Oct
04
2022
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The ACT and SAT: Which Test is Right for You?

By | Going to College, Life & Career, Student Loans, student_loan | Comments Off on The ACT and SAT: Which Test is Right for You?

The SAT and ACT are both standardized tests that colleges use to evaluate a student during the admission process. Some schools will accept both SAT and ACT scores while others show preference to one, and some schools don’t require students to submit scores for either test.

It’s possible to compare estimated scores across the two tests using a simple conversion chart or formula. It’s also worth understanding how the two tests are different, and what a student can expect when taking each test.

ACT and SAT History

In 1926, the SAT was developed as the Army Alpha, to measure the IQ of Army recruits. Over time, the format and audience for the Scholastic Aptitude Test changed. The scoring method, format, and subjects have been adjusted over the years to better reflect the high school curriculum and college application process.

The current version of the SAT takes three hours and includes sections on math, reading comprehension, and writing. The highest score a person can achieve on the SAT is 1600.

The American College Test, created in reaction to the SAT, was first administered in 1959. University of Iowa professor of education Everett Franklin Linquist developed the standardized test to better evaluate a student’s practical knowledge instead of reasoning skills that the SAT focuses on.

The modern ACT takes two hours and 55 minutes (add 40 for the optional writing section) to complete. The test includes sections on English, math, reading, and science, and the optional writing portion. The highest score possible is 36.

Colleges and universities generally accept both the ACT and SAT, but preparing for and taking the two tests is not the same. Understanding the differences between the ACT and SAT might help students decide which test to take and how they might best maximize their score.

Difference Between the ACT and SAT Tests

Other than the score a test taker receives, the SAT and ACT have several differences that might inform a student’s decision to prepare for one over another. Students are taking both tests now more than ever, but preparing for each is different, and it’s possible to prefer one test experience over another.

Scoring

One of the most obvious differences between the two tests is the score. An ACT score ranges from 1 to 36, and there’s no penalty for getting a question wrong. The score is calculated by adding the raw scores of each section, then dividing by four to get the composite score (out of 36).

SAT takers get a score between 400 and 1600. Once again, there’s no penalty for answering a question wrong, and the score goes up with every right answer. Section scores are added together to yield the total score (out of 1600).

Type of Testing

There’s a common belief that students’ strengths in the classroom might allow them to test better on one standardized test over the other. The ACT, with a deeper focus on verbal skills, might be a better fit for students who excel in English classes. Those with strong math skills could prefer the SAT, with a bigger emphasis on math questions.

Both tests have a math section, but the SAT covers data analysis, while the ACT will have questions about probability and statistics.

Format and Subjects

Even when the essay portion is included, the ACT is shorter than the SAT. However, the SAT has 154 questions, while the ACT has 215 — how does that compute? SAT takers have an average of one minute and 10 seconds on each question, compared with 49 seconds for the ACT.

Time per question could be important to a student’s test taking strategy, especially when factoring in the difficulty levels of each test. In the SAT’s math section, the questions become harder the further a student moves along. The same goes for the ACT’s math section, as well as its science section, where passages and the questions become more difficult as the test progresses.

The ACT has more sections than the SAT, including multiple-choice questions on:

•   English: grammar, punctuation, sentence structure

•   Math: algebra, geometry, trigonometry

•   Reading: passage comprehension on fiction, humanities, and sciences

•   Science: comprehension, including summaries, charts, and graphs

•   Writing (optional)

The SAT has fewer sections, with all multiple-choice questions about:

•   Reading: comprehension questions based on passages

•   Writing and language: grammar, editing, and vocabulary

•   Math: algebra, trigonometry, and geometry

The SAT used to have an optional essay section, but it was discontinued in 2021.

The major differentiator between the SAT and ACT experience might be the ACT’s dedicated science section. The SAT includes questions about science, but they are dispersed across the test.

Pricing

The cost of taking the SAT and ACT is similar:

•   SAT: $60

•   ACT: $63, $88 with optional essay

The cost of taking the test shouldn’t keep a student from doing so. Both the College Board and ACT offer fee waivers for students who meet the requirements.

High school students preparing for the SATs may also be getting ready to pay for college and manage their own finances for the first time. SoFi’s Ca$h Course: A Student’s Guide to Money has some tips and strategies that can help.

Evaluating options for paying for college is another important piece of the college preparation puzzle. Options include grants, scholarships, and undergraduate loans, including both private and federal student loans.

Recommended: What Are Pell Grants?

Geography

Because the ACT was founded out of a Midwestern university, the test is somewhat more popular in middle America. The SAT has its origins in testing aptitude for admission to Northeastern educational Army institutions. Students on the East and West coasts are slightly more likely to take the SAT than the ACT.

Because of these geographic trends, students on the coasts might find more SAT prep courses than ACT prep courses, and vice versa.

Converting Test Scores

SAT to ACT conversion is a hot topic. Comparing the tests on their face is like comparing apples to oranges. However, if a student takes both, it helps to figure out which one they performed better on. That means finding a way to compare one test score to another.

