Jan
20
2026
Colorful plastic 529 numbers stand atop a stack of books on a table, next to a pink piggy bank.

529 Annual Plan Contribution Limits by State in 2026

By | Going to College, Student Loans, student_loan | Comments Off on 529 Annual Plan Contribution Limits by State in 2026

A 529 plan is commonly used to help families save for college, but you can use these tax-advantaged plans to save for a range of educational costs throughout your child’s life.

Thanks to changes in the federal tax laws in 2025, it’s now possible to use 529 plan funds to pay for homeschooling costs, and expenses such as books and tutoring for students in K – 12 private schools as well.

Different 529 plans have different tax rules, offer different investment options, and — most important — 529 plans have different contribution limits by state, some of which have changed for 2026. It’s important to look into various plans and decide which one is the best for you and your family.

Key Points

•   529 plans are tax-advantaged savings accounts available in every state except Wyoming.

•   529 plans are primarily for qualified higher education expenses, but now also include K-12 private school and some homeschooling costs.

•   Each state sets its own aggregate total maximum contribution limit per beneficiary.

•   These plans offer tax-free growth, and some 40 states provide a state tax deduction or credit for contributions.

•   While contributions that exceed the $19,000 annual gift tax exclusion for 2026 must be reported, there is typically no penalty for contributing more than the state’s specific plan maximum.

🛈 While SoFi does not offer 529 Plans at this time, families can consider a range of online investing options.

What Is a 529 Plan?

529 plans are tax-advantaged savings plans that are designed chiefly to be used for qualified higher education expenses like tuition, housing, and books at postsecondary institutions such as a college, a trade school, and graduate school.

Thanks to tax law changes in 2025, parents can now withdraw up to $20,000 of 529 funds annually to use for a child’s elementary or secondary school education at a private or religious school. It’s also possible to use 529 funds to cover certain homeschooling expenses.

How a 529 Plan Works

Each 529 plan has a named beneficiary (the student). The account holder — usually a parent or grandparent — contributes savings to the plan up to the allowable 529 limits, which vary by state (see below).

Every state except Wyoming offers its own 529 plan. Although you cannot deduct 529 plan contributions on your federal taxes, some 40 states and the District of Columbia offer a state tax deduction or credit for contributions. California, Hawaii, Kentucky, and North Carolina do not offer a state tax deduction for 529 contributions.

In most cases, but not all, you have to be a resident of that state in order to claim the state tax deduction.

Understanding Contribution Limits

If you contribute over the annual limit for a given plan, you may not get the additional tax deduction, but there typically isn’t a penalty for overcontributing. Some states allow you to carry-forward excess contribution amounts; be sure to check the terms of the plan you’re considering.

The one factor some higher-income families have to consider is whether they are contributing in excess of the $19,000 annual gift tax exclusion. If that’s the case, form 709 has to be filed with the IRS, and the total amount will count toward the individual’s lifetime gift exemption, which is $15 million starting in 2026 (meaning, an individual would have to give over $15 million during their lifetime to owe federal gift tax; $30 million for couples filing jointly).

How Are 529 Plans Invested?

Once contributions are made, the account holder typically has a range of investment options to choose from, including mutual funds or exchange-traded funds (ETFs).

Many 529 plans offer an age-based mutual fund that’s similar to a target-date fund for retirement. These plans adjust their holdings over time to become more conservative. 529 plan investments grow tax free. And qualified withdrawals, including investment earnings, are not subject to federal or state taxes.

There are some 529 plan withdrawal penalties, however. For instance, any amount of money from the plan used for something other than qualified expenses for the student’s education incurs an income tax liability and a 10% penalty upon withdrawal.

Why Are There Maximum Contribution Limits?

In addition to yearly contribution limits for some 529 plans, there are aggregate maximum contribution limits that apply to the total contributions to the plan, for each beneficiary. States sponsor and operate their own 529 education savings plans and set their own aggregate max contribution amounts.

Many states have a total allowable contribution limit of $500,000 per beneficiary, though some states have lower or higher 529 limits. These limits are generally based on the cost to attend a four-year undergraduate or graduate program within the state.

