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With the average cost of tuition at a private college close to $40,000 per year, it’s no surprise that many students will take out student loans to pay for their education. These student loans come in all shapes and sizes: federal or private, subsidized or unsubsidized, cosigned or not.

Most federal student loans do not require a credit check and can be borrowed without a cosigner. While the majority of students who take out private loans have a cosigner to guarantee the loan, that’s not an option for everyone. A cosigner — generally a family member or close friend — is someone who guarantees they will pay back your student loan if, for some reason, you can’t.

If you don’t have enough established credit to qualify for a private student loan on your own, turning to a cosigner, if possible, may also help you get approved at a better interest rate. However, not everyone has someone to cosign their student loans, and that’s okay too. There are plenty of ways to potentially qualify for both private and federal student loans without a cosigner. Here’s what you need to know.

Purpose of Adding a Cosigner

There are two main reasons why adding a cosigner to a private student loan may make sense — one is to improve your chances of being approved for a loan and the other is to potentially help secure a more competitive interest rate.

If you’re applying for student loans, you may not have a long credit history yet. To lenders, a lack of credit history can be seen as risky because you haven’t proved how well you can manage your financial obligations. You might need a cosigner to convince a lender to give you a student loan, since having a cosigner with more financial security or a better credit history reduces risk to the lender.

A cosigner with a strong credit history may also help you get approved for a loan with a lower interest rate, which could help reduce the amount of money you pay in interest over the life of the loan.

A cosigner will need to share their financial information with the lender, so it’s a good idea to make sure that your cosigner has plenty of time to get their documents in order and discuss loan applications with you.

Can You Get a Federal Student Loan Without a Cosigner?

The short answer is yes. The first step in qualifying for a federal financial aid package is to fill out the Free Application for Federal Student Aid (FAFSA) .

You’ll submit your financial information and, if you’re a dependent student, your parents’ information too. Depending on your financial need, you’ll then be offered a combination of federal student loans — including subsidized and unsubsidized Direct or PLUS Loans — and work-study programs.

Federal student loans typically do not require a cosigner, nor a credit check, and they often have competitive interest rates. Direct PLUS Loans , which are primarily offered to parents and graduate or professional students, however, do require a credit check.

You’ll want to keep in mind that there are limits on how much you can take out in federal loans. For example, dependent students whose parents are unable to obtain PLUS Loans cannot take out more than $9,500 as a first-year undergrad. And, no more than $3,500 of this amount may be in subsidized loans. For more information on loan limits, check here . Because of these limits, students may look for additional sources of funding.

💡 Quick Tip: You’ll make no payments on some private student loans for six months after graduation.

Can You Get a Private Student Loan Without a Cosigner?

Yes, it is possible to get a private student loan without a cosigner, but you will likely need to have an established credit history or be willing to pay a higher interest rate.

To qualify for a private student loan, which are available from banks, credit unions, and online lenders, you generally have to be age 18 or older, a U.S. resident, and enrolled in school at least part time. Additionally, certain lenders may only approve loans if you are enrolled at schools that meet their criteria, which can vary from lender to lender.

To qualify for a private student loan without a cosigner, you typically must meet certain credit requirements. This often includes at least two years of established credit history, a credit score in the “good” range (670-739), and a certain minimum amount of income.

Some private lenders will provide student loans without a cosigner even if you have a limited credit history or income. However, you will almost definitely pay a higher interest rate.

If you know you’re going to need a student loan without a cosigner, one option is to start building your credit as early as you can. There are several ways to begin building credit. One is to be added as an authorized user on a credit card held by someone (usually a parent) with good credit. If you’re over 21, you might consider applying for a low-limit credit card. This type of credit card can help keep you from going overboard on spending, while still allowing you to establish credit.

💡 Quick Tip: It’s a good idea to understand the pros and cons of private student loans and federal student loans before committing to them.

Why It Can Help to Have a Cosigner on a Private Student Loan

Having a cosigner on a private student loan can help you qualify for a loan you might not otherwise be able to get. In addition, it can help you get approved for a larger loan amount, as well as lower rates and fees.

