“Married Filing Separately”: Student Loan Payment Impacts

Each tax season, married couples have a choice to make: Should they choose to file a joint return or file their taxes separately?

The overwhelming majority end up opting for “married filing jointly” status, and often that makes sense. But if you or your spouse are repaying federal student loans on an income-driven repayment plan, you may want to run the numbers to see if filing separately could potentially lower your monthly loan payments.

Read on for a look at the pros and cons of married filing separately with student loan payments and to find out if it could work for you.

Key Points

•   Filing taxes separately as a married couple can result in lower student loan payments under income-driven repayment (IDR) plans.

•   By filing separately, a borrower’s monthly payment under an IDR plan is based on their own discretionary income. When filing jointly, payments are based on both spouses’ income.

•   However, filing separately as a couple may lead to loss of tax benefits such as certain credits and deductions, including the student loan interest deduction.

•   Doing the math, using the Federal Student Aid’s Loan Simulator, or consulting with a tax professional could help you determine what tax filing status is best.

•   Other options for lowering student loan payments include Graduated or Extended Repayment Plans and student loan refinancing.

Married Filing Taxes Jointly vs. Separately

When you’re married, choosing to file your taxes jointly vs. separately can make a significant difference in the size of your refund or what you owe. Most married couples decide to file a joint return for the tax advantages the IRS offers to those who select this status. But there are times when filing separately may be the better choice for your family’s financial needs.

If you took out federal student loans for help with paying for college tuition, and your student loan repayment plan is determined by the income you report on your tax return each year, for example, you might be able to lower your monthly loan payments by filing separately.

That’s because with an income-driven repayment (IDR) plan like Income-Based Repayment (IBR), Pay As You Earn Repayment (PAYE), or Saving on a Valuable Education (SAVE), your discretionary income is used to calculate your monthly payment amount.

If you file a joint return with your spouse, your payments are based on your joint discretionary income. But if you file separately, your payments will be based only on your individual discretionary income — which could mean a lower student loan payment.

You might have heard recently about the SAVE plan and married filing separately. However, the SAVE plan has been blocked by court actions and is on hold. Borrowers can still apply for the plan if they choose; those who are already on the plan have been placed in forbearance until further notice, with no monthly payments due and no interest accruing.

If you have private student loans, these loans don’t have the same repayment options that federal student loans do. That means your tax filing status won’t impact your monthly private student loan payments.

Recommended: Tax Benefits of Marriage

Spouses No Longer Need to Cosign IDR Applications

One change that will affect married borrowers is that spousal signatures are no longer required for most IDR applications, whether the couple files their taxes jointly or separately. This includes the SAVE plan for married filing jointly couples. (The only exception is when a couple is paying their student loans together using an Income-Contingent Repayment (ICR) plan.)

In the past, a spouse had to sign to verify that all information on the form, including family size and income, was accurate. Removing the requirement should make it simpler for a married borrower to file his or her application.

Tax Differences Between Filing Separately vs. Jointly

If you and your spouse are thinking about filing your taxes separately in an effort to lower student loan payments on an IDR plan, it’s important to calculate what you could save on your monthly loan bill and then compare that amount to what you might lose in tax benefits for the year.

The tax consequences of filing separately vs. jointly can vary significantly depending on each couple’s unique circumstances, and they can change from year to year. But you could lose quite a few tax advantages by choosing the “married filing separately” designation.

Filing separately can limit the availability of certain tax credits and deductions, such as the American Opportunity Tax Credit (for educational expenses), the Earned Income Tax Credit, the Child Tax Credit, and the Child and Dependent Care Credit. Nor will you be able to claim the student loan interest deduction, which allows you to deduct up to $2,500 in interest paid on your federal and private student loans.

Filing separately may also affect your tax rates and the amount of your standard deduction. And it can restrict a married couple’s ability to offset capital gains with capital losses (a process known as tax-loss harvesting).

Another important factor to consider is that if you choose to file separately, you and your spouse must agree on whether you’ll claim the standard deduction or itemize your deductions. Both spouses must use the same method on their separate returns.

IDR Plans: Low Payments When Filing Separately

Good communication can be key for couples making decisions about how to file, how they will split their finances and manage their deductions if they file separately and other tax questions.

You may want to sit down with a tax professional who can help you run the numbers and assess how all your filing choices could impact your current and future tax bills. And you can use the Loan Simulator on the Federal Student Aid website to get help estimating loan payments based on various IDR plans as well as factors like income, family size, and tax filing status.

When might it make sense to file separately? Let’s say one spouse earns $200,000 a year and has no student loan debt, and the other spouse earns $50,000 a year and has $150,000 in student debt. Instead of using their joint discretionary income when applying for PAYE — which is open only to those on the blocked SAVE plan who want to switch over, as well as new borrowers as of October 1, 2007 who received at least one Direct loan after October 1, 2011 — the couple could file their taxes separately so that the spouse with the lower income and student loan debt could qualify for a lower monthly payment.

