of Choosing a Cosigned Loan

The disadvantages of a cosigned loan lie mostly with the cosigner, not the primary borrower. The cosigner does not have any ownership rights to the loan funds or anything purchased with the loan funds. They are, however, responsible for repayment of the loan if the primary borrower fails to make payments.

The cosigner’s credit can be negatively affected if the primary borrower defaults on the loan, and their future borrowing power could be affected if a lender decides extending more credit would be too risky.

The Disadvantages of Choosing a Joint Personal Loan

People who already share financial responsibilities — married couples or parents and children, for example — may be the ones who consider joint personal loans, so there is typically some familiarity present.

That trust matters because co-borrowers have equal ownership rights to the loan funds or what the loan funds purchased. And it’s also important to have confidence in a co-borrower’s ability to repay the loan because each borrower is equally responsible for repayment over the entire life of the loan.

What’s the Better Loan Option?

If you’re seeking a loan with a spouse or relative and one of you has the strong credit history needed to get a favorable interest rate and terms, then a joint loan as co-borrowers may be right for you.

However, if you’d rather have a loan in your name with a little added security, then having a cosigner may make more sense.

No matter which situation you find yourself in, it’s important to weigh all of the options and do the necessary research that will allow you to arrive at the best joint personal loan option for you. (You might also consider personal loan alternatives as part of your research.)

After all, taking out a loan and repaying it responsibly has the power to put someone on a path to a more secure financial future, but it can also come with risks for each party.

Recommended: Exploring the Pros & Cons of Personal Loans

Where Do You Find a Joint Personal Loan?

It’s not uncommon for lenders to offer joint personal loans, but some research is necessary to find the right lender for your unique financial situation.

Looking at lenders of joint personal loans online is a good first step. Prequalifying to check joint personal loan eligibility is a fairly quick and easy process.

If you’re already an established customer at a local bank or credit union, you may also want to look at loan options there.

Tips for Applying for a Joint Personal Loan

If you decide to pursue a joint personal loan, consider these points to make the process easier.

Communicate Financial Responsibilities Clearly

As you apply for a joint personal loan, it’s wise to make sure you both agree on the details, such as the loan amount, the monthly payment you can afford, and who will pay it (will you split it 50/50?), and when. Develop a contingency plan if you struggle to make a payment.

Compare Lenders and Loan Terms Together

It’s also important to make sure the two of you are aligned on reviewing and deciding upon your loan. It’s wise to consider at least a few loan offers to see what rates and terms are available. For instance, a shorter loan term can mean higher monthly payments but less interest paid over the life of the loan. That might be preferable, if you can afford it, versus a longer term with a lower monthly payment, because that winds up often costing more in total.

Also make sure you both understand the consequences of late or missed payments before embarking on the loan together.

The Takeaway

Co-borrowers may help a primary borrower secure a personal loan by presenting a more positive financial profile and securing more favorable rates. However, these joint loans also require a great deal of forethought since both borrowers have access to the funds and responsibility for repaying the debt.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.


SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

Can you apply for joint personal loans?

As long as the lender allows co-borrowers, you can apply for a joint personal loan.

What is the maximum amount of people for a joint personal loan?

Typically, a joint personal loan has two co-borrowers, but the maximum number of co-borrowers is up to the individual lender. Some allow for more than two borrowers.

Do joint personal loans get approved faster?

It’s likely to take more time for a joint personal loan to be approved than an individual loan because the lender will check the credit of each applicant.

Does a joint loan affect both credit scores?

Yes, a joint loan affects both borrowers’ credit scores. If loan payments are made on time, the borrowers could see a positive impact on their credit. If, however, payments are late or missed entirely, that can negatively impact each of the borrowers’ credit.

Can one person be removed from a joint personal loan?

Removing one person from a joint personal loan is dependent on the lender’s specific guidelines. It can be a complicated process that may involve refinancing the loan into a new individual loan, provided the solo borrower qualifies.

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 SoFi.com/legal. Equal Housing Lender.


*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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 .

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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Is Getting an MBA Worth It_780x440: Getting an MBA won’t be right for everyone, but it could be one way to advance your career.

Is Getting an MBA Worth It?

By | Debt Payoff, Student Loans, student_loan | Comments Off on Is Getting an MBA Worth It?

The question of whether it’s worthwhile to obtain a Master’s in Business Administration (MBA) — an advanced and versatile degree that can help people ascend into management analysis and/or strategy roles — is a highly personal one without a real single objective answer. As usual with financial and personal decisions, the answer tends to be “it depends.”

Keep reading for some things to consider when deciding to pursue an MBA, pros and cons of getting an MBA, how much an MBA costs, and more.

Key Points

•   An MBA can significantly boost your salary, especially if you attend a highly ranked program.

•   Business school offers valuable opportunities to build connections with peers, faculty, and alumni.

•   With an MBA, you may accelerate your career or pivot into new fields, as the degree builds management and leadership skills.

•   MBA programs can be very expensive — tuition for top schools can exceed $150,000 — and many students graduate with significant debt.

•   Students can consider refinancing their student loans to possibly qualify for a lower rate or lower monthly payment.

The Pros and Cons of Getting an MBA

Getting an MBA won’t be right for everyone, but it could be one way to advance your career. Here are some things to consider as you weigh the pros and cons of getting an MBA.

Pros to Consider

Earning an MBA can open the door to greater professional opportunities, financial growth, and long-term career flexibility. Here are the advantages of receiving an MBA:

Improved earning potential. An MBA degree may increase your salary. The average anticipated salary for MBA graduates entering the workforce is $85,842, according to the National Association of Colleges and Employers. A recent grad’s expected salary may be even higher depending on where a student gets their MBA.

But if you’re wondering if it’s worth getting an MBA from a lower tier school, consider that the average MBA salary for graduates with a degree from the 10 schools where compensation was lowest was just $60,576.

Keep in mind, though, that the top 10% of MBA grads earn more than $200,000 per year.

Expanded network. Business school can be a great opportunity to make friends and network with like-minded individuals. In addition to your peers in the program, you’ll engage with faculty and be introduced to a (hopefully robust) alumni network.

Career acceleration or transition. Successful completion of an MBA program can improve an individual’s career mobility. Coursework is often designed to encourage management skills, critical thinking, and other specialized skills, which can help prepare people for the workforce.

Recommended: Best Jobs for MBA Graduates

Cons to Consider

While an MBA can offer meaningful benefits, it also comes with drawbacks that prospective students should carefully weigh. Here are some things to consider:

The cost. The average cost of an MBA program is $63,000 (total for two years), but top-tier universities may run up to $125,000 per year. With anticipated starting salaries sitting at $85,000 on average, prospective students need to weigh the expense of the MBA against their earning potential.