Here’s how the ACT’s composite scores compare to the SAT:

ACT Score

 SAT Range
36 1570-1600
35 1530-1560
34 1490-1520
33 1450-1480
32 1420-1440
31 1390-1410
30 1360-1380
29 1330-1350
28 1300-1320
27 1260-1290
26 1230-1250
25 1200-1220
24 1160-1190
23 1130-1150
22 1100-1120
21 1060-1090
20 1030-1050
19 990-1020
18 960-980
17 920-950
16 990-910
15 830-870
14 870-820
13 730-770
12 690-720
11 650-680
10 620-640
9 590-610

Should I Take the ACT or SAT?

The SAT and ACT are both widely accepted by colleges and universities in the U.S. It’s common for students to take both the SAT and ACT. If you are deciding which test is best for you, consider taking a full, timed practice test for each type. This can give you a rough estimate of where you may score when you take the exam.

The Takeaway

Both the SAT and ACT are standardized tests designed to gauge a student’s readiness for college. One test is not inherently easier than the other and both are accepted at a wide array of colleges and universities. Taking a timed practice test can be one of the best ways to roughly estimate your score.

Paying for college is another important step in preparing for college. Students may consider using a combination of grants, scholarships, and student loans. Private student loans may lack borrower protections offered by federal student loans, so federal loans are generally prioritized over private loans. This private student loan guide has more information on the differences between private and federal student loans.

Borrowers interested in private student loans could consider SoFi — where private student loans have no fees, applications can be completed online and you can easily add a cosigner.

SoFi private student loans offer competitive interest rates for qualifying borrowers, flexible repayment plans, and no fees.

3 Student Loan Tips

1.    Can’t cover your school bills? If you’ve exhausted all federal aid options, private student loans can fill gaps in need, up to the school’s cost of attendance, which includes tuition, books, housing, meals, transportation, and personal expenses.

2.    Even if you don’t think you qualify for financial aid, you should fill out the FAFSA form. Many schools require it for merit-based scholarships, too. You can submit it as early as Oct. 1.

3.    Would-be borrowers will want to understand the different types of student loans peppering the landscape: private student loans, federal Direct subsidized and unsubsidized loans, Direct PLUS loans, and more.

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.

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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Sep
28
2022

Undergraduate vs. Graduate Student Loans: 6 Ways They Differ

By | Debt Payoff, Fresh Out of School, Student Loans, student_loan | No Comments

Heading off to graduate school? You’re probably not a newbie at the financial aid process after your years as an undergraduate. You might even have a few things to say about the increase in graduate student loan borrowing.

Out of the over $1.5 trillion in student loan debt in the United States, dollars borrowed by graduate school students are rising more quickly than undergraduate debt.

The reality is that, when looking at funds borrowed over the last academic year, the percentage taken out by graduate students is at 40% of the total, compared to 32% in 2002.

However, it’s a mistake to assume that graduate student loans are the same as undergraduate loans. There are actually significant differences between the two, and knowing those differences can be the key to saving money on your grad school debt in the long run. Here are some key factors to consider when taking out graduate school loans.

What Does Undergraduate Mean

In the context of student loans, undergraduate refers to someone who has not yet completed their bachelor’s degree.

What Is an Undergraduate Student

An undergraduate student is someone who is pursuing their Bachelor’s or associate’s degree.

What Is an Undergraduate Degree

Associates degrees are generally offered at two-year community colleges. A bachelor’s degree generally takes about four years to complete. Bachelor’s degrees are often completed at four-year colleges or universities. There is a wide variety of Bachelor degree programs ranging from history, English, to engineering, math, chemistry, and more. Three of the most common types of bachelor’s degrees include Bachelor of Arts, Bachelor of Fine Arts, and Bachelor of Science. Program requirements for undergraduate degrees will vary by institution.

What Does Graduate Mean

A graduate is someone who has successfully completed a specified course of work. In terms of student loans, graduate refers to any student who has completed their bachelor’s degree.

What Is a Graduate Degree?

Graduate degrees are specialized degrees that students can pursue after completing their bachelor’s or undergraduate course work. Graduate degrees include master’s, doctorates, and PhD’s, MBA’s, and JD’s. Depending on the program coursework for a graduate degree can take anywhere from one to six years to complete.

What Is a Graduate Student?

A graduate student is someone who is pursuing graduate studies. Law students, medical students, and PhD candidates are all examples of graduate students.

Recommended: Applying to Graduate School: Smart Tips & Strategies 

Differences Between Undergraduate and Graduate Programs

Beyond differences in coursework, there are few differences when it comes to student loans and financial aid options for undergraduate and graduate students.

1. Graduate Students Are Typically Considered Independent Students

As a graduate student, you’ll still need to (complete the FAFSA®) to qualify for federal student aid; you no longer need to include financial information about your parents on the form.

That’s because students who are pursuing either a master’s or doctorate degree are virtually always considered to be independent students.

There are a couple of key benefits associated with being an independent student. First, it helps streamline filling out the FAFSA. And, secondly, as an independent student, you’ll likely report much less income because your family’s earnings generally are no longer considered when financial aid eligibility is calculated, which could potentially give you access to additional aid options.

There are circumstances where undergraduate students can also be considered independent, but it’s usually more common with graduate students.

2. Graduate Student Loans Typically Have Higher Interest Rates

The 2022-2023 federal student loan interest rates for graduate and professional students are 6.54% for Direct Unsubsidized Loans for Graduate or Professional students and 7.54% for Direct PLUS loans — much higher than the 4.99% interest rate on federal undergraduate student loans.