You’ll also want to keep in mind that having a cosigner is not necessarily a permanent situation. Some lenders will “release” a cosigner from a loan after the primary borrower meets certain requirements, like a certain number of payments and a credit check.

You also may consider refinancing your loan once you’re out of school, which will then be a way to have the loan in your own name. It can be a good idea to talk through what your cosigner expects and anticipates for the life of the loan, so that you’re both on the same page.

What is the Minimum Credit Score for a Student Loan?

If you apply for a federal student loan, your credit score won’t be a factor, since a credit check is not even part of the application process. However, private student loans often require a credit score of at least 670 to get a loan without a cosigner.

The exact qualification criteria will vary from lender to lender but, generally, the higher your credit score, the more likely you are to qualify and obtain a competitive interest rate for a private student loan.

Before you apply for a private student loan, you may want to get copies of your credit reports (available free at AnnualCreditReport.com ) and check your credit score to get a sense of where you may stand in the eyes of a lender. You also can check your credit report for any errors, which could bring down your score.

Who is Eligible for Student Loans That Don’t Require Cosigners?

Federal student loans don’t require a cosigner. There are also some private student loans that don’t require a cosigner, though you typically need to meet certain credit and income requirements.

You may be able to check your private student loan eligibility before you apply for a loan without a cosigner. This triggers what’s known as a “soft” credit check. A soft credit check does not affect your credit score, but can give you an approximate idea of whether or not you’ll be approved for a loan and what the interest rate on the loan may be.

Keep in mind, though, that your loan won’t be finalized until you apply for the loan. At this point, a hard credit check will be performed and final approval decisions will come through. But checking loan eligibility is one way to know whether or not a lender may consider your application without a cosigner.

What are Your Options If You Can’t Get a Student Loan Without a Cosigner?

If you can’t get a student loan without a cosigner and you don’t have someone who can be your cosigner, don’t panic. There are other potential paths forward depending on your goals and your circumstances:

•   Take a gap year. Some students take a year off to build credit, grow their income, and reapply once they feel their finances are on more secure footing.

•   Consider a less expensive school. Some students who can’t get a cosigner decide to go to a community college and take core credit courses. They may also work during this time. Then, when they feel their finances are on more secure footing, they transfer to their intended school to finish their degree.

•   Rethink your education priorities. If you can’t get a cosigner and are having trouble shouldering loans on your loan, you may recalibrate your educational goals and consider different degree programs or institutions that may have a less expensive price tag. It can be helpful to talk to people who work in your future career field — they may have thoughts on how you can save money on education or may have tips for alternate paths toward the job you want.

•   Talk with your financial aid office. Chances are, your financial aid office has seen similar situations and may have ideas. They may also be able to connect you with other funding opportunities, as well as students who have independently financed their education.

Other Ways to Help Finance Your Education

Besides taking out federal student loans or private student loans without a cosigner, there are a few other options to help finance your education.

There are many grants and scholarships available, including need-based grants and merit-based grants (grants available for students who reach a certain level of academic excellence) that you do not need to repay. You can search for scholarships online to see if there are any you might qualify for. You might also ask your high school’s college counselor or selected college’s financial aid office for information on any scholarships or grants you may be eligible for.

You might also consider working while you’re in school. Some students find they can manage a job alongside their studies, while others find that it’s challenging to find a balance. There is no “right” way to pay for your education. Some students may take a year or more off to save up for school, and then focus full-time on school. Talking to graduates can help you see different pathways and that there is no “one size fits all” when it comes to financing an education.

The Takeaway

Applying for a private student loan with a cosigner can help a potential borrower secure a more competitive interest rate or preferable loan terms. This is because the cosigner provides additional security for the lender — if the primary borrower runs into any issues repaying the loan, the cosigner is responsible.

Federal student loans, aside from Direct PLUS loans, do not require a credit check or cosigner. If you find that your federal loans aren’t going to cover your education, a private student loan may help. And, some private lenders will offer student loans without a cosigner. Just keep in mind that private student loans lack the borrower protections offered by federal 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.

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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.

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

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 .