However, there are ways to mitigate the cost. You can pursue part-time programs or stagger your course load over a longer period of time so you can still be drawing a salary to offset the costs while you’re studying.

Time commitment. Getting an MBA in a full-time program can take two years. There are some accelerated programs that may allow students to complete their coursework in 12 to 16 months, though. Beyond the length of the program, MBA classes are no joke. The coursework requires commitment and diligence, so be sure you have the time to dedicate to classes.

Consider factoring in the application process when evaluating both time and cost. To apply for graduate school, schools may require GMAT™ scores, letters of recommendation, and more. Meeting the application requirements may take both time and money if you still need to take the required standardized tests.

How to Decide If an MBA Is Worth It for You

While an MBA can offer great potential for career growth, it’s definitely not the right choice for everyone. Be honest with yourself about why you want to pursue an MBA. Below are some considerations when it comes to deciding whether or not an MBA is for you.

Career Goals and Industry Expectations

Your long-term career goals and the expectations of your target industry should heavily influence your decision to pursue an MBA. In consulting, finance, or corporate leadership, for example, an MBA is often considered a valuable credential that can accelerate advancement or even serve as an entry requirement.

In other industries, real-world experience or specialized training may be more beneficial than another degree.

Opportunity Cost of Leaving the Workforce

When considering an MBA, it’s important to factor in the opportunity cost of stepping away from full-time work. Taking one or two years off means forfeiting income, delaying promotions, and potentially losing momentum in your career.

Beyond financial impact, time away from your role may also require an adjustment period when returning to the workforce.

Part-Time vs Full-Time MBA Considerations

Choosing between a part-time and full-time MBA program depends on your career stage, financial circumstances, and lifestyle. A full-time MBA offers an immersive experience, faster completion, and more networking opportunities, but requires pausing your career.

A part-time MBA allows you to continue working, easing financial strain and enabling you to apply new skills immediately — though it may take longer to complete and offer a less intensive campus environment.

Recommended: Average Salary by State

How to Pay for an MBA

Paying for grad school can feel overwhelming, but understanding your financing options can make the process far more manageable. From loans to scholarships to school-funded opportunities, there are several ways to reduce the cost of earning your degree.

Student Loans for Graduate School

Graduate student loans are one of the most common ways to finance an MBA, allowing you to borrow federal or private funds to cover tuition, living expenses, and fees.

Federal loans — such as Direct Unsubsidized Loans and Grad PLUS Loans — often offer flexible repayment options and protections like income-driven repayment or deferment. Grad Plus Loans, though, will no longer be available as of July 1, 2026, and students will need to rely on Direct Unsubsidized Loans and private loans.

Private lenders may offer competitive interest rates, especially for borrowers with strong credit, but typically come with fewer repayment safeguards. Exploring both types of loans and comparing interest rates, terms, and borrower benefits can help you choose the best option for your financial situation.

Fellowships and Assistantships for MBA Programs

Many MBA programs offer fellowships and assistantships that can significantly reduce the cost of attendance. Fellowships often provide partial or full tuition support based on academic merit, leadership potential, or professional achievement.

Assistantships may require students to assist with research, teaching, or administrative work in exchange for tuition reductions or stipends. These opportunities are competitive, but they can dramatically lessen your financial burden while providing valuable academic or professional experience.

Scholarships from Business Schools and Private Organizations

Scholarships are another key funding source for MBA students, and they can come directly from business schools or from outside organizations. Many institutions award scholarships based on merit, diversity, leadership, or industry interests, while private groups may offer aid tailored to specific demographics or career goals.

Some scholarships cover a portion of tuition, while others offer full-ride support, making them among the most desirable forms of funding. Dedicating time to research, apply early, and tailor your applications can increase your chances of securing scholarship assistance.

Employer Tuition Reimbursement Programs

Employer tuition reimbursement programs can be one of the most cost-effective ways to pay for an MBA, especially if you’re already working full-time. Many companies offer financial support to help employees advance their education, whether through partial reimbursement, full tuition coverage, or annual education stipends.

However, tuition reimbursement programs typically come with certain requirements and restrictions. Some employers only cover degrees that directly relate to your current role or the company’s long-term needs, and many require you to maintain a minimum GPA to stay eligible. It’s also common for companies to require a commitment to remain with the organization for a set period after completing your degree — otherwise, you may need to repay some or all of the funds.

It’s a good idea to ask your current employer if this is a benefit they offer, and then weigh the pros and cons as to whether this is a perk you want to take advantage of.

Recommended: 13 Companies That Help Employees Pay for College

Comparing MBA Program Types (Online, Executive, In-Person)

Understanding the different types of MBA programs can help you choose an option that fits both your career goals and your budget. Each format comes with its own cost structure, time commitment, and level of flexibility.

•   Online MBA: Offers remote learning with lower overall costs, flexible scheduling, and the ability to continue working full-time.

•   Executive MBA (EMBA): Designed for experienced professionals, often more expensive but structured for minimal career disruption with weekend or modular classes.

•   In-Person MBA: Provides the most immersive campus experience, stronger networking opportunities, and access to on-campus resources, but typically comes with higher tuition and living expenses.

Program Cost Differences

The cost of an MBA can vary significantly depending on the program type. Online MBAs are generally the most affordable, with lower tuition and fewer additional expenses like housing and commuting. Executive MBAs, while more expensive, often come with employer sponsorship, which can offset the higher tuition. In-person programs tend to be the most costly due to comprehensive resources and a full campus experience, but they may also offer more financial aid options and scholarships.

•   Online MBA average cost: $40,000

•   Executive MBA average cost: $55,000

•   In-person MBA average cost: $63,000

Flexibility and Work-Life Balance

Flexibility is a major factor when considering how to finance and complete an MBA program. Online MBAs generally offer the greatest adaptability, allowing students to watch lectures on their own schedules and balance coursework with full-time work or family responsibilities. Executive MBA programs provide structured flexibility, with classes concentrated on evenings or weekends to minimize disruption to professional life. In-person programs offer the least flexibility but provide the most immersive learning environment, which can be valuable for networking and hands-on experiences.

Evaluating your work commitments, lifestyle, and time constraints can help you choose the format that best supports both your education and personal well-being.

Recommended: MBA Refinancing

The Takeaway

Deciding whether an MBA is worth it ultimately comes down to your goals, finances, and the career path you hope to pursue. For some, the degree offers a valuable boost in earning potential, professional credibility, and long-term opportunities. For others, the cost, time commitment, and uncertain return may outweigh the benefits.