(Note: Federal student loan interest rates are reevaluated annually, and updates are announced in early July.) Private student loans, another option for grad students, can come with even higher rates.

Graduate students can use federal student loans to pay for qualifying education expenses, including tuition, fees, college textbooks, and living expenses.

PLUS loans are funded by the U.S. Department of Education and require a credit check, although the credit requirements are not as stringent as they would be with a private lender. At 7.54%, they have the highest interest rates of all the federal student loans.

Federal loans also have fees that should be factored into the total cost of borrowing. For Direct subsidized and unsubsidized loans, the loan fee for the 2022-2023 school year was 1.057%. For Direct PLUS Loans, the fee was 4.228%.

These fees are deducted proportionally from each loan at the time of disbursement. This means that the amount of money a borrower receives will be less than the total value of the loan. Borrowers are still responsible for repaying the total value of the loan.

3. There Are No Subsidized Graduate Student Loans

Grad school federal loans start accruing interest charges while you’re a full-time student, unlike subsidized loans for undergraduates.

Say for example, you borrowed $20,000 in Direct Unsubsidized Loans (for graduates) to cover the cost of tuition when you started the program. When you factor in the current disbursement fee of 1.057%, you would have received approximately $19,789.

Since this loan type is unsubsidized, it will accrue interest while you attend school. Note, that even though you received $19,789, interest will accrue based on the loan total of $20,000. If the program is two years long, and you made no payments during that time, the loan would have accrued approximately $2,616 (assuming the interest rate stays the same 6.54% for those two years). For undergrads with subsidized loans, the interest clock doesn’t start until after graduation.

4. Borrowing Limits Are Higher for Grad Students

Typically, graduate students can borrow $20,500 annually in Direct Unsubsidized Loans, although there is currently a lifetime cap of $138,500 when undergrad loans and graduate school Direct loans are combined. If you’re in a qualifying health field, you may have a higher lifetime limit, potentially up to $224,000.

Compare that to annual limits for undergraduates, and they’re typically capped at $5,500 during year one; $6,500 for year two; and $7,500 for subsequent years, with a total availability of $31,000.

Having said that, although graduate students have more flexibility in how much can be borrowed, it can be challenging to pay back those higher amounts of debt.

5. Graduate Students May Qualify for Competitive Rates on Private Student Loans

Private student loans aren’t backed by the federal government; they’re issued by private lenders or banks.

If you’ve already established a solid credit history and/or have steady income coming in, those are important cornerstones that may help you qualify for more competitive rates on private student loans. This is in contrast to the typical undergrad, who may be new to credit and lending entirely, and don’t usually have well-paying, full-time jobs.

Though keep in mind that private student loans don’t necessarily offer the same borrower protections as federal student loans — things like income-driven repayment plans or loan forgiveness options. Because of this, federal loans are usually prioritized over private student loans.

Recommended: Private Student Loan Guide

6. Student Loan Refinancing Can Be a More Viable Option for Graduate Student Loans

While anyone with higher education debt can apply to refinance student loans, there are a couple reasons why this option tends to be more popular with grad students.

First, in order to qualify to refinance loans at a lower interest rate than what a borrower may currently have, a strong credit history that includes a positive track record of paying debts is important — and proof that you make enough money to pay back the loan (among other factors that will vary by lender). Depending on a graduate student’s background, there is a chance that they might be viewed as a more stable lending choice than an undergraduate.

Additionally, some graduate programs offer the potential for students to increase their earning potential after graduation, which also could be appealing to private lenders.

The other reason is that undergrads with federal student loans enjoy interest rates that are typically quite low already, and can be tough to beat when compared to private loan interest rates. Grad students, on the other hand, often carry student loan debt with higher interest rates and generally have higher debt burdens than undergraduate students.

With a strong credit history and steady employment (among other factors), it may be possible to get a better deal — and save money over the life of the loan — through refinancing.

Student loan refinancing won’t be the right option for everyone. Federal loans come with a variety of protections and benefits, like income-driven repayment plans and loan deferment. When you refinance a federal loan, it becomes a private loan, and will no longer qualify for any federal benefits.

7. Federal Grants are Few and Far Between for Graduate Students

Even if you were eligible for a Federal Pell Grant the last time around, you can’t count on that for graduate school. What are Pell Grants? They are a need-based grant that does not need to be repaid, and are typically awarded only to undergraduate students.

There are a variety of other opportunities available to grad students to help them finance their education, including some grad school scholarships, other grants, and fellowships. Grants are generally offered based on financial need while fellowships are awarded based on a student’s academic performance and research.

Scholarships, grants and fellowships are available through sources like federal and state government, schools, and even some corporations. Each opportunity might have very specific application criteria or might only be for students specializing in certain areas of study. You may be able to find even more scholarship money, by looking for any scholarships that go unclaimed each year. Contact your school’s financial aid office and check out SoFi’s guide to unclaimed scholarships for more information.

Thinking Outside the Box: Paying for Graduate School

When you think about paying for graduate school, it’s natural to consider student loans, but there are additional avenues likely worth pursuing. For example, your school of choice may offer scholarships, fellowships, and grants.

Typically, the college will use the information in the FAFSA® to decide what funding, if any, they can offer you.
Other times, though, there may be separate applications unique to your school; you can ask for specifics at the financial aid office. Sometimes, the award might be small; other times, it might be full tuition reimbursement.