As mentioned above, PAYE isn’t the only IDR plan that allows couples to potentially lower their student loan payments by filing their taxes separately. The IBR and SAVE options also allow couples to separate their finances in an effort to minimize their monthly payments and/or reach forgiveness sooner. But each program has different rules regarding monthly payment caps, how long it can take to get student loan forgiveness, and more. So it makes sense to check out the pros and cons of each to find the plan that’s the best fit for your family’s needs.

Other Repayment Options

As you’re doing your research, you may also want to look into other strategies that could help reduce your payments.

One option is a Graduated Repayment Plan, which can keep your payment timeline to 10 years (or up to 30 years if you’ve consolidated your loans). Under this plan, you start out with lower payments and then the payment amount slowly increases over time based on your expected income.

If you owe more than $30,000 in federal student loans, you may be eligible for the Extended Repayment Plan, which extends your loan repayment timeline to 25 years. If you extend your loan term, you’ll end up paying more interest, but your monthly payments will be reduced.

Refinancing your student loans could be another way to get a lower interest rate or longer loan term, or both, which could help lower your monthly payments. When you refinance, you replace your current loans with a new loan from a private lender like a bank, credit union, or online lender. However, if you refinance federal student loans, you’ll lose access to important benefits, like IDR plans, so make sure you won’t need these programs before moving ahead.

Recommended: Refinancing as an International Student

The Takeaway

If you and your spouse are struggling to repay your federal student loans — or if you want to lower your payments to make room for other goals — you may want to look into switching to an income-driven repayment plan. With these plans, couples have the option of choosing the “married filing separately” designation when filing their taxes, which means their student loan payment amount can be based on just the borrowing spouse’s discretionary income instead of the couple’s combined discretionary income.

Couples who file separately may lose several tax breaks, however, which could mean a higher tax bill. So it’s important to calculate what you could save on your monthly student loan bill and then compare that amount to what you might lose in tax benefits for the year.

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.


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SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.


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.

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.

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.

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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Self-Directed IRA for Real Estate Investing Explained

A self-directed IRA (SIDRA) allows you to save money for retirement on a tax-advantaged basis while enjoying access to a broader range of investments. Opening a self-directed IRA for real estate investing is an opportunity to diversify your portfolio with an alternative asset class while potentially generating higher returns.

Using a self-directed IRA to invest in real estate offers the added benefit of either tax-deferred growth or tax-free withdrawals in retirement, depending on whether it’s a traditional or Roth IRA. Before making a move, however, it’s important to know how they work. The IRS imposes self-directed IRA real estate rules that investors must follow to reap tax benefits.

What Is a Self-Directed IRA?

Individual Retirement Accounts (IRAs) allow you to set aside money for retirement with built-in tax benefits. These retirement accounts come in two basic forms: traditional and Roth.

Traditional IRAs allow for tax-deductible contributions, while Roth IRAs let you make qualified distributions tax-free.

When you open a traditional or Roth IRA at a brokerage you might be able to invest in mutual funds, exchange-traded funds, or bonds. A self-directed IRA allows you to fund your retirement goals with alternative investments — including real estate.

You can do the same thing with a self-directed 401(k).

Self-directed IRAs have the same annual contribution limits as other IRAs. For both 2024 and 2025, you can contribute up to:

•   $7,000 if you’re under 50 years of age

•   $8,000 if you’re 50 or older

Contributions and withdrawals are subject to the same tax treatment as other traditional or Roth IRAs. The biggest difference between a self-directed IRA and other IRAs is that while a custodian holds your account, you manage your investments directly.

Get a 1% IRA match on rollovers and contributions.

Double down on your retirement goals with a 1% match on every dollar you roll over and contribute to a SoFi IRA.1


1Terms and conditions apply. Roll over a minimum of $20K to receive the 1% match offer. Matches on contributions are made up to the annual limits.

💡 Quick Tip: Want to lower your taxable income? Start saving for retirement with an IRA account. With a traditional IRA, the money you save each year is tax deductible (and you don’t owe any taxes until you withdraw the funds, usually in retirement).

How Self-Directed IRAs for Real Estate Investing Work

Using a self-directed IRA to invest in real estate allows investors to invest in various funds or securities that, themselves, invest in property or real estate. Those securities may be real estate investment trusts (REITs), mutual funds, or ETFs focused. Investors with self-directed IRAs can, then, direct retirement account funds toward those securities.

Other types of real estate investments can include single-family homes, multi-family homes, apartment buildings, or commercial properties — actual, physical property. For investors who do want to buy actual property using an IRA, the process generally involves buying the property with cash (which may require them to liquidate other investments first), and then taking ownership, which would all transact through the IRA itself. It’s not necessarily easy and can be complicated, but that’s the gist of it.

With that in mind, the types of investments you can make within an IRA will depend on your goals.

For instance, if you’re interested in generating cash flow you might choose to purchase one or more rental properties using a self-directed IRA for real estate. If earning interest or dividends is the goal, then you might lean toward mortgage notes and REIT investing instead.