If you decide that earning an MBA makes sense for you, there are ways to help cover the costs and develop a solid budget. You can explore all options, including scholarships, grants, and federal and private student loans, as well as refinancing your existing loans.

FAQ

What is the average cost of an MBA program?

The average cost of an MBA program in the U.S. ranges from $60,000 to $120,000, depending on the school and program format. Top-tier programs can exceed $150,000, while online and part-time options may be less expensive. Financial aid and scholarships can help offset these costs.

How much can you earn with an MBA?

Earning potential with an MBA varies widely, but graduates often see a starting salary between $85,000 and $125,000. On average, MBA holders can earn between $120,000 and $225,000 annually, depending on their industry and role.

Are there affordable or online MBA programs worth considering?

Yes, there are affordable and online MBA programs worth considering. Many reputable universities offer online options with lower tuition, flexible schedules, and quality education.

Can I work full-time while pursuing an MBA?

Yes, many MBA programs are designed for working professionals. Part-time, online, and executive MBA formats allow you to balance work and studies. These programs often offer flexible scheduling, evening classes, and accelerated options to fit your needs.

What types of financial aid are available for MBA students?

MBA students can access various financial aid options, including scholarships, grants, loans, and assistantships. Many business schools offer merit-based scholarships, and federal or private loans are available. Additionally, some companies provide tuition reimbursement for employees pursuing an MBA.


SoFi Student Loan Refinance
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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 SoFi.com/legal. Equal Housing Lender.


Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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14
2025
A young woman is sitting on the floor, looking at her phone near a laptop, wondering if she should pay off her car loan or student loans first.

Should I Pay Off My Car Loan or Student Loans First?

By | Debt Payoff, Financial Independence, Student Loans, student_loan | Comments Off on Should I Pay Off My Car Loan or Student Loans First?

If you’re juggling a car loan and student loans, you might be wondering which debt to prioritize. While it’s important to keep up with minimum payments on all your loans, making extra payments on one of these types may help you save money on interest.

The decision of whether to pay off a car loan or student loans first ultimately depends on your personal financial situation. Here, we’ll look at the benefits of paying off each, what factors to consider, and how you can best decide which option is right for you.

Key Points

•   Looking at the interest rates and total cost of car loans and student loans can be a helpful way to compare them.

•   Prioritizing the loan with the highest interest rate can generally save borrowers the most money.

•   Federal student loans are more flexible than car loans, providing income-based repayment options and opportunities for potential loan forgiveness.

•   Interest on student loans may be tax deductible. New car loans may qualify for a tax break if purchased between 2025 and 2028.

•   Paying off a car loan first can prevent possible repossession of the car in the case of loan default.

Understanding Your Debt Types

First, it’s important to understand the difference between student loans and car loans. Student loans may be federal or private, and they might come with fixed or variable interest rates. They’re unsecured loans, meaning they’re not backed by collateral. Auto loans, on the other hand, are a secured form of debt.

Secured Debt

Secured debt is a type of loan backed by collateral, meaning the lender can seize the pledged asset if the borrower fails to repay.

Car loans are secured by your vehicle. If you fall behind on car loan payments, a lender can repossess your car. Car loans commonly have fixed interest rates and repayment terms of 36 to 84 months.

Unlike student loans, auto loans don’t usually offer much flexibility if you’re having trouble making payments. And car loan payments can be costly — the average car payment in 2025 is $745 a month for new cars. By comparison, the average student loan payment is estimated to be about $536 per month in 2025, according to the Education Data Initiative.

Unsecured Debt

Unsecured debt is a loan that isn’t backed by collateral. Both federal student loans and private student loans are unsecured forms of debt.

Federal student loans qualify for various benefits and plans that can help lower student loan payments, such as income-driven repayment, as well as programs to temporarily pause payments if needed, like deferment and forbearance. Federal student loans are also eligible for forgiveness programs such as Public Service Loan Forgiveness.

Private student loans don’t have as many benefits as federal loans, but some private lenders will let you modify or postpone payments if you run into financial hardship. You might also explore refinancing student loans to see if you can qualify for a lower interest rate or more favorable terms that might help make your payments more manageable.

Factors to Consider When Prioritizing Debt

There are several things to think about when deciding whether to pay car or student loans first. Some of the main considerations include your loan’s interest rate, tax implications, repayment terms, and the impact on your credit score.

Interest Rates and Total Costs

It typically makes sense to pay off the loan with the highest cost of borrowing first. This usually means the loan with the highest interest rate. If your student loan has a rate of 5.00%, and your car loan has a rate of 10.00%, paying off the car loan would save you more money in the long run.

Along with the interest rate, consider whether the loan carries any other fees, such as a prepayment penalty. Student loans don’t charge penalties for prepayment, but a car loan might. Compare each loan’s annual percentage rate (APR), as this figure takes both interest and fees into account.

Tax Implications and Deductions

Another factor has to do with tax deductions. The student loan interest deduction allows you to deduct up to $2,500 a year in student loan interest from your taxable income, depending on your modified adjusted gross income (MAGI). At certain income limits, student loan tax deduction phase-outs begin. In 2025, if your MAGI is less than $85,000 a year if you’re a single filer, and $170,000 if you’re married and filing jointly, you can qualify for the full deduction. If you earn between $85,000 and $100,000 ($170,000 and $200,000 if married filing jointly), you can make a partial deduction.

Car loans may also qualify for a tax deduction. Beginning in the 2025 tax year, the new One, Big, Beautiful Bill Act permits taxpayers to deduct up to $10,000 in interest paid on qualifying auto loans — even if they use the standard deduction. This deduction applies only to new, U.S.-assembled vehicles purchased after December 31, 2024, and only for personal (not business) use. The benefit phases out for individuals with modified adjusted gross income (MAGI) over $100,000 (or $200,000 for joint filers).

Loan Terms and Repayment Periods

Student loans tend to have more flexible repayment terms than car loans. Federal student loan borrowers are eligible for various repayment plans, including the Standard Repayment Plan and income-driven repayment plans. Keep in mind that for new loans taken out on or after July 1, 2026, borrowers will be limited to the standard plan or the new Repayment Assistance Program (RAP).

Car loans don’t qualify for many options. You’ll often choose a repayment term of three to seven years and be expected to pay monthly on your agreed-upon rates and terms. If you can’t make payments, the lender can repossess your vehicle.

Impact on Credit Score and Financial Flexibility

Neither type of payoff is universally better for your credit score, as it depends on your situation. Paying off a car loan can boost your score by reducing installment debt and freeing up cash flow, but it may slightly lower your credit mix. Paying down student loans, which are typically long-term, can improve your payment history and lower your overall debt burden. Paying off either one should have a positive impact on your credit score.