Becoming a Teaching or Research Assistant

Some graduate students work on campus as teaching or research assistants. These opportunities could offer the opportunity for students to expand their skill set while earning some income.

Working Full-Time as a Grad Student

If you’re pursuing a graduate degree while working full time, you can check with your employer to see if they offer a tuition reimbursement plan.

If they do, the program will have its own parameters and processes.

Sometimes, if you accept funds from this program, you’ll need to stay at the company for a predetermined amount of time; other times, they might fund only certain degrees.

Still other times, they may not specifically have tuition reimbursement funding available, but there might be professional development dollars you can access. Or, your employer may be willing to allow you to work a more flexible schedule to accommodate your class schedule. It doesn’t hurt to ask!

Finding Scholarships

You can also use databases like FastWeb or SoFi’s scholarship search tool to see if there are private scholarships available that you might qualify for.

Want access to more student loan resources? Explore our student loan help center to help guide you in your debt repayment!

The Takeaway

Graduate students are those who have completed some type of bachelor’s program and are pursuing an additional degree, such as an MBA, master’s, PhD, or doctorate. Graduate students may be eligible for different types of federal loans and financial aid than they were as an undergraduate. However, federal student loans for graduate students typically have a higher interest rate and fees than options for undergraduate students.

Student loans can get complicated — SoFi is here to help. In addition to the competitive refinancing options available to qualified borrowers, SoFi offers private graduate student loans that can help you to focus on your degree, not your debt.

With SoFi, there are no fees — meaning no origination fees, no late fees, and no insufficient fund fees — and no fuss. You can fill out our simple online application in just minutes and have access to live customer support seven days a week.

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

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.

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.


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.

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

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

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Sep
28
2022

Law School Scholarships Guide

By | Budgeting & Goals, Building Your Career, Going to College, Student Loans, student_loan | Comments Off on Law School Scholarships Guide

So, you’ve been accepted to law school — congrats! You’re well on your way to embarking on a career that could help you fight for others’ rights and further the public good.

These are all laudable motivations, but chances are there’s something stronger weighing on you: How to pay for law school? There are a variety of law school scholarships available to help students finance their way to the courtroom.

The Average Cost of Law School

U.S. News & World Report notes that the average annual cost of a public, out-of-state law school is $42,754, or $29,610 for in-state. For private law schools, the average is $53,034. Because students aren’t yet racking up those billable attorney hours, it can be helpful to research law school scholarship opportunities before applying.

Types of Law School Scholarships

Per the numbers mentioned above, there might be a fair amount of sticker shock for those who haven’t yet applied for graduate school and are only thinking of someday going the lawyer route. (Here’s SoFi’s guide on how to apply to law school.) Fortunately, there are a range of options for aspiring attorneys seeking to fund law school.

Full-Ride Tuition Law School Scholarships

In some cases, there are full-ride tuition scholarships and need-based grants out there. Full-rides, of course, are not available at all law schools. If a law school doesn’t explicitly advertise or highlight information regarding full-ride opportunities, interested students can contact the school to ask.

Students deciding whether to apply to law school may want to familiarize themselves with the language universities adopt to explain these scholarships. In some cases, specific scholarships are designated for particular students. Full-ride law school scholarships can be highly competitive — with some schools offering as few as two to four per enrollment year. One potential tip for the search for scholarships is to target law schools with more tuition help.

General Law School Scholarships

There are lots of options for law-school hopefuls to find potential scholarships. The nonprofit organization Law School Admission Council (LSAC) has compiled a list of the many law school scholarships available to applicants.

From the LSAC’s list, the Attorney Ken Nugent Legal Scholarship ($5,000) and the BARBRI Law Preview’s “One Lawyer Can Change the World” Scholarship ($10,000) are worth pinning, due to the sizable chunk of change they offer.

Many law schools themselves offer competitive scholarships to attract stronger candidates. It might be helpful to check if a school also offers in-state residents specific tuition reductions or grants — especially true, if the applicant is considering a public school in their home state.

Law School Scholarships from Law Firms

Similarly, some law firms offer scholarships. Usually applying is a straightforward process: Some may require a short essay, a transcript, and sometimes references to be considered. One such law firm scholarship is offered by The Dominguez Firm, which offers $2,500 annually to a student applicant.

On top of this, there’s the rising trend of law firms helping new hires to repay a portion of their student debt once onboarded.

Diversity Law School Scholarships

Some scholarships are awarded to students with diverse backgrounds. One example of this is the Legal Opportunity Scholarship Fund offered by the American Bar Association. This scholarship is awarded to law students from a racial or ethnically diverse background.

The NAACP Legal Defense Fund also offers a scholarship for diverse students.

Law School for Women

Some scholarships require candidates to be women. One example of this is the American Association of University Women Selected Professions Fellowship. The fellowship offers a maximum grant of $25,000.

Finding Scholarships for Law School

There are dedicated resources like Fastweb and SoFi’s scholarship search tool to help prospective students find scholarships for which they may qualify. Fastweb is an online resource to help students find scholarships, financial aid, and even part-time jobs in support of college degrees.