Students who don’t have enough funds in a 529 plan to cover the cost of college can turn to other forms of financial aid, including scholarships, grants, and federal and private student loans.

529 Plan Max Contribution Limits by State

The max contributions to 529 plans vary based on the state plan you’re enrolled in. Below is a list of 529 contribution limits for 2026 in every state, according to Saving For College, a research company focused on educational policies.

 

State Contribution Limit
Alabama $475,000
Alaska $550,000
Arizona $590,000
Arkansas $500,000
California $529,000
Colorado $500,000*
Connecticut $550,000
Delaware $500,000
Florida $500,000
Georgia $235,000
Hawaii $305,000
Idaho $500,000
Illinois $500,000
Indiana $450,000
Iowa $505,000
Kansas $501,000
Kentucky $450,000
Louisiana $500,000
Maine $545,000
Maryland $500,000
Massachusetts $500,000
Michigan $500,000
Minnesota $525,000
Mississippi $400,000
Missouri $550,000
Montana $396,000
Nebraska $550,000
Nevada $500,000
New Hampshire $621,411
New Jersey $305,000
New Mexico $500,000
New York $520,000
North Carolina $550,000
North Dakota $269,000
Ohio $541,000
Oklahoma $450,000
Oregon $400,000
Pennsylvania $511,758
Rhode Island $520,000
South Carolina $575,000
South Dakota $350,000
Tennessee $500,000
Texas $500,000
Utah $574,000
Vermont $550,000
Virginia $550,000
Washington $500,000
Washington D.C. $500,000
West Virginia $550,000
Wisconsin $589,650
Wyoming N/A (the state does not offer a 529 plan)

Source: Savingforcollege.com
*Colorado’s Smart Choice College Savings Plan has a limit of $400,000.

States with Highest Aggregate Limits

The states with the highest allowed aggregate 529 contribution limits remain the same from 2025 to 2026:

•   Arizona

•   New Hampshire

•   South Carolina

•   Utah

•   Wisconsin

These states have a maximum contribution limit greater than $550,000, with New Hampshire allowing the highest 529 limit in the U.S. at $621,411.

States with Lowest Aggregate Limits

State 529 programs that have the lowest total contribution limits (i.e., under $400,000) include:

•   Delaware

•   Georgia

•   Hawaii

•   Montana

•   New Jersey

•   North Dakota

•   South Dakota

Georgia’s 529 savings plan has the lowest aggregate contribution limit nationwide at $235,000, while Wyoming doesn’t offer a state-sponsored 529 plan at all.

Tax Benefits for 529 Plans

The advantages to 529 plans go beyond saving for your child’s college education. A 529 might unlock certain tax benefits. For example, earnings in the account grow tax-free and there is no federal or state income tax liability for qualified withdrawals.

More appealing for some families is the opportunity to take a state tax deduction each year you contribute. Some 40 states now allow you to deduct your 529 contributions up to a certain limit from your taxable income. For example, in New York, residents can deduct up to $5,000 in 529 contributions, or $10,000 for those who are married, filing jointly.

But not all states allow you to deduct 529 contributions. For example, California, Kentucky, and Hawaii don’t offer a state tax deduction or credit for 529 contributions on their state income tax returns. However, qualified 529 withdrawals are exempt from income tax in all three of those states.

Eight states (Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington) have no state income tax so there is no 529 deduction in those states. As a reminder, although there is no state income tax in Wyoming, this state doesn’t offer a 529 plan currently.

Tax deduction limits and rules vary by state, so check with yours.

529-to-Roth IRA Rollover

Traditionally, a downside to saving money in a 529 plan has been the 10% penalty and potential tax liability incurred on earnings for non-qualifying withdrawals. This might come up if you over-saved in the account, or if your child chooses not to go to college, and you wish to withdraw the funds you’ve saved.

The SECURE 2.0 Act of 2022 has addressed these concerns. Starting in 2024, unused 529 funds can be rolled over into a Roth IRA under the original beneficiary’s name without penalty or tax implications. Excess contributions can also be transferred to another beneficiary, or used later to pay off student loans.

There are some guidelines for a 529 to Roth IRA rollover. The 529 plan must have been active for at least 15 years, and the rollover funds must have been in the account for at least five years.