It’s also important to consider your financial situation. If your student loan payment is higher, for example, you may want to pay that off first to free up more cash.

Recommended: Student Loan Consolidation vs Refinance

Benefits of Paying Off Car Loans First

Paying off a car loan before your student loan can have several advantages, especially since car loans don’t have as much repayment flexibility or offer any tax benefits for vehicles that are strictly for personal use. Here are some reasons to consider prioritizing your car loan over your student loans.

Eliminating Secured Debt

Defaulting on a car loan could lead to losing your car. The sooner you can pay off your secured car loan, the sooner you’ll own your car outright and you won’t have to worry about the possibility of car repossession.

Potential Savings on Interest

Car loans may come with higher interest rates than student loans, so paying off the auto loan first could lead to more savings. Keep in mind, though, that if you purchased a new car in 2025, you could qualify for the new car loan interest deduction. Savings on interest mostly applies to vehicles purchased in or before 2024, used vehicles, or foreign brand vehicles.

Let’s say, for example, that you owe $15,000 on a car loan at a 10.00% rate and a $15,000 student loan at a 5.00% rate, and that both loans have five years left on their repayment.

If you put an extra $100 per month toward your car loan, you’d save $1,232 on interest and get out of debt nearly a year and a half sooner. If you put that extra $100 toward your student loans, you’d also get out of debt about a year and a half sooner but you would save just $574 in interest charges. Our student loan payoff calculator can help you crunch the numbers on your student debt.

You could also consider refinancing your car loan for a better rate to help save on interest. This option might be worth exploring if interest rates are lower now than when you originally took out the loan.

Building Equity in Your Vehicle

The faster you pay down your car loan, the more equity you’ll hold in your vehicle. That means you’ll own more of your car outright, which could come in handy if you ever want to sell it. Plus, you’ll be less likely to end up underwater on your car loan, which can happen when the debt you owe on your vehicle exceeds what the vehicle is worth.

Lower Monthly Obligations and Insurance Costs

Paying off your car loan can significantly reduce your monthly financial obligations, freeing up room in your budget for savings, investments, or other expenses. Once the loan is gone, you’re no longer responsible for a sizable installment payment each month, which can improve overall cash flow. In addition, some lenders require comprehensive and collision insurance coverage for financed vehicles, meaning you may be able to lower your insurance costs once the car is fully paid off.

Advantages of Prioritizing Student Loans

Although it often makes sense to prepay a car loan before a student loan, there are certain advantages to paying off student loans first. Here are some scenarios where you could benefit from prepaying your education debt:

•   Your student loans have a variable rate: Some private student loans have a variable rate that can increase and make your borrowing costs unpredictable. If you’ve been dealing with a rising variable rate, you may want to pay off those loans as quickly as you can. You might also explore refinancing those loans, which could allow you to switch to a fixed (and potentially lower) interest rate.

•   You’re considering filing for bankruptcy: If you’re in dire financial straits, you might be looking into potentially erasing or restructuring your debts through bankruptcy. Although it’s possible to discharge student loans in bankruptcy, the process is notoriously difficult. It may be easier to discharge a car loan through bankruptcy than a student loan.

Access to Federal Loan Protections and Forgiveness

Federal student loans come with a variety of borrower protections, but you may not require any of them for managing your student loan debt. If you aren’t pursuing loan forgiveness, for instance, you might focus on paying off your federal loan debt.

Income-Driven Repayment Options

Federal student loans also come with income-driven repayment plans, where your monthly payments are based on your income and family size. If you aren’t using that benefit, it might make sense to prioritize paying off your student loans before your car loan.

Recommended: Student Loan Refinancing Calculator

Develop a Debt Repayment Strategy

Once you’ve decided which loans to pay off first, it’s important to develop a strategy for repayment. Here are some steps to take.

Create a Budget and Debt Snowball

Start with making a budget so you have a clear sense of your income and expenses. Track your spending, and look for areas where you could cut back. By reducing your spending, you might find room in your budget to direct extra payments toward your debt.

There are debt pay-off strategies that can help. For example, with the debt snowball method, you pay off the loan with the smallest balance first. Then you work on paying off the next smallest loan and so on. The debt avalanche, in contrast, targets the loan with the highest interest rate first, and then the loan with the next highest interest rate, and it can save you the most money in the long run.

The debt snowball may not save you as much money as the debt avalanche, but it can be psychologically rewarding to pay off a debt in full before moving onto the next one.

Seek Additional Income Sources

After budgeting and cutting down on spending, you might explore ways to increase your income. This could mean going for a promotion and raise at work or finding a new job. You could also consider taking on a side hustle, such as driving for a ride-sharing service or doing freelance tutoring.

By setting up additional income streams, you’ll have more cash to put toward your loans and get out of debt faster.

Negotiate with Lenders

If you’re looking to modify payments or adjust your interest rate, try negotiating directly with your lender. Notify the lender that you’re having difficulty repaying the loan and see if they might be willing to work with you. Depending on the type of loan, the lender might offer a repayment plan or reduce the loan interest rate. Although there’s no guarantee of success, it’s worth a try.

Consider a Hybrid Approach to Paying Off Both Loans

A hybrid approach — paying more than the minimum on both your car loan and student loans — can be a smart strategy if you’re unsure which to prioritize. By splitting extra payments, you reduce both balances simultaneously, chip away at interest, and avoid neglecting one debt while focusing on the other. This method also preserves financial flexibility, allowing you to adjust your payoff strategy if your income, expenses, or interest rates change over time.

The Takeaway

While there’s no one-size-fits-all answer to whether you should pay off a car loan or a student loan first, paying off the loan with the highest interest rate can generally save you the most money. For many borrowers, that may be their car loan. If your student loans have high interest rates, you might consider refinancing your student loans.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.


With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

Is it better to pay off higher interest debt first?

Paying off high-interest debt first usually makes the most financial sense, since it will save you more money in the long run. However, it’s important to keep up with the minimum payments on all your debts so you don’t end up in delinquency or default.

Can I deduct student loan interest on my taxes?

It depends on your income. The student loan interest deduction lets you deduct the interest you pay on student loans, up to $2,500 a year if your modified adjusted gross income (MAGI) is less than $85,000 for single filers and $170,000 if you’re married and filing jointly. If you earn between $85,000 and $100,000 ($170,000 and $200,000 if married filing jointly), you can make a partial deduction. Anything more than that and you cannot take the student loan interest deduction.

Can I claim car loan interest on my taxes?