The American Bar Association’s law-student division also has a running list (along with deadlines) of law student awards and scholarships. Additionally, the Law School Admission Council offers a list of diversity scholarships available to students from diverse racial and ethnic backgrounds. Here’s another guide on unclaimed scholarship money.

Another resource that could be useful in factoring living expenses is this student loan calculator for aspiring law school students. Tools like this can, usually, auto-load the tuition and cost-of-living breakdowns for specific law schools. From here, it’s possible then to compare how much degrees from particular schools may end up costing.

Recommended: Applying to Graduate School: Smart Tips & Strategies 

Negotiating Wiggle Room

Doing all this research and the math around law school scholarships could put applicants in a more informed position when evaluating which program to attend — and, potentially, help them to identify schools more likely to be interested in their application.

A reality of today’s admissions process for law school is negotiating scholarships. Some schools have a strict policy against negotiating, but others fully expect their initial offer to be countered. That’s why it can help to save acceptance letters and anything in writing from schools that offer admission.

Suggestions for Negotiating Law School Scholarship Offers

Offer letters could be shared with competing schools, asking if they’re able to match another university’s aid. It might be uncomfortable asking for more tuition assistance upfront, but a little discomfort now could help applicants shoulder less law school debt later on. If arguing a position makes an applicant uncomfortable, it might be worth pondering whether to become a lawyer.

Doing research on law schools (and figuring out the likely cost-of-living expenses at each institution) could help applicants to determine which scores or grades to aim for in an effort to make law school more affordable for them. Tabulating expenses (and having them on hand) may also demonstrate to universities that the amounts being negotiated are based on well-documented expenses.

Federal vs Private Loans for Law School

Students wanting to apply to law school could consider the differences between federal and private student loans. Federal loans come with certain benefits not guaranteed by private ones (such as, forbearance or income-driven repayment).

Private loans — like SoFi’s — can also help applicants to cover the expense of graduate school. So, it might be a good idea to weigh the pros and cons of both federal and private student loan options for law school.

For example, Direct PLUS loans for grads charge 7.54% in disbursement fees for the 2022-2023 academic year. SoFi Graduate Student Loans, by comparison, have no fees whatsoever — not even late or overdraft fees. Another great resource in understanding federal loans can be found over at studentaid.gov.

It’s important to note that private student loans don’t offer the same benefits and protections afforded to federal student loan borrowers, like Public Service Loan Forgiveness (PSLF). If a law school applicant is interested eventually in becoming a public defender or pursuing non-profit legal work, forgiveness and forbearance perks may play a role in their decision.

In addition to the financial aid resources mentioned above, more information can be found in SoFi’s private student loan guide. Those interested in figuring out how to pay for law school may want to check out SoFi’s competitive-rate private law school loans.

The Takeaway

Students looking to offset law school costs with scholarships can look to their law school, scholarship databases, local law firms and other organizations for resources. Consider contacting the financial aid office at your law school if you are looking for scholarship resources. If students interested in law school find themselves coming up short on funds for the JD after scholarships or federal aid, additional options may be available.

Some might seek out a student loan from a private lender, to name one possibility. SoFi’s private loans for law school offer competitive rates, flexible repayment options, and access to member benefits.

You can check your rates in just three minutes to see if a SoFi Law School Loan might help you pursue that dream of becoming a lawyer.

Learn more about private student loans for law school with SoFi.

FAQ

What LSAT score will get me a scholarship?

One general rule of thumb is that students who have a LSAT score (and sometimes GPA) above the median for a certain school. Chances of qualifying for a scholarship are even greater if your score falls in the 75th percentile for the school.

What is a good scholarship for law school?

Any scholarship for law school is a good scholarship. Scholarships typically don’t need to be repaid and can help reduce a student’s debt burden. Students looking for law school scholarships can apply for institutional aid and aid through other sources like nonprofit organizations.

Do top law schools give scholarships?

While some top law schools do not offer scholarships, many law schools do offer law school scholarships to students. For example, in the 2021-2022 class at Yale, 76% of students qualified for some form of financial aid and 64% qualified for an institutional law school scholarship. Check in directly with the schools you are interested in to see if they offer scholarships to students.

Photo credit: iStock/artisteer
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. SoFi Bank, N.A. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

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

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.

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

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

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Understanding Your Student Loan Promissory Note

By | Student Loans, student_loan, Terminology | No Comments

Generally speaking, promissory notes are legally binding contracts that state the terms of a loan, such as the amount to be repaid, the interest rate that will be charged, and any other important terms and conditions of that particular loan.

A student loan promissory note is no different; you’ll be required to sign one, accepting the terms of your student loan(s) before the lender disburses your money.

If a student loan promissory note sounds super important, that’s because it is. You can think of it as your student loan contract. Like any legal contract, it’s important to know the nuances of what you’re signing. Here’s what you should know about student loan promissory notes and master promissory notes.

What Is a Student Loan Promissory Note?

A promissory note is your student loan contract. It details the terms and conditions of that loan, as well as any rights and responsibilities you have as a borrower. Both federal student loans — loans backed by the U.S. government — and private student loans require that you sign a promissory note.

With private student loans, borrowers will generally be required to sign a promissory note for each student loan they borrow, because each loan’s terms and conditions may be different. Federal student loan borrowers may have the option to sign just one master promissory note.

What Is a Master Promissory Note?