Finally, the maximum annual rollover contribution permitted for 2026 is $7,500, based on Roth IRA 2026 contribution limits (IRA contribution limits typically change annually).

Despite these rules, the ability to do a Roth IRA rollover gives 529 account holders a penalty-free option, if needed.

How to Maximize Your 529 Contributions

If you’re considering a 529 for your child, you are not limited to choosing a 529 plan from the state you reside in. Many states allow out-of-state residents to open a 529 account. Here are some tips on how to maximize your savings in a 529.

•   Explore plans from multiple states and compare their tax benefits, investment choices, and fees to those of your state’s plan.

•   Check to see if your company offers 529 plan employee benefits. Some employers now provide these benefit plans, which allow you to contribute directly from your paycheck.

•   Many states offer direct-sold plans in which you select the investments in the plan yourself, and broker-sold plans in which a broker selects investments for you. Broker-sold plans typically come with more fees. Consider enrolling in a direct-sold 529 plan to help save on fees.

•   Anyone, including grandparents and family friends, can contribute to a 529 plan, so make sure loved ones are aware that you have a 529 for your child to save for college. They may want to make a contribution to the plan as a birthday gift, for instance.

•   You can open a 529 as soon as the beneficiary has a Social Security number. Start saving early and set up automatic contributions to the plan. The longer the money is invested, the more time it has to grow.

The Takeaway

A 529 can be a good way to save for your child’s education. The earlier you open a 529, the more time you have to contribute and save, and the more time the money in the plan has to grow. Just be sure to find out the 529 maximum contribution limits for the state in which you have the plan, and consider the tax implications.

FAQ

What happens if you contribute too much to a 529 plan?

Contributing more than your state’s 529 plan allows doesn’t typically incur a penalty. But savers should be aware that a single contribution that’s above the gift tax exclusion of $19,000 for 2026 would reduce your lifetime gift tax exclusion. But given that the lifetime exemption for the gift tax is $15 million, this likely won’t be a concern for many families.

What is the 5-year rule for 529 plans?

To contribute more in one year to a single 529 recipient without impacting your lifetime gift tax exemption, you can front-load up to five years of contributions into the 529. Doing so avoids impacting your lifetime gift tax exemption, but it also means that you can’t make additional contributions to the same beneficiary for the next five years.

What happens to a 529 plan if your child doesn’t go to college?

If your child doesn’t go to college, you have a few options for a 529. You can consider rolling the funds into a Roth IRA for the beneficiary, for instance (be sure to pay attention to the contribution limits on these rollovers). Or you could change the primary beneficiary to another family member, like a younger sibling.

Photo credit: iStock/Melpomenem

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2026
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What Do You Need to Open a Bank Account?

By | Budgeting & Goals, Going to College, money | Comments Off on What Do You Need to Open a Bank Account?

Often the hub of a person’s financial life, bank accounts can be quick and simple to open with the right materials in hand, including a valid government-issued photo ID, personal information such as your Social Security number (SSN), and perhaps an opening deposit.

Here, learn the details on what you need to open a bank account and how to navigate the process itself.

Key Points

•   Opening a bank account typically requires a valid government-issued photo ID, personal information such as your age and Social Security number, and possibly an initial deposit.

•   Joint account applications require personal and identifying information for all account owners.

•   How you open a bank account may vary slightly depending on the bank’s criteria, such as whether a minor needs to be present to open a co-owned account with an adult.

•   After opening a bank account, you may be able to utilize features like online bill pay, account alerts, and linking accounts to manage finances effectively.

•   The process for opening a bank account online and in-person are similar, though the deposit methods, if required, may differ.

🛈 SoFi members interested in the personal information needed to open a bank account can review these details.

Checklist of What You Need to Open a Bank Account

Here’s a list of what you are likely to need when opening a savings or checking account. Gathering these materials before you actually begin the process of starting a new account can help you save time and frustration.

A Valid Government-Issued Photo ID

You’ll need to provide a valid government-issued photo ID such as a driver’s license, non-driver state ID card, or passport. Double-checking the expiration date is a smart move.