Yes, you may be able to claim a deduction for car loan interest starting 2025, but only under certain conditions. The loan must be for a new, U.S.-assembled vehicle purchased for personal use, and the deduction is capped at $10,000 per year. This temporary benefit applies through tax year 2028, and you’re eligible whether you itemize or take the standard deduction.

What happens if I default on my car loan or student loans?

A car loan is secured by your vehicle, and if you default on the loan, the lender can repossess your car. Student loans are unsecured, so a lender can’t take your personal property. However, the government can garnish your wages, tax refunds, and Social Security benefits if you default on a federal student loan. Defaulting on private and federal student loans can also damage your credit, and a private lender could potentially take you to court to try to collect the money.

Can paying off a car loan early hurt your credit score?

Paying off a car loan early may cause a small, temporary dip in your credit score because it closes an active installment account and slightly reduces your credit mix. However, the impact is usually minor, and becoming debt-free often outweighs the short-term change in your score.

Should I refinance my car loan or student loans before paying them off?

Refinancing your car loan or student loans before paying them off can be beneficial if you qualify for a lower interest rate or better terms. Lower monthly payments or reduced interest costs can free up cash and make repayment more manageable. However, compare fees, credit requirements, and federal loan benefits before refinancing.

Photo credit: iStock/damircudic

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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 SoFi.com/legal. Equal Housing Lender.


Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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.

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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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Dec
14
2025

Does an MBA Degree Increase Your Salary?

By | Going to College, Money & Life, Student Loans, student_loan | Comments Off on Does an MBA Degree Increase Your Salary?

Earning an MBA, or a Masters of Business Administration, degree can increase your salary, teach you specialized skills, and provide you with new career opportunities. But getting your MBA is expensive, with an average cost of $62,600 for a two-year program versus $51,740 for a master’s degree in general at a public school. A degree from a top-tier school can be considerably more, with tuition and living expenses totaling $200,000 for the program.

Just how big of an MBA pay increase you’ll get in return depends on a number of factors, including the school you attend, the field you’re in, and your previous work experience. Here’s what to know about an MBA salary increase and how much you might expect to receive.

Key Points

•   MBA graduates may earn 70% more than those with a bachelor’s degree.

•   The median starting salary for MBA grads may range from $85,000 to $120,000, which is much higher than the average for bachelor’s degree holders.

•   The salary boost from an MBA varies significantly by industry — graduates in finance, technology, consulting, health care, legal, and manufacturing tend to earn very different post-MBA pay.

•   Your MBA salary potential is strongly influenced by the prestige of your school, your previous work experience, and how specialized your MBA program is.

•   Ways to pay for your MBA include student loans, grants, scholarships, and tuition reimbursement. You can also refinance your undergrad loans to possibly lower your payment.

Value of an MBA Degree

An MBA degree can make you more marketable to employers, which can in turn help you land a better job and a higher salary, research shows. And while earning your degree can come with a hefty price tag, taking out MBA loans is one option to help you pay for it.

The median starting salary of recent MBA graduates in the U.S. ranges from $85,000 to $120,000. That’s significantly more than the $68,680 starting salary of grads with a bachelor’s degree. Knowing how much you might earn could help you determine if an MBA is worth it.

An MBA can also help you advance in your career. MBA grads typically perform better and move up the ladder faster than other employees. That places them in high demand in the workplace, and 37% of employers plan to hire more MBA graduates in 2025 (up from 17%).

Average Salary Increase with an MBA

MBA graduates may earn up to 70% more than those with just a bachelor’s degree, assuming an entry level salary of $120,000 for MBA grads and $70,000 for those with a bachelor’s degree.

However, the amount your salary might increase once you have an MBA depends on the field you’re in. Here’s a closer look.

Salary By Industry and Job Function

The following industries tend to pay well for those who have earned an MBA, making them some of the best jobs for MBA graduates.

Industry Median Annual Salary
Finance $175,000
Technology $162,750
Consulting $190,000
Health Care $163,000
Legal $225,000
Manufacturing $165,000
Entrepreneurship & Startups $151,200

Finance

Many MBA grads pursue a career in finance, and it can be lucrative. The average salary for an individual with an MBA in finance is $175,000, but the amount can be more than $250,000 annually depending on your position.

Technology

Another hot field for those with an MBA is technology, especially as AI becomes more prevalent. The average salary for MBA grads in tech is $162,750 a year. However, your MBA salary increase could run higher still and may even include a signing bonus.

Consulting

Those who work as consultants and have their MBA average about $190,000 annually, but a consultant’s salary may go up dramatically within a few years, especially if they work at a big firm.

Health Care

Health care management is a popular job for MBA graduates. The average earnings are $163,000 per year. Top earners can make over $200,000 per year, but those with less experience may make less than a six figure salary.

Legal

MBA graduates working in the legal field earn a median annual salary of about $225,000. Job title matters, though, with those working as general counselors earning more than as general attorneys.

Manufacturing

MBA graduates in the manufacturing field earn a median annual salary of $165,000, demonstrating the industry’s strong demand for leaders with advanced operational and strategic expertise. Job titles include industrial production manager, purchasing manager, general manager, and senior operations leader.

Entrepreneurship and Startups

MBA graduates in the entrepreneurship and startups field earn a median annual salary of $151,200. However, this can vary substantially. Those just starting out typically earn much less, whereas the income potential for successful business owners could be unlimited.

Factors Influencing MBA Salary Potential

In addition to the field you choose to work in, how much you’ll earn after getting your degree is influenced by such things as the MBA program you choose and your previous work history and salary.

These are the five major factors that can affect MBA salary potential.

School Reputation and Rankings

Although it’s likely to be pricier, going to a top-rated school to get your MBA can pay off in multiple ways. These schools tend to have robust networking programs and employer recruitment opportunities. Some colleges may help prospective graduates find internships and jobs. Also, grads from top 10 schools tend to earn more than those who attend other programs.

Before applying to an MBA program, do your research to see where recent alumni have ended up and which companies have recruitment relationships with the school. For instance, certain coveted employers might always attend a particular school’s job fairs. If a university has connections to companies you might be interested in working at, you may want to apply to their MBA program.

Recommended: Why Accredited MBAs Are Important

Specialization and Concentration

Every MBA program offers different classes, internships, and hands-on opportunities, and it’s important to look for ones tailored to your goals and career path. Choose a program with specialized concentrations in the field you’re most interested in. For instance, some MBA programs specialize in health care while others focus on finance.

If you’re currently in a field that you want to pivot out of — moving from marketing to consulting, say — an MBA could help with career change without going back to an entry-level job.

