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Paying off a loan early could help you save money on interest, but it could cost you a few points off your credit score. Closing loan accounts can affect things like credit utilization, payment history, and credit mix, all of which factor into your score.

Does that mean you shouldn’t pay off a loan early if you have the opportunity to do so? Not at all. But it’s important to consider how your score may be affected if you decide to pay a loan in full ahead of its scheduled payoff date.

What Is a Personal Loan?

A personal loan is a loan that’s designed for personal use. When you get a personal loan, your lender agrees to give you a lump sum of money that you can use for just about anything. Some common uses for a personal loan include:

•   Debt consolidation

•   Credit card refinancing

•   Medical bills

•   Large expenses, such as a wedding or vacation

•   Emergencies

Personal loans are repaid in installments, according to the schedule set by your lender. For example, you might pay $350 a month for 36 months to pay off a personal loan. Each loan payment includes principal and interest, and your lender may also charge fees, such as origination fees.

Can You Pay Off a Personal Loan Early?

Unless your loan agreement specifically states that you must agree to pay every installment as scheduled, then you should be able to pay off the balance early.

Keep in mind that paying off a personal loan before the loan maturity date may trigger a prepayment penalty. This is a premium you pay to your lender for ending the loan agreement ahead of schedule. Lenders charge these penalties to recoup any interest they might miss out on if you pay off your loan sooner rather than later.

If your lender charges a prepayment penalty, they should tell you that up front. At a minimum, any prepayment penalties or other requirements for paying off a loan early should be disclosed in your loan paperwork.

Does Paying Off a Personal Loan Early Hurt Your Credit Score?

Paying off a personal loan early can hurt your credit score, at least temporarily. To understand why, it helps to know a little more about how credit scores are calculated.

As an example, let’s use FICO® Credit Scores, which are the most widely used among major lenders. Here’s how these scores break down:

•   Payment history. Payment history accounts for 35% of your FICO Score. Paying on time builds your score, while late payments can hurt it.

•   Credit utilization. Credit utilization refers to how much of your available credit you’re using at any given time. This factor represents 30% of your FICO Score.

•   Credit age. Your credit age is the overall average length of your credit history. This factor accounts for 15% of your credit score.

•   Credit mix. Credit mix is simply the different types of credit you’re using. It makes up 10% of your FICO Score.

•   Credit inquiries. Inquiries show up on your credit report when you apply for new credit. They make up the last 10% of your FICO Score.

Why does paying off a loan hurt credit? It has to do with some of the factors listed above.

When an account moves from open status to closed, that means you’re no longer racking up points for on-time payments. You’re also affecting your overall credit utilization and credit mix. That combination can mean a dip in your score, though it’s less drastic than what you might see if you were to suddenly stop paying your debts or max out your credit cards.

When does paying off a debt help your credit score? When you have high credit limits but low balances, that’s good for your credit utilization — assuming that you’re not closing credit card accounts after paying them off.

Your score is less likely to suffer a drop after paying off a loan if you have other debts that you’re making on-time payments to and a healthy credit mix. Signing up for free credit score monitoring can help you keep track of score changes over time and the factors that might cause your score to go up or down.

Does It Make Sense to Pay Off a Loan Early?

Paying off a loan early can make sense if you would like to clear the debt and have the cash to do so. Here’s what paying off a loan early might do for you:

•   Eliminate a monthly payment in your budget so you have more cash to direct toward other financial goals.

•   Potentially save money on interest, since you’re not making any additional payments to the lender.

Whether you should pay off a loan early depends on your personal debt repayment plan and strategy. Keep in mind that it’s not always the right solution. For example, say that you plan to take $10,000 out of savings to pay off a personal loan early. If doing so leaves you with nothing for emergencies, then you can find yourself back in debt pretty quickly if you have to charge an unexpected expense to a credit card.

If you’re interested in the fastest ways to pay off debt, there are some options. For example, you can:

•   Use your tax refund or other windfalls to pay off what you owe.

•   Double up on your monthly payments.

•   Make biweekly payments, which adds up to one extra full payment per year.

•   Refinance the debt into a new loan with a lower interest rate.

What matters most when paying off debt is finding a method that works for your budget and situation.

Credit Cards vs Installment Loans

Credit cards and installment loans are very different. A credit card is a revolving credit line. As you pay down your balance, you free up available credit. Installment loans, on the other hand, let you borrow a lump sum. As you pay it off, the balance goes down until it reaches zero.

In terms of how they’re treated for credit scoring purposes, credit cards tend to carry more weight. That’s because credit scores lean heavily on your credit utilization. Does carrying a credit card balance affect credit? Yes, and it can also cost you money if you’re paying a high interest rate.

Installment loans can help you build a positive payment history. They can also enhance your credit mix. Examples of installment loans include personal loans, car loans, federal student loans, private student loans, and mortgage loans.

How much does paying off a car loan help1 credit? What about student loans? The biggest boost you’ll get from paying off installment loans is with your payment history. As long as you’re making your payments on time each month, your score can benefit. That can show lenders that you’re responsible about meeting your debt obligations.