Your Social Security Number (SSN)

Be prepared to provide your SSN as a means of identification. You’ll also need to give contact information such as your address, phone number, and email. You might be required to submit proof of residency, such as a utility bill.

If you’re opening a joint account, you’ll need the identifying and personal information listed above for all the account owners. If you are doing this in person at a bank branch, you may or may not need the other person present. It’s a good idea to check in advance so you can avoid any inconvenience.

Proof of a Physical Address

You might be required to submit proof of your physical address. This can often be a document such as a utility bill.

Your Contact Information

You’ll also need to give contact information such as your address, phone number, and email.

Funds for an Opening Deposit

In many instances, you’ll need an initial deposit when opening a bank account. The minimum opening deposit varies from bank to bank but is often between $25 and $100, according to the Consumer Financial Protection Bureau. In some cases, it can be absolutely zero. You might need to establish direct deposits going forward. If you’re transferring the minimum deposit from another bank, you will likely need the routing and account numbers for that account.

How to Open a Bank Account in 5 Simple Steps

With these materials in hand, it can be quite simple to open a bank account. Here are the typical steps involved.

Step 1: Choose the Right Bank and Account for Your Needs

First, determine if you want to open a checking, savings, or combined checking and savings account. Or you might want to open a couple of different accounts at once.

Then, you can review various options in order to choose a bank. For instance:

•   You might decide to go with an online bank because of the convenience and the higher interest rates they may offer.

•   You might prefer a traditional bank, with a nearby branch, where you can regularly meet with the team in person.

•   You might like to bank at a credit union that you can become a member of based on, say, your profession.

Shop around a bit, and compare features (such as fee-free banking) to find the best fit.

Step 2: Gather the Documents From the Checklist Above

As noted above, whether you are applying online or in person, you will need to have a few documents needed to open an account on hand, including government-issued photo ID and your SSN.

Step 3: Complete the Application Online or in Person

Whether in person or online, you will want to make sure to fill this out carefully, double-checking the information to make sure it’s accurate.

Step 4: Fund Your New Account

You may or may not need to pay a deposit to get your account up and running. (If you are opening an account online and an opening deposit is required, you can typically do an electronic funds transfer.)

Many banks look for $25 to $100 as an opening deposit, but some — especially for checking accounts — may allow you to open an account without any cash.

Step 5: Set Up Online Access and Your Debit Card

Depending on the kind of bank account you are opening, you may need to wait to get a debit card, checks, and other materials. However, you should be able to use your account right away for at least some functions, such as setting up direct deposit and making electronic payments.

Opening an Account Online vs at a Bank Branch

The requirements for opening a bank account at an online vs. traditional bank are similar if not the same, generally requiring personal information and ID documents. Worth noting: You might open a bank account in person with cash. However, with an online bank account, you would probably need to make an electronic transfer or set up direct deposit.

Also keep in mind that while you can often open a bank account online in minutes, it may take a week or two for documents and your debit card to arrive and allow full access.

The Takeaway

Opening a bank account is usually quite simple. Typically, you’ll need personal information, government-issued photo ID, and an opening deposit to open a bank account. Once your bank account or accounts are established, you can enjoy a variety of conveniences and features that can help you manage your money better.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

🛈 SoFi members interested in the personal information needed to open a bank account can review these details.

FAQ

How much money do I need to open a bank account?

You will often need an initial deposit to open your checking account or your savings account. For checking and savings accounts, this can often be between $25 or $100, depending on the bank and the account services you’ve signed up for. In some cases, though, a bank may let you open a checking account with no money until your first paycheck or other amount of money is deposited.

What ID do I need to open a bank account?

You will typically need a government-issued photo ID to open a bank account. Usually, this means a driver’s license, a non-driver’s ID card, or a valid passport.

Do I need a good credit score to open a bank account?

You don’t need a good credit score to open a bank account. Here’s why: Banks typically don’t check your credit score when you apply for a checking or savings account. Instead, they may review your banking history via a ChexSystems report, which tracks past overdrafts, bounced checks, or unpaid fees. If you have a negative history with ChexSystems, you might be denied an account.

How long does it take to open an account online?