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

Third-Party Brand Mentions: No brands, 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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Using a surrogate, also known as a gestational carrier, involves an arrangement in which a woman carries and gives birth to a child for another couple or individual.

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

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

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

Why is Surrogacy so Expensive?

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

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


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

Agency Fee

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

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

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

Recommended: Exploring IVF Financing Options

Surrogate Fee

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

Fertility Clinic Fee

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

Recommended: How Much Does IVF Cost?

Pregnancy Costs

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

Legal Fees

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

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

Other Potential Costs

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

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

Is Surrogacy Covered by Insurance?

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

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

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


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

What To Know About Surrogacy Fees

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

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

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

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

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

How to Pay for Surrogacy

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

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

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

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

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

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

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

Recommended: 5 Tips for Saving for a Baby

The Takeaway

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

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

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

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

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

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

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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.

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

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Sending your child off to college is a major milestone towards their independence. But if your kid decides to get a private student loan, they will most likely need to have a cosigner. Typically, that means mom and dad step up to the plate.

Should parents cosign on student loans? The answer will depend on such factors as your risk tolerance, your child’s probable ability to repay the loan, and if it makes sense for your family and your finances.

Cosigning for a student loan has benefits and disadvantages. There are also other options that can help bridge the gap between the cost of higher education and what you’re able to pay.

This guide will provide important facts to know about being the cosigner on a private student loan.

Why Are Student Loans Cosigned So Often?

It’s no secret that the cost of college education has skyrocketed. Consider these statistics:

•   The average cost of college has doubled since year 2000.

•   The current average cost for one year of college at a public institution is $26,027, including living expenses, with tuition and fees costing $9,678 in-state and $27,091 on average out-of-state.

•   For a private, nonprofit university, that number rises to $55,840 on average, with tuition and fees accounting for $38,768 of that sum.

There are many kinds of funding and different types of student loans to contemplate when budgeting for college. When savings, federal student loans, federal work-study, and scholarships or grants can’t fill the gap, students may look to private lenders to help them cover the rest.

Unfortunately, students just starting out usually don’t have the credit history needed to get a loan from a private lender, so cosigners sometimes step in.

But do students have to have a cosigner for a private student loan? Almost always. Since many lenders won’t lend money to young adults with no or little credit history, they typically require cosigners. Roughly 92% of all private undergraduate student loans have a cosigner.

💡 Quick Tip: You’ll make no payments on some private student loans for six months after graduation.

What Are the Downsides to Cosigning My Child’s Loan?

If you’re looking to privately fund your child’s education costs, it means they likely need the help to pay for college, just like many Americans do. But cosigning for your child’s private student loan is not without potential repercussions. Think over the following:

•   When wondering “Should I cosign a student loan?” do consider your relationship with your child. If something goes wrong — missed payments, extended unemployment, or worse, default — the potential for financial stress could create the possibility of misunderstandings and hurt feelings. If your relationship with your child is already tenuous, bringing financial stress into it will likely not help.

•   Cosigning could put your own finances at risk. You may have the most responsible young adult in the whole state, but if something goes awry and the loan goes into default, the lender may sue you or hire a collection agency to try to recoup the debt.

A student loan default might also tarnish your credit score. Simply signing the loan also affects your score. Even if you’re not the one making payments, you’re still responsible for the loan, according to the major credit bureaus.

Recommended: What Is a Credit Bureau?

What Are Alternatives to Cosigned Loans?

Do parents have to cosign student loans? Not necessarily. And so you may wonder what options you have to cosigning a loan for your child’s education. Here, a few to know about:

The First Step for Federal Aid: FAFSA®

Do parents have to cosign a private student loan? The answer in the previous section was “almost always.” The “almost” part of that answer is “not if they can find other sources of funding.” Scholarships and grants, which don’t have to be repaid, are a good place to start, but they often don’t cover the entire cost of an entire college education. The first source of funding that should be exhausted before any others is federal student aid.

Filling out the Free Application for Federal Student Aid (FAFSA®) is the first step to figuring out how much federal (and frequently state) financial assistance your child is eligible for. You’ll add your financial information that will determine the amount of federal assistance, which includes Direct Subsidized Loan, Direct Unsubsidized Loans, and other student aid from the federal government, like grants and work-study.