Borrowers with federal student loans may be able to sign just one master promissory note. If eligible, a master promissory note covers all federal loans borrowed for a period of 10 years. There are versions of the master promissory note for both students borrowing Direct Subsidized or Unsubsidized Loans and a version for borrowers who are using Direct PLUS Loans.

Whether you’ll be able to sign a master promissory note is determined by the school you attend and the types of federal loans you have. Some schools do not offer the option to have students sign a master promissory note that covers borrowing over multiple years.

So be certain to understand what your school allows, and whether you need to sign multiple promissory notes or one master promissory note. The financial aid office at your college should be able to guide you through the process.

What to Look for on a Student Loan Promissory Note

Understanding the terms and conditions of a student loan promissory note is akin to understanding the terms of student loans. Here are some important items to consider on your loan, and note:

Federal vs Private Student Loan Promissory Note

First, it is important to know what type of loan you have — especially when it comes to federal vs. private student loans. Federal loans will have different terms than private loans, which are loans accessed through an independent bank, credit union, or other lender.

Repayment Options

Federal loans come with some options to help you manage your debt post-graduation, such as student loan forgiveness and income-driven repayment. If you have federal loans and access to multiple repayment plans, take some time to understand the ins and outs of different plans.

Deferment Options

Federal loans may also offer options for student loan deferment, which would allow you to suspend making payments during periods of economic hardship, immediately after you leave school, etc. Private loans may also offer some deferment options, but every lender is different, so you’ll need to check your note.

Recommended: How Student Loan Deferment Works

Interest Rate: Fixed vs Variable

The interest rate is a percentage of the principal loan amount that the borrower is charged for borrowing money. Be certain to understand the interest rate on your student loans, and whether that rate is fixed or variable. Federal student loans have fixed interest rates.

Private student loans may offer variable rates. If the rate is variable, it is possible that it will increase in the future, which would also increase your monthly payments. Be especially wary of private loans that offer introductory rate offers that later expire — they could end up costing you quite a bit of money.

Student Loan Fees

In addition to the loan’s interest rate, a student loan promissory note should include information on any additional costs, such as a loan fee (also known as an origination fee). Student loan fees will vary by lender, so be sure to check yours. Sometimes a loan fee is deducted directly from the amount that is disbursed.

Prepayment Penalties

Student loans — both private and federal — are not allowed to have prepayment penalties. Making prepayments on the principal value of the loan could help reduce the amount of money you owe in interest over the life of the loan.

Cosigner Requirements and Removal

With some loans, especially private loans, you may be required to have a cosigner. (That’s because private loans rely on your — or your cosigner’s — creditworthiness to determine the terms of your loan. Federal loans do not.) Upon graduation, some borrowers want to release their cosigner of the responsibility of having their name on the loan, so you may want to find out whether that’s a possibility.

How Funds Can Be Allocated

Some loans may require that the money is spent only on designated expenses, such as books or tuition. If you’re looking to upgrade your apartment, you might not be allowed to do so using student loan funds. Make sure to check on any stipulations on how you can spend the money.

When Is the Promissory Note Signed?

In general, borrowers will need to sign the promissory note for their loans before receiving any funds. Students who are borrowing federal student loans are able to sign their master promissory note online by logging into their federal student loan account. The student’s school should provide additional information for accessing the master promissory note.

Private lenders may have their own policies for signing a promissory note, it’s helpful to check in directly with the lender if you have any questions.

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What if a Promissory Note Is Not Signed?

For federal loans, a signed promissory note is required before the loan is disbursed. So, failing to sign the promissory note could mean you won’t receive your funds, or at least won’t receive them until the promissory note is signed.

A promissory note is also generally required for private student loans, though each lender may have their own application requirements.

Do You Need a New Promissory Note Every Year?

You may be required to sign a new promissory note each year, but this may depend on your school’s policies and the loan types you are borrowing. For federal loans, some colleges require students to sign a promissory note each year.

Additionally, if you are taking out a new loan type from one year to the next, you’ll need to sign a new promissory note.

Private lenders typically require borrowers to sign a new promissory note for each loan they borrow.

Do Your Parents Need to Sign?

If you are borrowing a private student loan and your parents are acting as a cosigner, your parents signature may be required.

For most federal student loans, the student is the primary borrower and their parent’s signature is not required.
If your parents are borrowing a Direct PLUS Loan to help pay for your college education, they would be required to sign a promissory note in that case.

How Long Does the Master Promissory Note Process Take?

Each school will determine the process for signing a Master Promissory Note. You may be required to complete the promissory note in one setting and the process can take around 30 minutes. Check in with your financial aid office if you have any questions about the promissory note process or requirements at your school.

Understanding Your Options

If you haven’t picked up on it already, knowing how student loans work and understanding your student loan contract is the name of the game. Taking out a student loan can be a huge financial commitment and shouldn’t be done without careful consideration — which means knowing what’s on that promissory note.

Before going to sign your student loan promissory note, it’s also a good idea to spend some time thinking about your financial goals. A good place to start is by looking at how much you’ll take out in loans, total, and comparing that to how much money you can expect to make after you graduate from school. Use a student loan calculator to get an idea of what your monthly payments could be given your total debt and the interest rate.