If you have all the necessary materials at hand (such as your SSN and government-issued ID), it may take just minutes to open a bank account online. However, it could take a week or two for the bank to fully process your application and send your debit card and other documents.

Can I open a bank account for my child?

You can typically open a bank account for your child, either as a joint account or a custodial account (like an UGMA account). You’ll usually need your ID and the child’s birth certificate and/or SSN as part of the application process.

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Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 12/23/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

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

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

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What Increases Your Total Loan Balance?

By | Going to College, Student Loans, student_loan | Comments Off on What Increases Your Total Loan Balance?

Key Points

•   Interest accrual can contribute to an increase in the total student loan balance over time.

•   Unpaid interest can capitalize, adding to the principal balance and causing borrowers to pay interest on top of interest.

•   Periods of deferment or forbearance often lead to loan balance growth due to interest accumulation.

•   Late or missed payments can incur fees and penalties, increasing the total amount owed.

•   Opting for a longer repayment term can reduce monthly payments but typically increases the total interest paid over the life of the loan.

If you have student loans, you may sometimes see the total loan balance go up, due to such factors as the interest you owe, your repayment term, or loan fees.

Whether your student loans are in a period of deferment or you’ve working to make payments every month, it can be frustrating to see your balance increase instead of go down.

To discover why this happens and what to do about it, read on. You’ll learn what increases your total loan balance, ways to reduce it, and repayment options that may help.

Understanding Loan Balances

The way student loans work is that when you first take out a loan for your education, your loan balance is the amount you borrowed. However, that loan balance can increase or decrease depending on your payments, interest charges, and fees.

Principal vs. Interest Explained

A student loan typically consists of principal plus interest. The loan principal is the amount you originally borrowed. If you took out a $25,000 student loan to pay for school, your principal amount is $25,000.

Interest is the cost of borrowing money, and it is part of what you owe on your student loan balance. Federal Direct loans for undergraduates disbursed on or after July 1, 2025 and before July 1, 2026, have fixed interest rates of 6.39%, while Direct Unsubsidized Loans for graduate or professional students have a fixed rate of 7.94%. Direct PLUS loans for parents and graduates and professional students have a rate of 8.94%.

The rates on private student loans vary, but as of December 2025, they ranged from 3.18% to 15.99% or more, depending on such factors as your credit and the lender you choose. Private student loan rates may be fixed or variable. If your rates are variable, meaning they fluctuate with market conditions, it can be quite challenging to predict exactly how your loan balance will change over time.

When you sign into your student loan account, your loan balance is the total amount you currently owe on your loan.

Recommended: Student Loan APR vs. Interest Rate

Capitalization of Interest and How It Works

In some circumstances, unpaid interest on your loan capitalizes, or gets added onto, your principal balance. Then you end up paying interest on top of interest, which is what increases your total loan balance — and potentially your monthly payment as well.

Here’s how capitalization works: Interest accrues on your student loans even at times you’re not responsible for paying it, such as the six-month grace period after graduation or during student loan deferment. If you have unsubsidized Direct loans or Direct PLUS loans, the unpaid interest that accrued during these times is added to your loan principle. The principle is then higher and you pay interest on the new larger amount.

Factors that Contribute to Increased Loan Balances

Whether you’re in a period of deferment or active repayment, you probably don’t expect your student loan balance to be increasing over time. Unfortunately, there are various circumstances that can cause your federal student loan balance to increase, such as the ones below.

Accrued Interest

Most loans, with the exception of Direct Subsidized Loans, start accruing interest immediately from the date of disbursement. If you borrowed as a freshman in college and deferred payments the entire time you were in school and for the six-month grace period after graduation, your loan balance could significantly increase after four and a half years of nonpayment.

Loan Forbearance or Deferment

It’s possible to temporarily postpone payments through student loan deferment or forbearance if you go back to school, encounter financial hardship, or have another qualifying reason. Most loans accrue interest during this time, however, causing your loan balance to grow. The only exception is Direct Subsidized Loans, which don’t accrue interest during periods of deferment. In forbearance, all loan types accrue interest.