Additional Considerations About Paying Off a Personal Loan Early

If you’re thinking of paying off a personal loan early, it helps to weigh the pros and cons. Credit score aside, here are a few other questions to consider:

•   Do I have enough money to pay the balance in full without draining my cash reserves?

•   Am I planning to apply for new credit after paying the loan off?

•   Will the lender charge a prepayment penalty? And if so, how much will it be?

You can ask these same questions if you’re paying off a different type of installment loan, such as a car loan or a student loan.

It’s also helpful to think about what you’ll do with the money that you’ll be freeing up in your budget. For example, you might decide to park it in a high-yield savings account or invest it to start growing wealth for retirement.

Keep an Eye on Your Credit When Paying Off a Personal Loan Early?

If you’re planning to pay off a personal loan early, it’s a good idea to check your credit scores regularly. While you’re making payments, you can monitor your scores to see what kind of positive impact they’re having. Once you make the last payment, you can go back and see if doing so helped or hurt your score.

You should make sure that the account has been properly marked as closed on your credit reports. Keeping records of all your payments is a good idea as well, in case the lender tries to come back later and say that you still owe.

Should your credit score go down after paying off a loan, the best way to bring it back up again is to make on-time payments to other debts. Paying down credit card balances and limiting how often you apply for new credit can also work in your favor.

The Takeaway

Paying off a personal loan early can save you some money on interest charges and free up cash for other goals. Before paying off a personal loan before maturity, it’s helpful to consider how it might affect your credit score.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

Is there a downside to paying off a loan early?

Paying a loan off early can impact your credit score negatively if it affects your credit mix or payment history. Your lender may also charge you a prepayment penalty to recoup lost interest.

Why does credit score go down after paying off loan?

Credit scores can go down after paying off a loan because you’re no longer benefiting from making on-time payments. You may also see a score loss if you no longer have an installment loan showing in your credit mix.

Does it hurt your credit score if you pay early?

Paying early on a loan can hurt your credit score if you’re no longer seeing on-time payments reported to the credit bureau. However, you can recover your score by continuing to pay other bills on time, maintaining a low credit utilization, and limiting how often you apply for new credit.

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SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Third-Party Brand Mentions: No brands, 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.

SORL-Q325-002

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After paying for tuition, fees, and housing, you may think you’ve got the cost of college covered. Not so fast. There is a hidden additional expense students face soon after they arrive on campus — the textbooks, online access codes, and supplies required for each class.

Despite increased use of e-books, the cost of course materials — necessary to be students in class — remains steep. According to Best Colleges, the average annual cost of textbooks at a four-year public college is $1,370. If you complete your degree in four years, textbooks can add more than $5,000 to your overall education expenses.

Fortunately, there are ways to pay for college books, including grants, scholarships, and student loans. You may also be able to get some of your textbooks on the cheap — even free. Here’s what you need to know.

How Much Do College Textbooks Cost?

If you’re wondering how much college books cost, here’s a closer look. Hard copy college textbooks can run as much as $400, with an average price falling somewhere between $80 and $150. You may need more than one book for each class, plus other supplies and materials, which can all add up.

The average college student spends more than $1,300 annually on textbooks and supplies for classes each year. That’s about 39% of tuition in a community college or 14% in a public four-year college.

According to the Education Data Initiative, prices for college textbooks increase by 6% each year, which is faster than tuition inflation (which is 4.8% per year).

Why Are Textbooks So Pricey?

One reason textbooks are so expensive is that only a few publishers control the industry. Almost 80% of the textbooks industry in the U.S. is dominated by five publishers. This lack of competition allows publishers to command steep prices. Publishers also know they have a captive audience — textbooks are a college essential, so students are forced to pay whatever price the market serves up.

While digital books typically cost less than hardcovers, that’s not always the case with college textbooks. Some schools have online access agreements or contracts with publishers. This means that students must purchase a code to access all of their course materials online, typically at full price. Digital textbooks also eliminate some of the ways students can save money on print versions, like sharing, borrowing, or buying used materials.


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

Grants and Scholarships That Pay for College Textbooks

There are a number of private scholarships and grants designed specifically to help pay for college books. You can search for book scholarships using online tools like FastWeb, Scholarships.com, and SoFi’s scholarship search tool. You may also want to check out these book-specific scholarship opportunities:

•   BookScouter: Every quarter, BookScouter awards $500 to a student to be used towards purchasing their textbooks. To apply, you need to fill out a questionnaire and record a short video.

•   Book Lover’s Scholarship: Bold.org offers $500 to support students who love reading books and believe in the power of reading to transform their lives. To apply, you need to tell them: If you could have everyone in the world read one book, what book would you choose and why?

•   Wilhelmina Foundation: The Wilhelmina Foundation’s Textbook Scholarship offers $500 to qualifying students throughout the state of Florida to help them pay for college books.

•   Carl A. Scott Book Scholarship: Every year, the Carl A. Scott Memorial Fund awards two $500 scholarships — one to a student pursuing a bachelor’s in social work, and the other to a student obtaining a master’s in social work degree.