Work Experience and Performance

The more work experience you have, the more likely you are to score a higher salary once you get an MBA. This is especially true if that experience is relevant to the area of study you’re pursuing. Most people going for their MBA have about five years of experience on the job. And some MBA programs require students to have a certain number of years of work experience before they apply.

Networking Opportunities and Alumni Connections

Strong networking opportunities and access to a well-established alumni network can significantly influence your MBA salary potential. Business schools with active alumni communities provide valuable connections to hiring managers, industry leaders, and recruiters, often opening doors to high-paying roles that might not be publicly advertised. These networks can also offer mentorship, referrals, and insider knowledge that help you strategically position yourself in competitive job markets.

Internship and Recruiting Access

Many top business schools have strong relationships with leading employers who actively recruit MBA students for high-paying internships that often lead to full-time job offers. These internships provide crucial hands-on experience, skill development, and exposure to different industries, all of which enhance your marketability.

Recommended: MBA Refinancing

Choosing the Right MBA Program

It’s important to find an MBA program that fits your interests and goals. Look for programs that offer concentrations in the areas and fields you want to pursue. Then review the curriculum and the courses offered to make sure they appeal to you.

In addition, learn where graduates of the MBA program have ended up. What companies do they work for and what kinds of jobs do they have? You might even reach out to ask how they felt about the program and if they would recommend it.

Location

Where the school is located is also a prime consideration. If you’re working and going to school at the same time, you’ll need to find a program in your area. You could also explore top online MBA programs if you want to take advantage of a particular school’s offerings when you’re unable to attend it in person. These programs tend to cost less than in-person ones, but you may miss out on networking opportunities.

If you’re a full-time student and you have the opportunity to move to attend school, you could choose an MBA program near the area where you hope to work. For instance, if you’d like to be employed in Silicon Valley, a school nearby might be a good choice for you. It may be easier to get an internship there as well as a job after graduation.

Cost

Of course, the cost of an MBA program is likely to be one of the most important factors in your decision. Beyond the tuition, find out the true cost of getting an MBA at any school you’re interested in. This includes living expenses, books, transportation, and so on.

Delivery Format (Online vs On-Campus vs Executive MBA)

In addition to location and cost, you need to consider how you want to learn the information. Some people learn best in a classroom environment where they can ask questions and interact with classmates face-to-face. Others prefer online learning where they can go at their own pace and learn the information on their own time.

Executive MBAs (EMBAs) are typically part-time and hybrid, with a mix of online classes, in-person modules, and intensive residential sessions. Most students can still work full-time while pursuing an EMBA.

How to Pay for Your MBA

There are a number of ways to pay for your MBA, such as student loans, scholarships, grants, employer sponsorships, and more.

Student Loans

You may want to consider both federal and private student loans. Federal loans include Direct PLUS Loans for graduate students from the Education Department. However, those are being eliminated for new borrowers on July 1, 2026.

Borrowers will have to rely on Direct Unsubsidized Loans moving forward. Starting July 1, 2026, borrowing is capped at $20,500 for graduate students, with a lifetime aggregate limit of $100,000.

Students can also rely on private student loans. Private graduate loans may have fixed or variable rates, and are offered by banks, credit unions, and online lenders. Be aware, though, that with private student loans, you will not have access to the same federal protections and programs you would with federal loans, including income-driven repayment plans.

Scholarships, Grants, and Fellowships for MBA Students

Scholarships, grants, and fellowships are some of the most valuable funding sources for MBA students because they do not need to be repaid. Many business schools offer merit-based awards to applicants who demonstrate academic excellence, leadership potential, or significant professional achievement. These programs can cover anywhere from a portion of tuition to the full cost of attendance, making them highly competitive but extremely worthwhile.

Employer Sponsorships and Tuition Reimbursement

Employer sponsorships and tuition reimbursement programs can be ideal for professionals who plan to keep working while pursuing their degree. Many companies provide partial or full tuition coverage as part of their employee development initiatives, seeing it as an investment in building stronger leaders and more skilled teams. For working students, this support can make an MBA far more affordable without taking on significant debt.

However, employer-assisted education typically comes with conditions that are important to understand upfront. Many employers require a commitment to stay with the company for a certain period after graduation, and leaving early may result in repaying some or all of the funds.

It’s best to ask your employer what they cover and what the expected commitment is from you prior to making a decision.

Recommended: Average Salary by State

The Takeaway

Earning an MBA may help you fulfill your career dreams and earn a higher salary. The degree could increase your salary by as much as 70%, depending on such variables as the school you attend and the field you work in. But getting an MBA can be costly, averaging more than $60,000 for a two-year program, and up to $200,000 for top-tier schools.

If you decide that earning an MBA makes sense for you, there are ways to help cover the costs and develop a solid budget. You can explore all options, including scholarships, grants, and federal and private student loans, as well as refinancing your existing loans.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.


With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

What is the average starting salary with an MBA?

The median starting salary with an MBA ranges from $85,000 to $120,000. That’s far higher than the $68,680 starting salary of graduates with a bachelor’s degree.

Is an online MBA worth the investment?

Online programs offer greater flexibility and are typically less expensive than in-school programs. However, with an online program, you may not have access to all possible networking opportunities or the opportunity to speak with professors face to face. You may also feel less connected to the school and the overall experience.

How long does it take to recoup MBA program costs?

How long it takes to recoup MBA program costs is different for everyone, depending on the price of the program and the salary increase they enjoy after earning their degree. In general, though, it takes grads of two-year full-time MBA programs about three and a half years of working to recoup the cost. Those who enroll in online MBA programs recoup the cost in about two and a half years of work.

What factors most affect post-MBA salary?

Post-MBA salary is most affected by factors such as the reputation of the business school, the student’s pre-MBA work experience, the chosen concentration or specialization, and the industry and location of employment. Networking opportunities and internships during the program also play a significant role.

Do all MBA programs lead to higher salaries?

Not all MBA programs guarantee higher salaries. The impact on earnings depends on the program’s reputation, the student’s pre-MBA experience, the chosen specialization, and the job market. Top-tier programs and relevant industry experience often lead to better job opportunities and higher salaries.

Photo credit: iStock/Xavier Lorenzo

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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 SoFi.com/legal. 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.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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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Dec
14
2025
An aerial view of college graduates in black caps with red tassels in a crowded ceremony, receiving advice on college graduates entering the real world.

33 Pieces of Advice for College Graduates Entering the Real World

By | Fresh Out of School, Life & Career, student_loan | Comments Off on 33 Pieces of Advice for College Graduates Entering the Real World

Woo-hoo! You have your degree, perhaps a job offer, a place to live with a chill roommate, and you’ve found your favorite cafe where the cold brew is just right. Life is great, right?