The most important thing to know is that if you use a retirement account to invest in real estate, there are some specific rules you need to know. For instance, the IRS says that you cannot:

•   Use your retirement account to purchase property you already own.

•   Use your retirement account to purchase property owned by anyone who is your spouse, family member, beneficiary, or fiduciary.

•   Purchase vacation homes or office space for yourself using retirement account funds.

•   Do work, including repairs or improvements, on properties you buy with your retirement account yourself.

•   Pay property expenses, such as maintenance or property management fees, from personal funds; you must use your self-directed IRA to do so.

•   Pocket any rental income, dividends, or interest generated by your property investments; all income must go to the IRA.

Violating any of these rules could cause you to lose your tax-advantaged status. Talking to a financial advisor can help you make sense of the rules.

Pros and Cons of Real Estate Investing Through an IRA

Using a self-directed IRA for real estate investing can be appealing if you’re ready to do more with your portfolio. Real estate offers diversification benefits as well as possible inflationary protection, as well as the potential for consistent passive income.

However, it’s important to weigh the potential downsides that go along with using a self-directed IRA to buy real estate.

Pros

Cons

•   Self-directed IRAs for real estate allow you to diversify outside the confines of traditional stocks, bonds, and mutual funds.

•   You can establish a self-directed IRA as a traditional or Roth account, depending on the type of tax benefits you prefer.

•   Real estate returns can surpass those of stocks or bonds and earnings can grow tax-deferred or be withdrawn tax-free in retirement, in some cases.

•   A self-directed IRA allows you to choose which investments to make, based on your risk tolerance, goals, and timeline.

•   The responsibility for due diligence falls on your shoulders, which could put you at risk of making an ill-informed investment.

•   Failing to observe self-directed IRA rules could cost you any tax benefits you would otherwise enjoy with an IRA.

•   The real estate market can be unpredictable and investment returns are not guaranteed — they’re higher-risk investments, typically. Early withdrawals may be subject to taxes and penalties, and there may be higher associated fees.

•   Self-directed IRAs used for real estate investing are often a target of fraudulent activity, which could cause you to lose money on investments.

Using a self-directed IRA for real estate or any type of alternative investment may involve more risk because you’re in control of choosing and managing investments. For that reason, this type of account is better suited for experienced investors who are knowledgeable about investment properties, rather than beginners.

Real Estate IRAs vs Self-directed IRAs For Real Estate Investing

A real estate IRA is another way of referring to a self-directed IRA that’s used for real estate investment. The terms may be used interchangeably and they both serve the same purpose when describing what the IRA is used for.

Again, the main difference is how investments are selected and managed. When you open a traditional or Roth IRA at a brokerage, the custodian decides which range of investments to offer. With a self-directed IRA, you decide what to invest in, whether that means investing in real estate or a different type of alternative investment.

💡 Quick Tip: Did you know that opening a brokerage account typically doesn’t come with any setup costs? Often, the only requirement to open a brokerage account — aside from providing personal details — is making an initial deposit.

Opening an IRA With SoFi

Opening a self-directed IRA is an option for many people, and the sooner you start saving for retirement, the more time your money has to grow. And, as discussed, a self-directed IRA allows you to save money for retirement on a tax-advantaged basis while enjoying access to a broader range of investments, including real estate.

Once again, using a self-directed IRA to invest in real estate offers the added benefit of tax-deferred growth and tax-free withdrawals in retirement. There are pros and cons, and rules to abide by, but these types of accounts are another option for investors.

Ready to invest for your retirement? It’s easy to get started when you open a traditional or Roth IRA with SoFi. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

FAQ

Can you use a self-directed IRA for real estate?

You can use a self-directed IRA to invest in real estate-related or -focused securities and other types of alternative investments. Before opening a self-directed IRA to invest in real estate, it’s important to shop around to find the right custodian. It’s also wise to familiarize yourself with the IRS self-directed IRA real estate rules.

What are the disadvantages of holding real estate in an IRA?

The primary disadvantage of holding real estate in an IRA is that there are numerous rules you’ll need to be aware of to avoid losing your tax-advantaged status. Aside from that, real estate is less liquid than other assets which could make it difficult to exit an investment if you’d like to remove it from your IRA portfolio.

What are you not allowed to put into a self-directed IRA?

The IRS doesn’t allow you to hold collectibles in a self-directed IRA. Things you would not be able to hold in a self-directed IRA include fine art, antiques, certain precious metals, fine wines, or other types of alcohol, gems, and coins.


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SoFi Invest®

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

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.


Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

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.

Claw Promotion: Customer must fund their Active Invest account with at least $50 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.

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Can You Name a Trust as a Beneficiary of an IRA?

Individual retirement accounts (IRAs) offer a tax-advantaged way to invest for retirement. When opening an IRA, one question you’ll need to answer is who should be the beneficiary. You could name your spouse or another relative, but it’s also possible to list a trust as beneficiary of IRA assets.

A trust is a legal arrangement used in estate planning that allows an individual called a
trustee to manage assets for one or more beneficiaries, according to the specific wishes of the person who creates the trust.