Recommended: Finding Free Money for College

11 Tips to Spend Less on College Textbooks

These tips can help you keep up with your studies without breaking the bank.

1. Split the Cost with a Classmate

When thinking about how to pay for college textbooks, you might consider splitting the cost of books with a classmate to cut down on textbook expenses. While it may seem inconvenient, it could pay off.

There are a few ways to make sharing a textbook work. Try alternating study days so you each have the time you need to get your work done. Or, alternate highlighter colors to keep your notes straight. And as an added bonus, you have a built-in study buddy.

2. Buy Used Books

Sometimes on- and off-campus books stores will sell used copies of textbooks. You can also find used textbooks online at popular sites like Chegg, Abebooks, and Amazon. While you can’t examine the book before you buy online, you can often select the book’s condition.

When searching for used books, it’s important to make sure the book is the correct edition. The easiest way to confirm this is by using the book’s ISBN (a code that identifies specific book editions) to search.

Recommended: College Freshman Checklist for the Upcoming School Year

3. Rent Instead of Buy

In some cases, you may not need a particular text book after the semester ends. In those instances, you might consider renting. On average, renting textbooks can save you 50% compared to buying a new, printed textbook.

Some campus bookstores now offer the option of renting textbooks for a semester. Typically, you rent the book at the start of the semester and return it the first business day after finals. You can also rent textbooks through a number of online companies, including Chegg, CampusBooks, eCampus.com, and ValoreBooks. It can be a good idea to shop around and compare rental costs.

4. Get the E-Book

Printing costs are one reason for expensive textbooks. However, if you don’t need to have a physical copy and you’re not required to buy an access code through the school, you could save on college books by going with the e-book version. You can read it anywhere — your computer, tablet, or phone. Going digital can be particularly advantageous for textbooks you will refer to in the future, since the electronic version will typically include free updates.

You can buy e-textbooks from a number of online outlets, including Amazon, BooksRun, and Chegg.

Recommended: How to Save Money in College — 20 Ways

5. Find a Book Swap

Some schools have clubs or organizations that run book swaps. This is where you turn in a book you’re not using to get one you need in return. While not all campuses and colleges have this available, it could be worth looking into.

You might also check with upperclassmen to see if they might be willing to sell you a textbook or even let you borrow it for the semester.

6. Settle for an Older Version

Many textbooks have new versions released every year or every few years. Sometimes professors request you have the newest version available, but not always. Check with your professor to see if an older issue is acceptable for the course.

Recommended: 10 Money Management Tips for College Students

7. Try the Library

Some classes don’t rely on books as much as others. If you know that a class will be light on the required reading, you can save on college textbooks by heading to the library. Be mindful that other students in the class might already have the same idea as you. In that case, it’s a gamble to see if you can take out a book that may not be available.

Some schools have reserve copies of textbooks in the library that you can borrow for a specific amount of time. This could mean you can get your assigned reading done without purchasing the book. But know that these library textbooks usually have some borrowing restrictions, so you may need to plan ahead.

Recommended: The Ultimate Guide to Studying in College

8. Tap into Student Loans

When you take out student loans, you can typically use that money to cover the cost of attendance, which includes not only tuition and fees but also other expenses necessary to earn your degree, like textbooks. If you have scholarships and grants, they can typically also go toward your textbooks.

If you aren’t eligible for federal financial aid or have reached the borrowing maximum for federal loans, an in-school private student loan can be a useful alternative.

With private loans, you can borrow up to 100% of the school-certified cost of attendance, and the loans can be used for textbooks, supplies, and other college expenses. Just keep in mind that private student loans may not offer the borrower protections — like income-driven repayment plans and deferment or forbearance — that come with federal student loans.


💡 Quick Tip: Would-be borrowers will want to understand the different types of student loans that are available: private student loans, Federal Direct Subsidized and Unsubsidized Loans, Direct PLUS Loans, and more.

9. Sell Old Textbooks

The cost of college textbooks is an unavoidable expense, but that doesn’t mean you can’t get some of your money back.

You may be able to sell textbooks you’re finished with back to the bookstore where you bought them for immediate cash. Or, you might be able to sell them online at sites like Amazon, BooksRun, CheapestTextbooks, BookScouter, or Chegg. When you sell online, the process is often as simple as entering your book information, accepting an offer, sending it in, and getting paid.

If you know students who are going to take the same class you just took, you might offer to sell your textbooks to them for less than they would pay for a used book at the bookstore, but more than you would get in a buyback, for a win-win.

10. Use Open Educational Resources (OERs)

Open educational resources (OERs) are course materials available for free online that can be downloaded and shared. A growing number of universities are allowing their faculty to adopt OER course materials to help reduce costs for students. You can find these free educational materials at OERCommons .

There are also other sites that offer free access to textbooks, including Project Gutenberg and OpenStax from Rice University.

11. Use Textbook Price Comparison Sites

These days, it’s fairly easy to compare textbook prices before you buy to make sure you’re getting the best deal. Some comparison sites to check out:

•   Amazon Offering one of the largest selections of college textbooks, you can access a large number of sellers on Amazon.