Missed or Late Payments

If you make late payments, or you miss payments on your student loans, the ramifications can be serious. For one thing, you’ll likely be charged late fees and penalties, increasing the amount you owe. Also, your federal loan will be considered delinquent after just one missed payment. And after approximately 90 days of missed payments, your loan servicer will report the delinquency to the credit bureaus, which can then negatively impact your credit score.

After 270 days of missed payments, your loan goes into default. At that point, the government can take a portion of your wages or seize your tax refund, and the debt you owe may be sent to a collection agency. A default stays on your credit report for seven years, which can severely damage your credit.

Negative Amortization

If your monthly payments are less than the interest you’re charged (meaning you’re not paying off your interest each month), this is known as negative amortization. The interest charges will then be added to the amount you owe, causing your loan amount to grow over time.

Negative amortization can happen under income-driven repayment (IDR) plans if your payments are not big enough to cover the accruing interest each month.

Strategies for Managing and Reducing Loan Balances

Now that you know what increases your total student loan balance, these are some strategies you can consider for reducing it.

Making Extra Payments Toward Principal

Putting extra payments toward your loan balance can help you pay it down faster and save money on interest. Here’s how: Making extra payments can help you reduce your principal, which can help you save on interest over time.

So, if you get a windfall, such as a birthday gift, or you earn a little extra cash, putting that money toward your student loans could help you pay down your debt faster. Just be sure to tell your lender to direct the extra payment toward your loan principal, which can help you shrink the balance.

Enrolling in Autopay for Interest Rate Discounts

When you set up automatic payments for your federal student loans from your bank account, you’ll save 0.25% on your interest rate. Many private lenders also offer a 0.25% rate discount for using autopay. Besides the savings, autopay helps ensure your payment will be consistent and on time.

Avoiding Missed Payments Through Budgeting

Making your monthly payments by the due date will help you avoid late fees and penalties. One way to do this is to create a budget that factors in your student loans.

To make a budget, calculate your monthly income, including paychecks from your regular job plus anything you earn from a side hustle, and then make a list of all your monthly expenses, including your student loans. If your expenses are greater than your income, see where you can cut back. Perhaps you can eliminate a streaming service or two, and bring lunch from home rather than buying it every day. Creating room in your budget and then sticking to that plan, can help you make your loan payments so you won’t fall behind and end up owing more.

Long-Term Financial Impact of Growing Loan Balances

A growing student loan balance is not only stressful, but it can also harm your overall financial health.

Effects on Total Repayment Amount

The total repayment amount of your loan can increase over time for reasons that include missed or late payments that result in late fees and penalties being added to what you owe, failing to keep up with accruing interest on your loan, and deferring your student loan payments, which can result in interest capitalization, significantly increasing the amount you owe. The more your debt grows, the harder it becomes to pay off.

Impact on Credit Score and Future Borrowing

A large student loan balance can also negatively impact your credit. The amount of debt you have makes up 30% of your FICO® credit score. Owing a sizable amount of debt can drag down your score, making it difficult to qualify for new loans or credit cards or get affordable rates. Plus, a high debt load increases your debt-to-income ratio (or DTI), and lenders prefer a DTI under 36%.

Tips for Preventing Loan Balance Increases

To keep your balance from increasing, make sure you understand how your student loans work — including the interest rate on the loans and when you need to start paying them back — and then review the different options for repaying them.

Choose the Right Repayment Plan

Before picking a repayment plan, make sure you understand how it will impact your loan balance and overall costs. A longer plan can reduce your monthly payments, but it tends to increase the amount of interest you pay over the loan’s term.

For example, if you have federal student loans, sticking with the Standard Repayment Plan will help you pay off your balance in 10 years, assuming you don’t use deferment or forbearance during that time. However, your monthly payments will be higher than they would be on other plans.

On the other hand, the Extended Repayment Plan lets you stretch out your repayment period for a longer term, which can lower your monthly balance but increase the amount you pay overall.

There are also income-driven repayment plans that typically lower the amount you owe each month (read more about how these plans work below).

Stay Informed About Loan Terms and Changes

Make sure you understand the terms and conditions of your loans. Look over your loan agreement to see what your interest rate is, how much you owe, and how long you have to repay your loans. If you have any questions, contact your loan servicer.