There are advantages and disadvantages to naming a trust as the beneficiary of an IRA. It’s helpful to understand the implications of this process when developing your estate plan.

Key Points

•   Naming a trust as an IRA beneficiary allows the account holder to control when and how IRA assets are distributed after they’re gone.

•   IRA assets can be left to a trust in order to provide financially for those dependent on care, such as minors or special needs individuals.

•   When an IRA is left to a trust instead of a spouse, that spouse will not be able to claim or roll those assets into their own IRA, as they would if they were the beneficiary.

•   IRA assets held in a trust must be distributed within five years if the IRA owner died before starting to take required minimum distributions (RMDs).

•   A trust that qualifies as a see-through trust, which passes assets to beneficiaries through the trust, may be able to bypass certain distribution requirements.

How an IRA Is Inherited

The way IRAs work is that the account holder makes contributions to the IRA to help save for retirement. Those under age 50 may contribute up to $7,000 annually in 2024 and 2025, while those 50 and up may contribute up to $8,000 annually. The account holder names one or more beneficiaries to inherit the IRA. After the account holder’s death, IRA beneficiaries must take distributions from the account — known as required minimum distributions (RMDs) — and pay any required taxes due on those distributions, in accordance with Internal Revenue Service (IRS) rules.

You can select one or more beneficiaries when you open an IRA and then update your beneficiaries at any time. For example, you could make a change to your beneficiary designation if you get married or divorced and wish to name or remove your spouse.

Types of Designated IRA Beneficiaries

A designated IRA beneficiary, similar to a 401(k) beneficiary, is the individual who will inherit the IRA account, as chosen by the account owner. A designated IRA beneficiary must be a person.

There are two primary categories of designated beneficiaries: Spouse and non-spouse. Non-spouse designated beneficiaries to an IRA can include:

•   Children

•   Parents or other family members

The IRS recognizes a separate category of designated beneficiaries, referred to as eligible designated beneficiaries (EDBs). This term is used to describe beneficiaries who benefit from special treatment regarding inherited IRA distributions under the SECURE Act, which went into effect in 2020. The following individuals qualify for EDB status:

•   Spouses and minor children of the deceased IRA owner

•   Disabled or chronically ill individuals

•   Individuals who are not more than 10 years younger than the IRA owner

Eligible designated beneficiaries can space out required minimum distributions from an inherited IRA over their lifetime. Ordinarily, non-spouse beneficiaries who inherit an IRA are required to withdraw all of the assets from the account within 10 years, under the rules of the SECURE ACT.

Non-Designated Beneficiaries

Non-designated beneficiaries are entities that inherit an IRA or another retirement account. Examples of non-designated beneficiaries include:

•   Estates

•   Charities

•   Trusts

Non-designated beneficiaries must withdraw IRA assets within five years of the account owner’s death if the owner died before they were required to start taking RMDs at age 72 before 2023, and at age 73 beginning in 2023.

However, if the account owner died after they started taking out RMDs, the payout rule applies. According to this rule, the beneficiary (in this case, the trust) must take out the assets over what would have been the account owner’s life expectancy if they had not died.

Get a 1% IRA match on rollovers and contributions.

Double down on your retirement goals with a 1% match on every dollar you roll over and contribute to a SoFi IRA.1


1Terms and conditions apply. Roll over a minimum of $20K to receive the 1% match offer. Matches on contributions are made up to the annual limits.

Benefits to Naming a Trust as an IRA Beneficiary

So, can a trust be the beneficiary of an IRA? Yes. But should a trust be the beneficiary of an IRA? That answer is largely determined by the specifics of your situation. Here are some of the advantages of naming a trust as beneficiary to an IRA.

Control

Assets held in a trust are managed by a trustee who is bound by a fiduciary duty, meaning that they must act in the best interest of their client. During your lifetime you may act as your own trustee, with someone else succeeding you at your death. Any trustee you name is required to adhere to your wishes, as specified in the trust document.

That means you can have a say in what happens to IRA assets after you’re gone. That’s one of the chief benefits to a trust. If you were to name an individual as IRA beneficiary, on the other hand, they could do whatever they like with the money.

Special Situations

Trusts can be used to manage assets on behalf of minor children or special needs children/adults. You may set up a trust for the purpose of providing financially for a family member or another individual who is dependent on you for their care.

Setting up an IRA financial trust ensures that their needs will continue to be met after you’re gone. You can leave specific instructions for your trustee and any successor trustees you name on how the trust assets should be used to fund the care for these individuals.

Disadvantages to a Trust IRA Beneficiary

Naming a trust as the beneficiary of an IRA doesn’t always make sense, however. You may lose more than you benefit by choosing a trust as beneficiary vs. an individual. Here are some of the drawbacks to carefully consider.

Distribution Rules

Non-person IRA beneficiaries, including trusts, must fully distribute assets within five years of the account owner’s death if the owner had not yet begun taking required minimum distributions, or if the account is a Roth IRA. If the account owner died after they started taking out RMDs, however, the beneficiary must take out the assets over what would have been the account owner’s life expectancy if they had not died.