•   AbeBooks This website has a deep database of textbook sellers (including local sellers) to help you find the lowest available price.

•   BigWords This is a search engine designed to help you find the best prices and shipping costs on college textbooks.

•   Bookscouter This site compares a large number of textbook websites to help you find the best price to both buy and sell your textbooks.

•   CheapestTextbooks This is a free price comparison page for buying, renting and selling textbooks. They also price-compare e-books for rent or purchase.

•   SlugBooks Here, you can search by author and title or ISBN to find the best online deal for textbooks.

The Takeaway

Depending on your class needs and personal preference, you may be able to significantly cut the cost of college textbooks by heading to the library or opting for an e-book, a textbook rental, or a used copy of the book.

In addition, you might seek out and apply for a book scholarship to help cover some of your textbook expenses. If you have any type of student loan and can use it to make your textbook purchases, those funds can also be a big help.

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

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

FAQ

What percent of college students can’t afford textbooks?

Around one in four college students decide not to acquire at least one course material, according to a 2023 survey from the National Association of College Stores. According to the Education Data Initiative:

•   25% of students say they have worked extra hours to pay for their books and materials

•   11% of students report skipping meals in order to afford books and course materials

•   One in five students say that the cost of books and materials directly influences their decision on what classes to take

How much should I budget for textbooks?

The average full-time college student pays $1,370 for books and supplies in one academic year.

How do I use my financial aid to pay for textbooks?

Typically, financial aid money is sent directly to the school. If you have money leftover after covering tuition, fees, and other school charges, the school will make the money available to you to pay for textbooks no later than the seventh day of the term.

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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.

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SOISL-Q325-035

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Millions of students have earned a GED diploma and gone on to get a college degree. In fact, 98% percent of colleges accept the GED credential just as they would a high school diploma.

Some competitive schools and programs, however, require a certain minimum GED test score for admission, and possibly other tests and requirements. Here’s what you need to know to get into college with a GED.

What Is a GED Diploma?

A GED diploma is an alternative to a high school diploma for students who didn’t complete the requirements to graduate from high school. To earn a GED, you need to take a series of tests that will indicate whether or not you have a high school level of education. This is known as the GED (or General Educational Development) test.

The test covers four subject areas: Social Studies, Science, Mathematical Reasoning, and Reasoning Through Language Arts. Each test is administered separately (so you can space them out), timed, and covers several topics in the subject area.

•   Social Studies (70 minutes):

◦  Reading for Meaning in Social Studies

◦  Analyzing Historical Events and Arguments in Social Studies

◦  Using Numbers and Graphs in Social Studies

•   Science (90 minutes):

◦  Reading for Meaning in Science

◦  Designing and Interpreting Science Experiments

◦  Using Numbers and Graphics in Science

•   Mathematical Reasoning (115 minutes):

◦  Basic Math

◦  Geometry

◦  Basic Algebra

◦  Graphs and Functions

•   Reasoning Through Language Arts (150 minutes):

◦  Reading for Meaning

◦  Identifying and Creating Arguments

◦  Grammar and Language


💡 Quick Tip: SoFi offers low fixed- or variable-interest rates. So you can get a private student loan that fits your budget.

Preparing for and Taking the GED Test

The first step to getting your GED is to create an account on GED.com. Once you have an account, you’ll be able to access free study guides and practice tests, register for low-cost online and in-person prep classes, and purchase a voucher for the official GED Ready practice test.

You can register to take the GED test online or at a local test center through your GED account. Some states require that you take the GED practice test to register for the official GED test in-person or online. You can look up your state’s requirements here.

Each of the four tests is taken and scored separately, and there are three scoring levels.

•   GED Passing Score: Scoring a 145 on each test subject is a passing score, the minimum needed to obtain a GED diploma.

•   GED College Ready Score Level: Scoring between 165 and 174 on each test subject indicates a readiness for college-level coursework.

•   GED College Ready + Credit Score Level: Scoring between 175 and 200 indicates not only a readiness for college-level coursework, but possible eligibility for college credit, depending on the college program.

Test scores are typically available in your GED.com account within 24 hours of taking the test, though it can sometimes take up to three business days. The scoring section of your account will also include a detailed report of each subject test’s score and skills you can work on to improve their score.

Can You Go to College With a GED?

Absolutely! Nearly all colleges accept a GED diploma in lieu of a high school diploma. These include community colleges, vocational schools, private universities, and public universities. In some cases, however, you may need to meet a few specific requirements, or take a few extra steps, in order to be admitted with a GED.

Certain colleges, for example, may require a GED grad to show they’re ready for college-level courses either by submitting a high enough ACT or SAT score to the college or by taking the college’s placement test. The placement test score will be a factor in the admissions process.

Recommended: College Application Checklist

How to Get Into College With a GED: Step-by-Step

While most colleges and universities accept the GED diploma, this diploma can sometimes be perceived as less challenging than a high school diploma. As a GED student, you may also lack other things colleges might be looking for, such as transcripts that show academic performance or class rank.

Fortunately, there are a number of steps GED grads can take to increase their chances of getting accepted to college.