Some states and colleges also base merit aid on FAFSA information, so the application is an important one for all types of financial aid, not just federal.

Establishing Their Credit Score

There are also some other pathways to consider when trying to find loans without a cosigner. One good idea is to have your child start building their credit history. A credit score is typically enhanced over time as the record of their successful payments grows, along with other factors like their outstanding debt, credit mix, and more. A couple of pointers:

•   Your student might start by either getting a secured credit card at a credit union or other financial institution, then showing they can make timely monthly payments on a purchase.

•   If your student is trustworthy and mature, you could also consider adding them as an authorized user to a credit card you already have. You’ll be responsible for making the monthly payments, but they could benefit from your financial behavior.

Scholarships

Loans and scholarships can go hand-in-hand to make college affordable. Like the real estate mantra concerning location, the college payment mantra might be, “Scholarships, scholarships, scholarships!” Money you don’t have to pay back? Yes, please.

The FAFSA will help colleges determine what federal student aid, scholarships, and grants your child might qualify for, but don’t let your student stop there.

Merit scholarships come in all sizes and from diverse sources, including local and national organizations, heritage associations, and various writing and other contests sponsored by nonprofits and other organizations. It might help to look at groups that your family might be closely associated with, such as unions, professional associations, or alumni organizations.

Keep in mind that your child can apply for scholarships while they are still in college, because some are tied to college majors, and your student is likely to have settled on a major after the first year or two. This could open up scholarship options that couldn’t be considered before they declared a major.

Recommended: Pennsylvania Student Loan and Scholarship Information

Budgeting

You might also be able to forego cosigning a student loan by making strategic decisions about education costs. Can your student reduce the overall cost of college by ditching the meal plan, living off campus, or even attending a significantly less expensive college?

Or, instead of paring down expenses, maybe your student could consider boosting their income to avoid the need for a cosigner on a student loan. One idea might be to start a low-cost side hustle. Another could be to take a year off to work — this may be enough to close the gap, avoiding the need for a loan altogether.

Loans for Parents

Parents who don’t mind shouldering more of the cost can also take out their own federal student loans with the Direct PLUS Loan , sometimes referred to as a “parent PLUS loan.”

Even though your student benefits from the loan, they are not the borrower, and you’ll be solely responsible for paying it back. Some parents may consider working out a repayment arrangement between themselves and their student. If this will be the expectation, however, it’s a good idea to discuss the arrangement with your student before taking out this type of loan.

Direct PLUS Loans can also be taken out by graduate or professional students. Whether a parent or a graduate student, there is a downside for the borrower. The interest rate for Direct PLUS Loans is often higher when compared to other federal student loans — 8.05% for the 2023-2024 school year versus 5.50% for Direct Subsidized Loans and Direct Unsubsidized Loans.

However, in this scenario, you won’t be asking yourself, “Should a parent cosign a student loan?” because you’re helping fill the gap without depending on your student to pay the loan back.

💡 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.

The Takeaway

There are options available to eligible students before considering a private student loan. However, if all other options have been exhausted, a private student loan can be a good choice to help your child complete their college education.

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

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

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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.

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

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.

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.

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

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

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

How Much Will I Need to Save?

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

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

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

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

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

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

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

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

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

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

What Are Some Strategies for Saving?

Here are a few options to consider:

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

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

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

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

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

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

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

Which Savings Plan Is Right for Me?

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

529 Plans

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

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

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

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

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

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

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

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

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

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

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

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

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

Coverdell Education Savings Account

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

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

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

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

UTMA and UGMA Accounts

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

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

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

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

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

What About Student Loans?

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

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

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

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

•   Depending on your situation, student loan refinancing can also lower your monthly payment. Many online lenders consider a variety of factors when determining your eligibility and loan terms, however, including your educational background, earning potential, credit score, and other factors. And if you’re lowering your monthly payment by extending your loan term, you may pay more interest over the life of the loan.

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

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

Recommended: Student Loans Guide

The Takeaway

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

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

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

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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.

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

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

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

SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.

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

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