The only exception to these rules is if a trust qualifies as a see-through trust (learn more about that below).

By comparison, designated non-spouse beneficiaries generally have a 10-year window in which to withdraw IRA assets. Spousal beneficiaries can treat the IRA as their own and roll it over to their retirement account, which may minimize their tax liability.

Loss of Spousal Benefits

Naming a trust as IRA beneficiary when you have a living spouse takes away some of the tax benefits that are typically afforded to spouses when inheriting retirement accounts.

Most importantly, they don’t have the option to treat the IRA as their own. That could increase their tax obligation when receiving trust assets, leaving them with less inherited wealth to fund their retirement.

Rules for Trusts Inheriting IRAs

The SECURE Act introduced rules for trusts that inherit IRAs, including the five-year requirement for distributions. The rules says that non-designated beneficiaries must withdraw IRA assets within five years of the account owner’s death if the owner died before they were required to start taking out RMDs at age 72 before 2023, and at age 73 beginning in 2023.

If the account owner died after they started taking out RMDs, the beneficiary must take out the assets over what would have been the account owner’s life expectancy if they had not died.

Trusts may be able to bypass these requirements if they qualify as see-through entities, meaning they pass retirement assets to beneficiaries. With see-through trusts, the RMDs that must be taken are calculated based on the age of the beneficiary.

Here are the rules for see-through trusts.

•   Trusts must be valid according to the laws of the state in which they’re created.

•   The trust must become irrevocable, meaning it can’t be changed, when the account owner passes away.

•   Trust beneficiaries must be readily identifiable.

•   A copy of the trust must be provided to the custodian by October 31 in the year following the account owner’s death.5

These are the most current rules as of 2024. New legislation or updates to existing legislation can change inherited IRA rules.

Process for Updating IRA Beneficiary

The process for updating IRA beneficiaries is usually determined by the brokerage or bank that holds your IRA. If you need to make an update, you’ll need to contact your IRA custodian for the next steps.

Typically, you’ll fill out a beneficiary change form and share some information about the new beneficiary. If you’re updating your IRA beneficiary to a trust you’ll likely need to share the trust’s tax identification number as well as the trustee’s name and contact information.

Keep in mind that if you have an irrevocable trust you may not be able to make the change. Talking to an estate planning attorney or financial advisor can help you better understand what changes you can or cannot make.

The Takeaway

If you’re considering a trust as part of your estate plan and you also have an IRA, think about your specific situation and objectives. Putting an IRA in a trust could make sense if you have a special family situation or you want some say in how the assets are to be used after your death. On the other hand, it’s important to weigh the tax consequences your heirs might face.

If you don’t yet have an IRA but you’d like to set one up and begin making IRA contributions, it’s easy to open a retirement account online.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

Invest with as little as $5 with a SoFi Active Investing account.

FAQs

Who pays the taxes if a trust is the beneficiary of an IRA?

When a trust retains income from an inherited IRA, the trust pays tax on that income. If IRA assets are passed on to the trust beneficiaries, then the beneficiaries pay the tax.

Can a trust be the beneficiary of Roth IRAs and traditional IRAs?

A trust can be the beneficiary of a traditional or Roth IRA. It’s possible for someone to have both types of IRAs and name a trust as beneficiary to one or both of them.

Do IRAs with beneficiaries go through probate?

Probate is a legal process in which a deceased person’s assets are inventoried, outstanding debts are paid, and remaining assets are then passed on to their heirs. Generally speaking, retirement accounts with designated beneficiaries are not subject to probate.


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SoFi Invest®

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

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 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.

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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Student Loans Denied: Now What?

Most students are eligible to receive some type of financial assistance to help pay for college or a trade or vocational school. But the criteria for student loan borrowers varies, depending on the type of financing they apply for, and a borrower can be denied student loans if they don’t meet certain requirements.

Read on to find out why a student loan application might be turned down and what you can do if a student loan is denied.

Key Points

•   Borrowers can be denied student loans if they don’t meet certain eligibility criteria.

•   Standard qualifications for federal student loans include citizenship requirements, having a valid Social Security number, and enrollment in an eligible school program.

•   Eligibility requirements for private student loans include creditworthiness and having a stable income.

•   When a student loan is denied, find out the reason, correct the problem, add a cosigner if necessary, and reapply; or appeal the decision.

•   Alternative funding options to student loans include scholarships and grants.

Student Loans Explained

As the cost of college continues to rise, many students need to take out student loans to pay for college tuition, room and board, and other education expenses.

There are two main categories of student loans borrowers can choose from to help cover their costs:

•   Federal loans offered by the U.S. federal government

•   Private loans provided by banks, credit unions, and online lenders.

Federal Student Loans

Most borrowers (about 92%) take out federal loans. Federal student loans are generally easier to qualify for, and they come with more benefits and protections than private loans do. The interest on federal loans is fixed and generally lower than that of private loans. And if you demonstrate financial need, the government will pay the interest on some federal loans while you’re in school.