Check the School’s Admission Requirements

Some schools and competitive programs require students to have a minimum GED test score or some prior college credit to be considered for admission. Other institutions require applicants who hold a GED diploma to take additional placement tests. There is also a small percentage of schools that do not accept the GED diploma at all.

You can learn about requirements on a school’s website. If you can’t find enough information online, you can always call the school’s admissions office. The admissions staff can be a great source of accurate and up-to-date information on general admission policies, as well as standards pertaining to GEDs, such as getting credit for a College Ready+ score.

Consider Taking the SAT or ACT

Many colleges are test-optional now, which means students don’t have to submit SAT or ACT scores along with their applications. However, If you take one of these entrance exams — and get a higher-than-average-score — you could potentially increase your chances of getting in. Some schools (even those that don’t require the ACT or SAT) also use these test scores for class placement or scholarships.

The SAT scores range from 400 to 1600, and the national average is 1024. The ACT scores range between 1 and 36, and the average is around 19.4.

Write a Compelling Essay

The college admissions essay gives GED grads an opportunity to shine. Telling a personal story, perhaps about challenges that you have overcome or ways in which you have persevered, or describing how a volunteer activity has made an impact on your life, might be the thing that makes your application stand out against a stack of others.

Include Activities on Your Application

If you participated in extracurricular activities while you were in high school or volunteered with a community organization, putting that information on your college application can give the admissions team a fuller view of who you are as a person (instead of just looking at your test scores). You may also want to include any jobs you’ve had that are related to the field you want to study.

Recommended: 5 Ways to Start Preparing for College

Get Letters of Recommendation

Some colleges require two or three letters of recommendation. Even if a letter of recommendation is optional, including one can help your application stand out. A highly positive letter gives the admissions team insights into your character, while also showing that someone is willing to vouch for you. Good sources include former coaches, teachers, school counselors, supervisors, local leaders, and mentors.

Apply to Multiple Schools

A common — and recommended — strategy for all students is to apply to more than one school. Even if your goal is to attend a four-year college, you may want to include a local community college on your list. Community colleges often have open enrollment, which means that they don’t require the ACT or SAT tests. And, if you don’t get into colleges of your choice this go around, you might opt to get an associate degree at a community college, then transfer to a four-year college to complete your bachelor’s degree.

Recommended: How to Qualify for a College Application Fee Waiver

Explore Scholarships and Financial Aid

Scholarships and other financial aid packages can reduce the cost of getting a college education. The first step is to fill out the Free Application for Federal Student Aid (FAFSA®). This allows you to find out if you’re eligible for federal aid, such as grants, work-study opportunities, and federal student loans. You can also qualify for state-level and school-based aid through the FAFSA form.

In addition, you may want to explore private scholarships opportunities using a database like Fastweb or SoFi’s Scholarship Search Tool. Your school’s financial aid office might know about more resources available, too.

If you need to borrow to pay for college, it’s generally a good idea to take out federal student loans before private ones. Federal loans have benefits that private loans don’t, including access to income-driven repayment plans and loan forgiveness programs.


💡 Quick Tip: Federal student loans carry an origination or processing fee (1.057% for Direct Subsidized and Unsubsidized Loans first disbursed from Oct. 1, 2020, through Oct. 1, 2026). The fee is subtracted from your loan amount, which is why the amount disbursed is less than the amount you borrowed. That said, some private student loan lenders don’t charge an origination fee.

The Takeaway

Just because you didn’t finish high school, doesn’t mean you can’t go to college. By getting your GED diploma, you can apply to virtually any type of secondary school, including community colleges and four-year universities.

To improve your odds of getting into college, you’ll want to make sure you meet all of the school’s admissions requirements, take any necessary entrance or placement tests, and put together a strong application that includes a great essay and personal recommendations.

To make going to college affordable, it can also be a good idea to start researching ways to cover the cost of your education. Options include savings, scholarships, grants, work-study programs, and federal or private student loans.

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

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

FAQ

Is it harder to go to college with a GED?

Having a GED doesn’t make it inherently harder to go to college, but it might require additional steps like taking placement tests or completing preparatory courses. Many colleges accept GEDs, but policies vary, so it’s important to check each institution’s requirements.

What score do you need on the GED to get into college?

Most colleges require a GED score of at least 145 on each of the four test subjects to meet their admission standards. However, some competitive schools may require higher scores.

What is the acceptance rate for college with a GED?

On average, the college acceptance rate for GED holders is nearly 98%. Some community colleges have open enrollment, but more selective institutions may have lower acceptance rates.

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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., Puerto Rico, U.S. Virgin Islands, or American Samoa, 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 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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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.

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Researching the most affordable places to live might be on your to-do list if you’re hoping to move to an area with a lower cost of living. Reducing household expenses can be one of the best ways to start building wealth, or at the very least, create some financial breathing room.

We’ve put together a list of the most affordable places to live in the U.S., based on things like housing costs and overall value for the money. Keep reading to learn which cities are rated as the most budget-friendly places to call home.

Most Affordable Cities in the US

If you’re considering how to move to another state and are interested in finding the most affordable places to live in the U.S., it helps to know what makes one city better than another. Things like housing costs, the cost of utilities, and what you’ll spend on food, transportation, and entertainment can all factor into your decision if you’re planning a move.