Rarely is it financially sound to take out more in loans than you absolutely need. It might seem like Monopoly money now, but this is all money that you’ll have to pay back, with interest. The repayment process can be painstaking, especially as a person early in their career or during a setback, like layoffs or a health issue. Taking out the bare minimum in student loans may mean working part-time in college, exploring more affordable college options, or continuing to apply for scholarships after you’re enrolled.

Once you’ve graduated, keep in mind that refinancing your student loans is a way for some graduates to lower the interest rates on their loans or lower their monthly payments. Refinancing is a process where your existing loans are consolidated and paid off with a new loan from a private lender.

Generally, the borrower has the option to keep the same repayment schedule or increase or decrease the amount of time left on their loan. (Increasing the duration of a loan may result in paying more interest over time, whereas decreasing the duration of a loan may result in higher monthly payments, but less interest paid overall.)

If you’re planning on using your federal loans’ flexible repayment plans or student loan forgiveness programs, refinancing with a private lender may not be the right choice for you as you will lose access to those federal benefits. However, some private lenders, like SoFi, offer protections to borrowers who lose their jobs or experience economic hardship. SoFi even provides career counseling to help their borrowers get back on track.

The Takeaway

A student loan promissory note is a contract between the borrower and the lender that details the loan’s terms and conditions and where the borrower promises to repay the loan. Federal student loan borrowers may be able to sign just one master promissory note, which will cover all federal loans for a period of up to 10 years. Private lenders generally require a promissory note for each individual loan.

Understanding the terms and conditions of your loan when signing of the promissory note can help you set your expectations for borrowing and ultimately repaying your student loans.

Whether you need help paying for school or help paying off the loans you already have, SoFi offers competitive interest rates and great member benefits as well.

See what you’re prequalified for in just a few minutes.

FAQ

Do you have to do a master promissory note every year?

For federal student loans, you won’t necessarily be required to sign a master promissory note every year. If you are borrowing a new loan type, you will need to sign a new promissory note.

How do you get your student promissory note?

For federal loans, your school will have instructions for accessing your student loan master promissory note. Generally, this can be accessed online.

If you are borrowing private student loans, the lender will manage the process.

How long does it take for a master promissory note to process?

For federal student loans it can take about 30 minutes to complete the master promissory note. It may take the loan servicer a few days to process the master promissory note.

The process for private student loans will be determined by the individual lender.

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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.

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.

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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28
2022
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Return on Education for Bachelor’s Degrees

By | Debt Payoff, Fresh Out of School, Student Loans, student_loan | No Comments

If you’re thinking about going to college, or you have a child who is, you’ve probably experienced a fair amount of sticker shock when considering the cost of attending different schools.

Though a college education is an investment in the future — as with any investment, it’s important to consider what you’ll get in return to determine if it’s worth it. While it’s important to weigh the cost of college against future income and earning potential, there are also intangibles to consider, things like friendships, network building, and other soft skills.

This guide and benchmark aren’t official measures and they’re not set in stone by any means; we know there are many reasons to get an education, many of which can’t be (and probably shouldn’t be) measured and quantified. This guide is meant to offer tips to help in a challenging and competitive working world. Your mileage — and your life’s path — may vary!

Average Costs of a Degree

Choosing the right college is a multifaceted decision. Considerations include where the school is located, whether it has programs that meet your interests, what student culture is like, and, of course, price.

The price tag for college can be jaw dropping. The total cost for tuition, fees, and room and board at a private non-profit four-year college can set you back more than $38,070 per year on average.

Head to an elite private school like Columbia University in New York and tuition and fees can be upward of
$60,000 per year. At a public four-year college, you can expect to pay an average of about $10,000 per year in tuition and fees, which is cheaper, but still nothing to sniff at.

Return on Investment by Education Level

One way to make this consideration is by looking at the ratio of the cost of your degree to your expected income once you graduate. Your return on education is much like a traditional return on investment calculation, which looks at the ratio between net profit and cost from investing resources.

In this case, time and money are the resources you’re investing, and your future income is the profit. The return on investment for your education will depend largely on how much you spend on your schooling, what type of job you get after school, and to a certain extent, what you major in.

Associate’s Degree Return on Investment

Associate’s degrees can typically be completed in one to two years and often at a community college, which can make them more affordable than other four-year degrees. According to data from Education Data Initiative, the return on investment for an associates degree is 363.5% after 20 years.

Bachelor’s Degree Return on Investment

Bachelor’s degrees typically take students four years to complete. According to Education Data Initiative, the return on investment for a bachelor’s degree is 38.1% after 20 years. Though this estimated return on investment can vary greatly based on the major you pursue. For example, computer science degrees offer an ROEd of 716.6%.

Master’s Degree Return on Investment

A Master’s degree can be completed after a student receives their Bachelor’s degree. This degree allows the student to specialize in a specific area of interest, such as those who pursue a Master in Business Administration. The return on investment for a master’s degree is 90.1% after 20 years, according to Education Data Initiative.

Doctoral Degree Return on Investment

A doctoral degree is generally the most advanced degree one can get in a particular field. Doctorate degrees can take up to eight years to complete, though the exact timing will vary depending on factors like the program type, structure, and research being completed by the doctoral candidate. The estimated return on investment for doctorate degrees is 84.0% after 20 years according to Education Data Initiative.

Professional Degree Return on Investment

Professional degrees are advanced degrees that prepare a student to work in a particular field, for example law or pharmacy. After 20 years, the return on investment for a professional degree is 60.4%, according to Education Data Initiative.