Even if you don’t have all of the items above checked off, starting your independent, post-school life is an exciting time, and it’s a moment to learn all sorts of adulting skills.

To help you with that, here are 33 things to consider, learn, or do to help you as you discover everything from how to speak up in meetings to how to find an in-network doctor. Read on for tips for joining the real world and finessing your finances, career, and personal life.

Key Points

•   Creating a budget to track income and expenses is one of the most important things you can do as a new grad entering the workforce.

•   Start saving for retirement as soon as you can. It leverages the power of compound interest, allowing even small contributions to grow significantly over time.

•   Build a professional network by attending industry events, joining online groups, and connecting with alumni to open doors for career opportunities.

•   Stay competitive in your field by pursuing ongoing education and certifications, which can enhance your skills and job prospects.

•   If your student loan payments are too high, consider refinancing them. This could offer you lower monthly payments or a lower interest rate.

1. Tackle Your Overall Financial Situation

Your finances tend to get more complicated as you get older. At its most basic, though, understanding your financial situation means knowing your credit score, taking stock of your outstanding debts, figuring out ways to pay off student loans (if you haven’t already), and understanding what your monthly bills are.

💡 Quick Tip: Ready to refinance your student loan? You could save thousands.

2. Embrace a Budget

Here’s another bit of advice for college grads: Once you know how much money you have, owe, and make, it’s time to figure out your budget. Even if you have one already, post-graduation is a perfect time to reconsider your budget and make updates as needed. Never made one before? The popular 50/30/20 budget can be a smart start.

Recommended: Types of Budgeting Strategies and Methods

3. Learn About Job Perks

No matter if your job is still shiny and new or an old hat at this point, it’s good to take time to review your employee handbook for perks you may have overlooked. Check out your company’s retirement plan types and health insurance plans. You’ll also want to review potential bonuses and perks, such as free gym memberships, commuting stipends, and the like.

4. Start Saving for Retirement

Seriously? Yes! This may not be the most fun thing to review (and likely wasn’t part of your college advice), but your future self will thank you. Take time to learn about a 401(k) plan that may be available at work and hopefully enroll. You want to at least contribute enough to get any company match, which is like free money.

No job yet or retirement plan you qualify for? Spend a bit of time learning about the different kinds of IRAs.

5. Evaluate Your Housing Costs

Depending on your location, it can be hard to find affordable housing or even a job if your industry isn’t hot in your market. Before signing on the dotted line, consider how much home you can afford to rent. It can be expensive to live alone; having roommates can be a great way to save money.

6. Check Your Social Media

Even if you already have a job lined up, you may want to take stock of your social media. A professional online presence may help prevent current or future employers from second-guessing about hiring you. Those wild nights out with friends definitely don’t need to be broadcast via an account that’s public.

Recommended: College Graduation Rates

7. Network

Networking is crucial to helping you achieve your career goals. Whether through industry conferences or social media sites like LinkedIn, it’s smart to stay connected with professionals in your industry to get career advice and learn about job openings you may be the perfect fit for.

8. Schedule Some “You” Time

Scheduling dedicated “you” time after graduating college helps you decompress, recharge, and adjust to the new pressures of adult life. It also creates space for reflection, allowing you to set healthy routines and stay grounded as you navigate major transitions.

9. Start an Emergency Fund

Once you have a steady income, it’s wise to start an emergency fund, perhaps by a recurring automatic transfer into savings. Start slow and steady, and aim to build up to at least three to six months’ worth of living expenses in the bank. This will help protect you if you have a major expense or job loss.

Recommended: Emergency Fund Calculator

10. Find Your Medical Team

This tip is especially important if you’ve moved to a different state or city. Out-of-network bills can be costly, so having a doctor and knowing which hospitals are in-network can help you save money and stress in the long run. Ask coworkers, do online research, and don’t forget to explore where the nearest and best urgent care centers are.

11. Snag a First-Aid Kit and Emergency Bag

This may sound like your parents or grandparents talking, but no one sees an accident or disaster coming. You could get burned cooking brunch one Saturday, or a major storm could sweep through and leave you without power.

Store-bought first aid kits may be good starting points, but extra bandages, allergy relief pills, antacids, and other over-the-counter medicines will take your kit to the next level.

For an emergency go-bag, consider packing at least three days’ worth of clothes, a mini first aid kit, cash, a flashlight, and other provisions you think you (and your pets or loved ones) may need if you need to leave your home in a rush.

12. Consider Life Insurance

If your employer offers life insurance as a benefit and you’re supporting family members, it may be worth considering. Understanding life insurance policies can help you make the right decision for you. Even if you decide you don’t need it right now, you’ll be better prepared to sign up when the time is right.

💡 Quick Tip: If you have student loans with variable rates, you may want to consider refinancing to secure a fixed rate in case rates rise. But if you’re willing to take a risk to potentially save on interest — and will be able to pay off your student loans quickly — you might consider a variable rate.

13. Dive into Hobbies

It’s healthy to have interests outside of your career. If you’re wondering what to do after college besides work, you can learn to play instruments, sing, run, join a local soccer team, play games online, or enjoy any other hobby that helps you unwind and relax. Or maybe you’ll want to give back and spend some time planting at a local park or prepping meals at a soup kitchen. Find some passions and take the time to pursue them.

14. Tackle Your Taxes

If you’re employed (full-time, part-time, seasonally, side hustle, etc.), it’s time to learn how to prepare for tax season, which can help you avoid filing them late. Whenever you get an important piece of paperwork that’ll affect your taxes (such as W2s, charitable contribution receipts, or even home office receipts), you can put these in a safe place so you’re ready to go come tax time.

Then, determine if you’ll do your taxes yourself (say, with tax software) or work with an income tax preparer to get your return in on time.

15. Find Your Work-Life Balance

Each person has their own idea for work-life balance. If you’re not sure what yours is, consider taking the first few months on the job to figure that out. Being a good employee, for instance, doesn’t have to mean being the first person at the office in the morning and the last one out at night. If you feel tired or overwhelmed, it may be time to dig into and renegotiate those work-life boundaries.

16. Master Basic Home Repairs

Home repair costs can add up (especially as the years unfurl). You could save money by doing them yourself, especially if or when you own your own place and don’t have a landlord to pay for those costs. Problems such as a clogged sink, broken light switch, and dripping shower head may be easier than you think to fix.

If you do have a landlord, you might even get a discount on your rent by making simple repairs yourself. Just be sure to get a signed agreement from your landlord outlining how that will work.