Keep in mind that the cost of living is not static, which can affect how affordable a city is at any given time. Additionally, the cost of living by state can vary dramatically based on factors like the size of the population, demand for housing, availability of jobs, tax laws, and average household incomes.

As you’re weighing your options, an online budget planner can help you figure out what — and where — you can afford. “It’s the last thing that many people want to do on their precious weekends, but tracking spending is essential,” says Brian Walsh, CFP® and Head of Advice & Planning at SoFi. “There is real truth to the saying ‘What gets measured gets improved.’ There’s no way to fix problems like overspending without understanding exactly what goes in and what goes out.”

How We Found the Cheapest Places to Live

We compiled our list of the most affordable places to live in the U.S. based on the cost of living as it relates to housing. Specifically, we considered median rents for a one-bedroom apartment and median home sale prices for individual metro areas across the country. The cities that had the lowest cost of living in the U.S. overall, based on those criteria, are the ones that made the list.

What are some characteristics of the most affordable places to live? In general, the list includes:

•   An accessible housing market that isn’t pushing homeowners or renters to the limits of their budgets

•   Utility prices that are at or below the national average

•   Lower tax rates, including income tax, sales tax, and property tax

•   Pricing for groceries and fuel, as well as other goods and services, that align with the typical household income

Do the cheapest places to live always check all of these boxes? Not necessarily. But the most affordable places to live typically offer a cost of living that’s below the national average.

With that in mind, here are 10 of the cheapest places to live in the U.S.

1. Hickory, North Carolina

Median home price: $320,000

Average rent: $1,312

Hickory may be an ideal place to live if you love the outdoors. There’s plenty of access to hiking and biking trails and mild temperatures are perfect for kayaking or tubing down the Catawba River. In terms of affordability, Hickory offers housing and rental prices that are well below the national average. Plus, the city offers the additional advantage of being close to both Asheville and Charlotte.

2. Brownsville, Texas

Median home price: $280,000

Median rent: $1,450

Brownsville offers the dual advantages of moderately priced housing and being located in a state with no income tax. Home prices rise the closer you get to the Gulf of Mexico, but there are still plenty of budget-friendly options to choose from. Cold weather is a rarity here, which is a plus if you’re looking to move to a warmer climate. Keep in mind, however, that hurricanes and tropical storms occasionally pay visits to the Texas coastline.

3. Fort Wayne, Indiana

Median home price: $289,900

Median rent: $1,325

Fort Wayne could be ideal for home buyers looking for affordable housing. Renters don’t fare quite as well, as median rental prices are higher than some of the other cities included in our rankings. Overall, however, Fort Wayne has a low cost of living, and it offers a quiet place to call home while still having plenty of the amenities you’d expect to find in a bigger city.

4. Dayton, Ohio

Median home price: $180,000

Median rent: $1,000

Dayton is one of the most affordable places to live for both homeowners and renters alike, with home prices and rents that are well below the national average. The city of Dayton could be a good fit for families who are looking for access to a strong public school system, or for single people and childless couples who desire a relaxed pace. There are plenty of outdoor spaces to enjoy, as well as numerous options for dining and entertainment.

5. Sioux Falls, South Dakota

Median home price: $370,000

Median rent: $1,045

If you’re looking for an area with a low cost of living that experiences all four seasons of weather, Sioux Falls might be on your list. Housing is a little more expensive here compared to some of the other cities in our rankings, but rent prices may be appealing if you’re not quite ready to buy. There’s a thriving job market, and Sioux Falls offers plenty to do, including aquariums, museums, and parks.

6. Knoxville, Tennessee

Median home price: $432,600

Median rent: $2,157

The city of Knoxville attracts a diverse mix of people who are looking for an affordable place to live, including families, young professionals, college students, and retirees. Housing prices are on the higher side here, but the overall cost of living remains low. Knoxville offers plenty to do and see, which is great for people who are hoping to maintain a more active lifestyle. It’s also just over an hour away from the Great Smoky Mountains in case you want to get away from the bustle of city life for the weekend.

7. Erie, Pennsylvania

Median home price: $209,000

Median rent: $1,000

Erie boasts affordable housing for both renters and homeowners, along with lakefront views and access to good schools. Erie has low levels of crime and rates well for livability. Its population isn’t growing as quickly as other comparable cities, though whether that’s a pro or a con for you might depend on whether you prefer a larger city or a smaller one. Keep in mind that slower job growth can be a side effect of lower population growth, which is something to consider if you’re moving to Erie to explore career opportunities.

8. Huntsville, Alabama

Median home price: $367,500

Median rent: $1,695

Huntsville has a burgeoning economy, with plenty of opportunities for job-seekers. The cost of living is low overall, though a home may cost you a little more here compared to other cheapest cities on the list. Huntsville has a number of attractions to take in, including the U.S. Space and Rocket Center, along with some eye-catching natural scenery. One thing to note about the weather is that northern Alabama is often prone to seeing tornadic activity during the spring months.