The types of federal student loans include Direct Subsidized Loans and Direct Unsubsidized Loans, and Direct PLUS loans for parents taking out money for a child’s education (known as Parent PLUS loans) and graduate or professional students (referred to Grad PLUS loans).

Private Student Loans

There are limits on how much students can borrow each year using federal loans, which is why they may turn to private student loans to fill the gap in their college funding. Students can use private loans to pay for tuition, fees, housing, books, and education-related supplies.

The interest rate on private student loans may be fixed or variable, and unlike federal loans, a credit check is required for a borrower to qualify. If a college student doesn’t have a strong enough credit history, they may need a cosigner on the loan for approval and to get a competitive interest rate. Keep in mind, though, if the rate you get is high, you can consider student loan refinancing in the future when you may be able to qualify for a lower rate and more favorable terms.

There are even opportunities for refinancing for international students.

Can You Get Denied for Student Loans?

If you’re wondering, why can’t I get a student loan?, the answer is that you can be denied student loans if you don’t meet certain eligibility criteria.

With federal student loans, there are some standard qualifications that all applicants must satisfy, including being accepted or enrolled in an eligible degree program and maintaining your grades.

The requirements for private student loans are determined by each lender. Private lenders tend to focus on an applicant’s creditworthiness and ability to repay the loan. If your credit history is not strong enough, you could be denied a student loan.

Do I Qualify for Student Loans?

Eligibility for getting a student loan depends on whether you’re applying for a federal or private loan. Here are some of the basic qualifications that need to be met.

Standard Federal Loan Qualifications

In order to be considered for a federal student loan, you must first fill out the Free Application for Federal Student Aid (FAFSA). Federal student loan applicants need to meet a number of basic eligibility requirements, including:

•   Having a high school diploma or equivalent certificate to show you’re qualified to obtain a college or career school education

•   Being a U.S. citizen, a U.S. national, or an eligible noncitizen with a green card

•   Arrival-Departure Record (I-94), battered immigrant status, or T-visa

•   Having a valid Social Security number (with the exception of students from the Republic of the Marshall Islands, Federated States of Micronesia, and the Republic of Palau)

•   Being accepted for enrollment or enrolled as a regular student in an eligible degree or certificate program

•   Maintaining satisfactory academic progress based on the standards of your school

•   Providing consent and approval to have your federal tax information transferred directly into your FAFSA form.

•   Signing the certification statement on the FAFSA form stating that you are not in default on a federal student loan, don’t owe money on a federal student grant, and will only use federal student aid for educational costs

•   Demonstrating financial need to get some types of federal loans such as Direct Subsidized Loans.

Private Student Loan Qualifications

Private lenders typically require borrowers to have a strong credit history or a qualifying cosigner, and they may ask for proof of income. Here are some of the requirements you can expect when you apply for a private student loan:

•   Applicants must typically be at least 18 and U.S. citizens or permanent residents. Some lenders may consider international students if they have a willing cosigner who is a U.S. citizen.

•   A specific minimum credit score. While each lender has different requirements for a borrower’s or cosigner’s minimum credit score, an acceptable score is typically around 650. The higher the score, the more likely it is that you’ll be offered a lower interest rate and better loan terms.

•   Students must generally be enrolled full- or half-time at an accredited institution.

What to Do After Being Denied Student Loans

If your application for a federal or private student loan is denied, don’t panic. There are steps you can take to help get the necessary funds for your education.

1. Understand Why You Were Denied

If you were denied a federal student loan, reviewing your FAFSA Submission Summary, formerly known as the Student Aid Report (SAR), can help you determine the reason. Use it to check your application for errors and then make any necessary corrections. You can find your Submission Summary on the dashboard of your StudentAid.gov account after your FAFSA has been processed.

If a private lender denied your student loan application, you should receive a notice explaining why you were not approved. The Equal Opportunity Credit Act (ECOA) requires that when a creditor takes “adverse action” against an applicant, it must provide a notice with specific and accurate reasons why.

For both federal and private loans, if the denial was based on incorrect or missing information, you may be able to file an appeal. Consult the financial aid office at your college for information about the appeals process for federal student loans, and talk to your lender about how to appeal a private loan denial.

2. Wait and Apply Again

If you were denied a private student loan based on your credit history, you may want to add a cosigner and reapply. Or you could apply again after you’ve had a chance to build your credit.

If you applied for a federal loan and were denied, identify the reason for the denial and try to fix it. For example, if your GPA is low, work on improving it.

In the meantime, you can seek out other forms of financial aid, such as scholarships and grants.

Apply to Multiple Lenders

Private lenders often have different criteria for student loans, so shop around for the best terms. You can check the loan requirements, interest rates, and other loan terms and conditions from various lenders.

You can also prequalify online with multiple lenders to see what rates and terms you can get. Then you can pick the lender that offers the terms most suitable to your situation.