17. Be Smart About Subscriptions

Monthly subscriptions add up over time, and it’s easy to forget how many you have going at a given moment. Consider looking at what you’re actually subscribed to. Do you really need Max, Hulu, Peacock, and Netflix, or could you save on streaming services by dropping one (or two)? And do you really need so many gym passes and coffee clubs? Take a closer look and see if you can cut back.

18. Learn to Cook

Takeout is great, but you could save money on food and healthy up your meals if you cook at home. It’s also helpful to plan your groceries ahead of time to avoid overspending and food waste. Plus, it’s a fun pursuit with loads of free recipes and cooking videos available online. Invite a friend over and make it a social occasion.

19. Speak Up in Meetings

If you think you don’t have much to add to the conversation, agreeing with what someone has said — and tacking on an extra thought — can be a way to participate and not feel like a wallflower.

20. Tweak Your Sleep Hygiene

Getting enough high-quality sleep can be a key contributor to your wellness. Going to sleep around the same time every night can help to ensure you get enough rest so you can make good decisions and keep healthy habits. And here’s a reminder that taking your mobile device to bed with you is likely to lead to an hour or more of rabbit holes that rob you of your rest.

21. Start Investing

The idea of investing may sound intimidating, but you don’t have to be a Wall Street wolf to invest. Many rookies start small. Learn more about investing in your 20s and perhaps open an account.

22. Find a Mentor

If there’s someone higher up the ladder at your workplace with whom you click and who offers great guidance, ask them out for coffee to learn more about how their career progressed and see what advice they might share. You can also look for guidance via a professional group; you might find a mentor at a summit or similar event.

Mentors can often help you navigate your workplace, offer advice, and keep you motivated and sane when things get stressful. They also have contacts that may be helpful for you to know.

23. Change Your Mind

Many people end up with jobs outside of what they studied, even after getting a master’s or MBA. If this turns out to be the case for you, just know that people can change their minds and that it’s okay to switch paths.

Recommended: Benefits of Returning to School

24. Get Help

Unemployment, Medicaid, and other social nets exist for a reason. There are going to be choppy waters, and these services are meant to help. Using them because you got laid off or furloughed isn’t shameful. And if you can’t find employment, that’s another reason to get support versus staying silent and toughing it out.

25. Put Home Maintenance on Your Calendar

When was the last time you cleaned your dryer vents? Do you know how to change the filter in your HVAC? Avoiding these kinds of things for too long can result in big maintenance bills — and potentially be a safety hazard. Not sure what to clean? Check out a house maintenance list and put reminders in your mobile device’s calendar.

26. Travel

Hopping on a plane and traveling to far-flung places can get more difficult as you become older. It can be harder to take time off work, and perhaps you’ll have a family, meaning you will need a bigger travel budget. Now, when you’re young and probably okay with “roughing it,” it’s possible to travel cheap!

27. Learn to Say No

An important life skill is learning how to say no. Don’t want to go out for drinks? Can’t finish that report by Monday? Your best bet may be to just be honest. Taking on too much may only backfire, so learning to say no without feeling guilty can be important for your mental health and work-life balance.

28. Avoid Lifestyle Creep

Lifestyle creep is the situation in which the more your income increases, the more you spend. While a pay raise may mean you can splurge a bit, if you wind up renting a bigger house, leasing a luxury car, and treating yourself to a week in Tulum, you could wind up in the hole. Instead, treat yourself within reason, and plow more money into savings, such as for a down payment on a future home.

Recommended: 9 Tips for Finding the Best Deals Online

29. Outfit Your Home Office

Are you going to be working from home for some or all of your week? Having ergonomic, comfortable, and functional furniture can help keep your back and neck from hurting and your mind from getting distracted. Don’t just perch on the couch or in bed with your laptop. Scan home office ideas if you’re in need of some inspiration.

30. Give Back

You’re joining the ranks of adults, so do the right thing and find a way to contribute and help others. Maybe you can spend some time on the weekend at a Habitat for Humanity site or make a charitable donation to a favorite cause.

31. Understand Student Loan Repayment Options

Understanding your student loan repayment options sets yourself up for financial stability after graduation. Consider income-driven repayment plans, which adjust your monthly payments based on your income and family size, consolidating your federal loans into a single, simplified payment, or refinancing your loans — especially if you have strong credit — to potentially secure a lower interest rate.

32. Set Career Goals and Revisit Them Annually

Setting clear career goals helps you stay focused, motivated, and intentional as you navigate life after graduation. Reviewing these goals each year allows you to adjust based on new experiences, changing interests, and evolving opportunities, ensuring your career trajectory stays aligned with who you are and where you want to go.

Recommended: Tips for Applying for Graduate School

33. Learn the Basics of Insurance (Health, Renters, Auto)

Learning the basics of insurance is an important part of stepping into financial adulthood. Understanding how health insurance works helps you choose a plan that fits both your medical needs and your budget, while renters insurance protects your belongings and provides liability coverage in case of accidents. Auto insurance ensures you’re protected financially if you’re involved in a car accident or experience vehicle damage.

The Takeaway

Your post-college years can be exciting and fun but also a bit confusing and challenging at times. Start with a few items on this list, and work your way through to build your life skills, launch your career, and manage your money confidently.

And if your student loan payments are getting in the way of you living your best post-college life, you may want to consider refinancing your student loans.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.


With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

How long does it take to get a job after college on average?

It typically takes graduates three to six months to find a job after college. However, recent grads reportedly face tougher economic conditions and less employer demand, extending their search beyond six months. Networking, internships, and a well-crafted resume can help expedite the process.

What is the average salary for college graduates?

The average starting salary for college graduates holding a bachelor’s degree is $68,680 in 2025. Engineering and computer science graduates often earn higher starting salaries, while those in humanities and social sciences may start lower. Experience and location also play significant roles.

What’s the average age of a college graduate?

The average age of a college graduate is around 24 years old for those who complete their degree right after high school. However, this can vary widely depending on factors like part-time study, career breaks, and returning to education later in life. Many nontraditional students graduate in their 30s or even 40s.

What percent of college graduates go back to school?

About 14% of the population holds an advanced degree, such as a master’s degree or professional certification. This varies by field and career goals, with higher rates in fields like medicine, law, and academia. Continuing education can enhance career prospects and personal development.

What percent of college graduates use their degree?

A recent study found that more than half of college graduates are working in fields that do not require a degree. However, this can vary by field, with higher usage rates in specialized professions like engineering and health care. Factors like job market conditions and personal career choices also influence whether a degree is directly applied.

Photo credit: iStock/Rattankun Thongbun

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Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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