9. Peoria, Illinois

Median home price: $150,000

Median rent: $1,100

Peoria might make your shortlist of possible candidates for a new place to live if you’re looking for affordability, good schools, and access to housing. There are plenty of young professionals and families living here, though the population isn’t so large that you’ll feel like you’re getting lost in the crowd. If there’s one potential downside to consider it’s crime. Property and violent crime rates are both above the national average.

10. Kalamazoo, Michigan

Median home price: $285,000

Median rent: $1,100

Kalamazoo is something of a cultural hotspot, with plenty of theaters, museums, and live music venues. The city hosts numerous community events year-round that always draw a crowd. From a cost perspective, Kalamazoo is highly affordable, and it attracts a lot of young people who are looking to start a career. There are a few downsides, however, including harsh winters and high poverty rates.

Other Factors to Consider Before Deciding Where to Live

Cost can be a major concern when planning a move. For example, you might be debating the merits of renting vs. buying, or what you might pay for things like childcare if you’re a parent or health care if you don’t have insurance.

While the financial side of things is important, there are some other things to weigh when deciding where to move. That can include things like:

•   Job opportunities if you’re moving without a job lined up

•   Access to daycare and quality schools if you have kids

•   Crime rates and overall safety

•   Access to public transportation if you’re not taking a vehicle with you

•   Climate and whether the area is vulnerable to things like tornadoes, hurricanes, or wildfires

•   Population size and seasonality (for example, a beach town could get crowded once summer rolls around)

•   Recreation and entertainment

Last but not least, consider how much money you might need for the move itself. If you don’t have cash on hand to cover a moving van, security deposits, or other expenses, you might need to look into financing options. For example, getting a moving loan for relocating could make it easier to get settled in your new place.

The Takeaway

Keeping your budget in check — whether you’re relocating across the country or across town — is important when a move is in the works. For example, if you’re planning to buy a home in your new city, using an online home affordability calculator can help you pinpoint what price range you should be looking in for properties.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

What determines the cost of living for a city?

Cost living is influenced by several factors, including how affordable housing is in a given location, what people pay for transportation and food, and the cost of entertainment and recreation. Areas that have a higher cost of living may also offer a higher median household income, though the two don’t always go hand in hand.

How can I lower my cost of living?

Cutting expenses is a good way to reduce your cost of living. That might include making smaller cuts to your budget, or larger ones, like downsizing your home or moving to a cheaper city. Making a move might seem impractical, but it could yield significant savings if your cost of living in your new city is much lower than it was in your previous location.

Can I borrow money to move?

Moving loans can put cash in your hands that you can use to cover the expenses of relocating. For example, you might use a moving loan to hire professional movers, rent a moving truck, pay for shipping costs, or fund deposits if you’re renting a new place. You could also use a moving loan to help cover your expenses as you get settled in until you find a job.

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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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Loan modifications can change the terms of your loan in order to make the payment more manageable. Unlike refinancing a loan, having a loan modified means the loan remains with the same lender — just under revised terms.

Loan modifications can be challenging to obtain and typically decrease your credit score. But for some borrowers, they may be the only option, if the lender agrees to the terms.

So what is a loan modification and how does it work? Let’s explore the details below.

Loan Modification Defined

A loan modification is a revision to the terms and conditions of an existing loan. The lender and borrower agree to new terms that make the monthly payments more manageable for the borrower and prevent the lender from having to take more expensive, drastic actions, like foreclosing on a property.

While loan modifications are most common for secured loans, like home mortgages, it’s also possible to get student loan modifications and even personal loan modifications.

How Do Loan Modifications Work?

The goal of a loan modification is to make a borrower’s monthly payments more manageable. Typically, borrowers will consider this option if they’re at risk of defaulting on their loan (or if they already have). In the case of mortgages, loan modifications can help prevent foreclosure.

Borrowers may also look for loan modifications in times of hardship, like a serious illness or injury. In this case, borrowers might also request a loan deferment.

So how do loan modifications work? They’re a two-way street: The lender and the borrower must come together and agree to a change of the loan terms. The approach can vary, but strategies may include:

•  Adjusting the interest rate: If interest rates were high when you first took out your loan, your lender may agree to lowering the interest rate on your loan. Doing so typically reduces your monthly payment. An online personal loan calculator is one tool that might be helpful in determining how a new interest rate can affect your monthly payments.

•  Extending the length of the loan: Extending the loan could reduce your monthly payment, though adding more years to a loan may mean you’ll spend more on interest in the long run. Still the immediate relief it offers might be worth it.

•  Changing the structure of the loan: If your loan has an adjustable interest rate structure, you might benefit from modifying it to a fixed rate. This can make your monthly payments more predictable.

•   Reducing the principal balance: In some cases, a lender may agree to temporarily reduce the amount owed on your principal to make it easier to manage your monthly payments. Note, however, that you’ll have to make up for those reduced payments later. In the case of mortgages, this is a rare strategy that is typically only considered to avoid foreclosure. Student loan forbearance may also be possible with federal loans.

When Should You Use Loan Modification?