Private Student Loans with SoFi

If you’ve received federal financial aid and still have a funding gap for college, or if you were denied a federal loan, you might decide that a private student loan is right for you. SoFi offers private student loans you can quickly and easily apply for online. You can add a cosigner (or not) and choose a fixed or variable interest rate. Loan repayment plans are flexible, so you can select the option that works best.

SoFi also can help if you’re looking to refinance your student loans, ideally for a lower interest rate and better terms, if you qualify, which may help you manage your monthly loan payments. Just be aware that if you refinance federal loans, you’ll no longer have access to federal benefits and protections.

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 can I do if my student loan is denied?

If your student loan is denied, find out the reason you weren’t approved. If the denial was due to incorrect information, you may be able to appeal the decision to your college’s financial aid office for a federal loan or to the lender for a private loan. If the denial was issued because you didn‘t meet specific lending requirements, fix the problem then reapply. And if the loan was denied because of your credit, you could add a cosigner with strong credit and then apply again.

Can a refinance be denied?

Yes, a student loan refinance can be denied if you don’t meet a private lender’s specific refinancing eligibility criteria for your credit score, income, or debt-to-income ratio, among other factors.

Can you be denied student loan consolidation?

If you’re in the process of repaying your loans or in the grace period after graduation, most federal student loans are eligible for Federal Direct Consolidation. If you want to consolidate a defaulted loan, however, you must make satisfactory repayment arrangements, which means three consecutive monthly payments, or agree to repay your new Direct Consolidation Loan under an income-driven repayment plan.


Photo credit: iStock/PeopleImages

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.


SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 04/24/2024 and is subject to change. SoFi Private 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.

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.

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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What Are the Prerequisites for Nursing School?

A nursing career can be incredibly rewarding professionally and personally. If you’ve decided to attend nursing school to pursue your dream job, you’ll first need to meet certain nursing school prerequisites in order to be eligible. Prerequisites (also called pre reqs for nursing) are required courses or subjects aspiring nurses must take before applying to nursing school.

Learn more about the prerequisites and nursing school requirements you’ll need to be accepted at the college of your choice.

Key Points

•   Academic prerequisites for nursing school vary, depending on the type of nursing degree a student wants to earn.

•   Common prerequisites include high school biology, chemistry, and two years of college-preparatory math, all with a minimum grade of C.

•   Students must also have a certain high school GPA and passing grades on standardized tests like the SAT.

•   Once a student is in nursing school, there are ongoing prerequisite courses they will need to fulfill.

•   The average annual cost for a Bachelor of Science in Nursing (BSN) degree is approximately $30,884, with financial aid options like scholarships and grants and student loans available to help cover the cost.

Why Nursing School Prerequisites Matter

Nursing school prerequisites prepare students for a career in which they can earn a good salary as a nurse and do work that fulfills them. Whether you’re planning to get an Associate Degree in Nursing (ADN) or a Bachelor of Science in Nursing (BSN), each degree program and school requires specific prerequisites. Nursing pre reqs provide the foundation for the more advanced courses you’ll take while in school.

There are different types of nurses, and the type you’re planning to become helps determine the nursing school requirements you’ll need to fulfill. Knowing how many years you’ll be attending school can also help you with budgeting as a nurse. These are some of the nursing roles you might consider.

•   Licensed practical nurse (LPN): LPNs provide basic patient care under the supervision of registered nurses and doctors. They work in hospitals, physicians’ offices, nursing homes, extended care facilities, and in patient’s homes. Rather than a college degree, LPN’s typically attend a vocational or technical school for one year and they must graduate with a license from an accredited institution to practice.

•   Registered nurse (RN): RNs care for patients, administer medication, assist in diagnostic testing, and more. RNs usually work in hospitals, doctors’ offices, nursing homes, long-term care facilities, and other locations. They must have an associate degree in nursing or a Bachelor of Science in Nursing.

•   Clinical nurse specialist: This is an RN with additional training and education who diagnoses conditions, prescribes medication, and treats patients. These professionals must have a Master of Science in Nursing (MSN).

•   Nurse practitioner (NP): Nurse practitioners examine and diagnose patients, prescribe medications, and order tests. They must be licensed RNs and have an MSN or a master’s degree in a specialty role.

•   Nursing director: Nursing directors oversee health care facilities. They typically need a Master of Science in Nursing (MSN) or a Doctor of Nursing Practice (DNP).

•   Nurse educator: These nurses teach nursing students clinical skills, patient care methods, and collaboration practices. Nurse educators must have an MSN or DNP degree.

Factoring in the Cost of Nursing School

As you consider the nursing school requirements you’ll need to meet, it’s important to think about how you’ll pay for college. The average cost of nursing school is approximately $30,884 annually for a BSN degree, which can be costly over the four-year degree program.

Fortunately, there are options to help students afford their schooling, including federal student loans, scholarships and grants, and private student loans. Explore the different options, and fill out the Free Application for Federal Student Aid (FAFSA) to see what you qualify for.