Highest Earning Degrees

The return on education will vary depending on the degree program you chose. For example, a student with a computer science degree may earn more than an English major. There are of course exceptions, but it’s a good idea to understand the norm for particular fields. These are some of the high-earning degrees by level.

Associate’s Degrees

As mentioned, an associate’s degree takes about two years to complete and can often be finished at a community college for significantly less than it may cost to get a four-year degree. Associate’s degrees often allow students to specialize in a specific trade or field. And in some cases this specialization can lead to a high-earning career.

One of the top-earners post-associate degree are air traffic controllers. According to the Bureau of Labor Statistics (BLS), Air traffic controllers earn a median income of over $129,000.

Dental hygienists, MRI technicians, and funeral service managers all earn an average salary of $70,000 or higher, making them top associates degrees based on earning potential.

Bachelor’s Degrees

According to Best Colleges, some of the bachelor degrees with the highest earning potential include petroleum engineering, aeronautics and astronautics, computer science, electrical engineering, and public accounting.

For example in 2021, petroleum engineers earned a median salary of $130,850. Accountants and Auditors earned a median salary of $77,250 per year, according to the BLS.

Certifications

Some people may consider adding a certification to their resume in order to boost their earning potential. Professional organizations often award certifications for specific skill sets. Some top earning and in-demand certifications include those for project management or data engineering.

Bachelor’s Degree ROI by Major

The return on investment can vary quite a bit based on the type of bachelor degree pursued. As mentioned, computer science degrees have some of the best return on investment for Bachelor’s degrees — about 716.6% over 40 years, according to Education Data Initiative. Take a look below at a list of majors and their estimated return on investment after 40 years, according to Education Data Initiative:

•   Business finance — 710.2%

•   Business accounting — 547.2%

•   Electrical engineering — 517.8%

•   Biology — 225.0%

•   Communications — 209.3%

•   Architecture — 188.6%

•   Art Degree — 70.5%

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Consider What Can’t Be Measured by Money

Yes, going to college or pursuing other higher education opportunities can be expensive. But in addition to the cost and potential boost in earning potential, there are a variety of intangible benefits that can’t be measured by a dollar. For example, college students living on campus are gaining a newfound independence and developing life skills they’ll carry with them.

College might be when a student learns how to budget or applies for their first credit card. SoFi’s Ca$h Course: A Student’s Guide to Money is filled with strategies, ideas, and tools to help college students manage their finances.

Plus, many colleges have strong alumni networks that can help when a student is looking for a job post-grad. Students have the chance to not only get to know themselves better, but in the process they may make life-long friends.

Controlling Costs

One way to improve return on investment is to lower the amount of money you are paying for school. This could be particularly useful if you already know you want to pursue a career in a relatively low paying field.

Scholarships

One way to offset the cost of tuition is to look for scholarship programs that help pay your tuition or other college costs. Many schools offer need-based financial aid to families who might otherwise struggle to pay tuition costs. In some cases, you could even get a full ride.

You can find scholarships by looking at your school’s financial aid website, connecting with your guidance counselor, or reviewing databases or online scholarship search tools.

In some cases you may be able to apply for unclaimed scholarships to help supplement the aid you have already received.

Grants

Students may qualify for grants directly from their school or through federal financial aid. Grants typically do not require repayment so they can be an incredibly helpful addition to a student’s financial toolkit when it comes to paying for college. Pell Grants are one type of grant awarded by the federal government to students who demonstrate exceptional financial need.

Recommended: What Are Pell Grants?

Pell Grants are usually only available to undergraduate students. In order to maintain eligibility for a Pell Grant, undergrads will also be required to meet satisfactory academic progress requirements.

Student Loan Forgiveness Programs

If you need to take out student loans to help pay for college, keep an eye on your terms and interest rates to help you keep costs down. If you take out federal loans and plan to work for certain non-profits or government organizations, you may be eligible for loan forgiveness under the Public Service Loan Forgiveness (PSLF) program. After making 10 years worth of qualifying monthly payments, the remaining balance of your loan may be forgiven through this program.

Private Student Loans

Private student loans don’t qualify for federal benefits like PSLF, but they can be helpful tools for students who have exhausted their federal financial aid option.

If you are interested in paying for college or another higher education degree with a private student loan, take the time to shop around and review interest rates, terms, and other fees or benefits offered by lenders. For more information on evaluating loan options, take a look at SoFi’s private student loan guide.

Employer Support After Graduation

Finally, some employers may also help you pay back your student loans as part of a benefits package. Consider working for an employer who offers these benefits.

The Takeaway

College students can estimate the return on their educational investment by looking at how much they’ll pay for their degree and comparing it to their lifetime earnings. Though important, the money you’ll eventually earn isn’t the only thing you should consider when choosing a college. Getting a bachelor’s degree can help you acquire skills and expand your horizons in ways that aren’t directly related to your degree or job prospects.

When you decide on the right school for you, take the time to consider all your options — including scholarships, grants, federal and private student loans, post-graduation repayment programs, and other sources of public and private funding — to help you achieve your education and career goals.

Visit SoFi to learn more about how to pay for college and whether SoFi’s private student loans can help.

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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.

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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.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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

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

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

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