Loan modifications are often a last resort. Here are some scenarios when it might be time to consider loan modification:

•  Risk of foreclosure: If you’ve missed multiple payments on your mortgage or cannot afford to make future payments at the current amount, a lender may be open to modifying. This can prevent you from losing your home to foreclosure and may save the lender money in the long term.

•  Underwater on a mortgage: An underwater mortgage (also called an upside-down mortgage) occurs when you owe more on your home than it’s worth. This can happen if your home’s property value plummets or if you miss payments early on and are playing catchup on accumulated interest. Loan modification may be the right solution for you and your lender.

•  Defaulting on a personal loan: If you cannot afford your upcoming monthly personal loan payment or have already missed one or more payments, it may be worth seeing if you can have your loan modified, likely by extending the life of the loan to reduce your monthly payments. This may be more agreeable to a lender than having to take expensive legal action against you.

•  Financial hardship: If you are undergoing some kind of hardship, such as a debilitating medical condition or loss of job, you may want to work with your lender to see if you can modify your loan before you miss a payment.

Does Loan Modification Hurt Your Credit Score?

A loan modification will show up as a negative entry on your credit report and thus could negatively impact your credit score.

That said, if you’re missing payments on your loan because you can’t afford them — or worse, verging on home foreclosure in the case of a mortgage loan — that can have an even more dramatic negative impact on your credit.

Recommended: What Credit Score Is Needed For a Personal Loan?

How Often Do Loan Modifications Get Approved?

While getting a personal loan can be a simple process, approval for loan modifications vary by lender, loan type, and the borrower, but they’re typically more challenging to get than refinancing. Lenders are not obligated to approve your loan modification, but it may be in their best interest to avoid an expensive foreclosure process.

You might be able to improve your chances of approval by working with a debt relief company. These companies may be able to advise you on how to negotiate.

What Does It Mean to Refinance Your Personal Loan?

Personal loan modification is possible, but for many borrowers, it may make more sense to refinance a personal loan. You might consider refinancing a personal loan to achieve one of several goals.

Shortening Your Term

If you initially took out a personal loan with a particularly long term, you could try to refinance for a shorter term and pay it off sooner. While your monthly payment would go up, you might pay less in interest over the life of the loan.

Lowering Your Monthly Payment

On the flip side, you could extend the length of your loan when refinancing to lower your monthly payment. While you might pay more in the long term, this strategy could be helpful if you’re struggling to pay your bills each month.

Lower the Interest Rate

If you took out a personal loan when interest rates were higher — either because of your credit score or the state of the market — it could be worth refinancing to get a better personal loan rate. Depending on the difference in the interest rate and the size and length of the loan, refinancing could save you a considerable amount of money.

Recommended: Loan Modification vs. Refinancing

How to Get a Loan Modified

Lenders are under no obligation to modify your loan, but it’s worth a shot if you don’t see any other options.

Qualifying for modification usually requires missed payments and a demonstration of personal hardship. In some cases, borrowers may qualify for a government loan modification program.

Thinking about applying for loan modification from your lender? You’ll need to assemble a wide range of documents for your application, including:

Proof of Income

Or rather, proof of lack of income. Demonstrating to the lender that you do not currently earn enough income to afford your loan payment is crucial to making your case.

Self-employed individuals may need to supply a profit and loss balance, while salaried and hourly workers can supply an employment contract demonstrating their pay.

Your most recent tax return can also offer insight into your income and overall financial standing.

Bank Statements

Lenders typically want to see your bank statements as well. This will verify how much money you have but will also show them your spending habits.

Hardship Statement

A hardship statement is your chance to make your case. You can use this formal letter to explain your hardship — medical issues, divorce, unemployment, etc. — and how it has affected your finances.

You may be more successful if you include documentation to support your argument. This might include medical bills, divorce paperwork, or a termination letter.

Recommended: A Guide to Unsecured Personal Loans

The Takeaway

A loan modification can help make monthly payments more manageable for borrowers and can be a useful strategy for those who are at risk of defaulting on their personal loan or having their house foreclosed. The lender and the borrower must agree to a change of the loan terms. Strategies may include adjusting the interest rate, extending the length of the loan, changing the structure of the loan, and reducing the principal balance.

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 a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.

FAQ

Does a loan modification hurt your credit?

A loan modification results in a negative mark on your credit report, which can lower your credit score.However, the alternative for many borrowers is missed payments and, in the case of a mortgage or car loan, eventual foreclosure or vehicle repossession. These can have an even worse impact on your credit score.

What qualifies as a loan modification?

Loan modification is a revision to the terms of an existing loan. The borrower and the lender must both agree to those terms. Modifications can take many forms, but often the lender will reduce the borrower’s interest rate, increase the length of the loan, or change the rate structure from adjustable to fixed.

What are the types of loan modifications?

Borrowers can seek out loan modifications for various types of loans, but mortgage modifications are the most common. Borrowers with unsecured loans, like personal loans and student loans, may also be able to get modifications. Modification types include changes to the interest rate, rate structure, and length of the loan. In some cases, lenders may temporarily adjust the principal balance as a type of loan modification.

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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.

*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.

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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