Also, keep in mind that while the thought of repaying school loans can seem daunting, there are ways to manage your payments including income-driven repayment plans for federal student loans, loan repayment assistance programs offered by various states and organizations, and student loan refinancing.

When you refinance student loans, you replace your current loans with a new loan from a private lender such as a bank, credit union, or online lender. Ideally, the new loan will have a lower interest rate and more favorable loan terms.

If you can secure a lower interest rate, refinancing student loans to save money may make sense for you. But be sure to explore your options.

Using our student loan refinancing calculator can help you see what your monthly payment might be.

Common Nursing School Prerequisites

No matter what type of nursing degree you want to earn, the most common nursing school prerequisite is earning a high school diploma or its equivalent, a General Equivalency Diploma (GED).

In addition, you will need these nursing pre reqs:

Biology

Nursing students need one year of high school biology with a grade of C or better.

Chemistry

As a nursing pre req, students need one year of high school chemistry with a grade of C or better.

College-Preparatory Math

Nursing school requirements call for two years of college-preparatory math with at least a C grade.

Grade Point Average (GPA)

To qualify for an Associate Degree in Nursing program, students generally need a GPA of at least 2.7. For a Bachelor of Science in Nursing program, they need at least a 3.0 GPA.

Standardized Tests

Passing grades on SATs or TEAS (Test of Essential Academic Skills) are typically required for admission to most nursing schools.

It’s important to note that every college has its own requirements (including GPA requirements), so check with your college’s admissions office to find out what you’ll need specifically to be admitted.

For example, the University of Iowa suggests the following high school prerequisites for nursing:

•   Four years of high school English

•   One year of biology

•   One year of chemistry

•   One year of physics

•   Four years of the same world language or two years in two different world languages, or two years of the same world language plus required additional coursework

•   Algebra I, Algebra II, and geometry

•   Three years of social studies

Recommended: Ways to Pay for Nursing School

How to Complete Nursing School Prerequisites

In most cases, you can take high school courses to complete nursing school prerequisites. But if you know what college you’d like to attend for nursing school, check to see what required courses they ask for.

If your high school doesn’t offer certain prerequisite courses, you can typically complete them through a community college, online courses, or the four-year college where you plan to get your nursing degree.

Other Nursing School Prerequisites

Once you’re in nursing school, there are additional prerequisites you’ll need to fulfill. For example, your school may require you to take some basic courses like the ones below before you can take more advanced classes.

•   English composition

•   Fundamentals of oral communication

•   Biomedical ethics

•   College algebra

•   Microbiology

•   Chemistry

•   Human growth and development

•   College study skills

If you’re already in college and you want to switch your major to nursing, you must also meet specific prerequisites to get into nursing. For example, the University of Iowa requires you to meet these prerequisites with a grade of “C” or higher:

•   Natural science, such as chemistry, biology, anatomy, physiology, microbiology, or nutrition courses

•   Social science, such as elementary psychology, human development and behavior, or sociology classes

•   General education courses, such as arts and cultural perspectives

•   Additional prerequisites, such as rhetoric, statistics, and diversity, equity, and inclusion for health professions

•   World language

Check with the college or university to see what’s needed for the nursing program you want to attend.

Recommended: Student Loan Refinancing Guide

The Takeaway

There are a number of prerequisites needed for nursing school, including high school class requirements before you apply to college, and prerequisites needed once you’re enrolled. Keeping on top of them and making sure you fulfill all the requirements for the type of nursing degree you’re working for can help you chart a clear path toward graduation.

Nursing school can be expensive, and many students use federal student loans to help pay for it. They might also fill any funding gaps with private student loans. To better manage your monthly payments after graduation, you can consider refinancing student loans, especially if you can qualify for a lower interest rate and more favorable terms. Just be aware that refinancing federal student loans makes them ineligible for federal programs like income-driven repayment.

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.

FAQs

What are the minimum requirements for nursing school?

The minimum nursing school requirements generally include graduating from high school with a diploma after taking science and math classes (such as chemistry, biology, and college- preparatory math), having a GPA of 2.7 or higher for an Associate Degree in Nursing program and 3.0 or higher for a Bachelor of Science in Nursing program, and passing grades on standardized tests such as the SATs. However, minimum requirements can vary from school to school, so check with each institution you’re applying to.

When do you take nursing school prerequisites?

You take nursing school prerequisites starting in high school with classes like biology, chemistry, and math, as well as standardized tests like the SATs. When you’re in nursing school, you’ll begin by taking foundational prerequisite classes and work your way up to higher-level classes as you work toward your degree.

What if my GPA is too low for nursing school?

There are some possible ways to get into nursing school even if your GPA is too low. While many programs require at least a 3.0 for admission to a Bachelor of Science in Nursing program, some schools are less selective than others. For instance, you could apply to a community college to earn a licensed practical nurse degree (LPN) and then transfer to a four-year college once your grades are higher. Also, consider doing volunteer work in a health care setting — some institutions give more weight than others to nonacademic activities like health-related volunteer work.


Photo credit: iStock/FatCamera

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.


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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