Also, check to see how your interest accrues. If your loan accrues interest right away, consider making interest-only payments while you’re in school to prevent your balance from rising.

Borrowers with federal student loans currently have repayment plans to choose from that could potentially reduce their student loan payments, such as income-driven repayment, as well as repayment alternatives like refinancing.

Income-Driven Repayment Plans

Income-Driven Repayment plans base your monthly federal loan payments on your discretionary income and family size and extend your loan term to 20 or 25 years. These plans can make your monthly payments more affordable. But you may pay more interest overall on an IDR plan.

There are currently three IDR plans — the Income-Based Repayment (IBR) Plan, the Pay As You Earn (PAYE) Plan, and the Income-Contingent Repayment (ICR) Plan. On the IBR plan, any remaining balance on your loans is forgiven when your repayment term ends.

However, as part of the Trump administration’s One Big Beautiful Bill, changes are coming to IDR plans. In July 2027, most of the current IDR plans, except IBR, will no longer accept new enrollees.

In July 2026, a new plan will be introduced, called the Repayment Assistance Plan (RAP), that bases payments on borrowers’ adjusted gross income (AGI). (This and a revised version of the Standard Repayment Plan will be the only repayment plans available to new loan borrowers as of July 1, 2026.)

Under RAP, depending on their income, a borrower would pay 1% to 10% of their AGI over a term that spans up to 30 years. If they still owe money after 30 years, the rest will be forgiven. The government will cover unpaid interest from month to month. However, a borrower on RAP could end up paying more interest over the life of the loan due to the longer repayment term.

Refinancing to a Lower Interest Rate

If you have good credit (or a creditworthy cosigner), another option you might consider is to refinance student loans for a lower interest rate and new repayment terms. With refinancing, you exchange your current student loans for a new loan from a private lender.

Some potential advantages of refinancing student loans may include lowering your monthly payment, saving money over the life of the loan, and/or paying off your balance faster. A student loan refinancing calculator can help you see how much you might save.

However, it’s important to keep in mind that refinancing federal loans means you forfeit access to federal benefits and protections, including federal student loan forgiveness programs. Also, if you refinance for an extended term, you may pay more interest over the life of the loan. For these reasons, refinancing student loans requires careful thought to decide if this is the right next step for you.

The Takeaway

Student loan debt can be stressful, and seeing your loan balance rise can add to this situation. Understanding what increases your student loan balance (such as your interest rate, loan fees, and repayment plan) can help you avoid paying more than you need to on your debt.

Everyone’s situation is unique, so consider your budget, financial goals, and any plans for loan forgiveness when choosing a repayment strategy. You may find that changing your federal loan repayment plan or refinancing your existing loans might help you better manage your student loan debt.

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


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

FAQ

What causes student loan balances to grow over time?

Some of the factors that can cause student loan balances to grow over time include interest that accrues; capitalization, which is when unpaid interest is added to your loan balance in certain situations, such as at the end of student loan deferment or when your six-month grace period after graduation ends; and fees and penalties due to late or missed student loan payments that are added to what you owe.

How does interest capitalization increase your loan balance?

Interest capitalization increases your loan balance because the interest that accrues during certain situations, such as student loan deferment, is added to your principal balance, making the balance bigger. You then owe interest on the new bigger balance, increasing the amount you’ll pay over time.

Can deferment or forbearance make your loan more expensive?

Yes, deferment and forbearance can make your loan more expensive over time. If you have unsubsidized federal loans or Direct PLUS loans, for example, the interest on your loans accrues while you’re in deferment, making your total loan balance bigger. (If you have subsidized federal loans, the interest does not accrue during deferment.) In forbearance, interest accrues on all types of federal loans, and the interest is typically added to the loan balance, meaning you’ll pay more over the life of the loan.

What are the best ways to lower your total loan balance?

Some ways to lower your student loan balance include making extra payments toward the principal on your student loans; paying the interest that accrues while you’re in school, during the six-month grace period after graduation, or during deferment; and setting up automatic payments for your loans to ensure that your payments are consistent and on time (as a bonus, you’ll typically get a $0.25% discount on your interest rate when you set up autopay).

Will refinancing help reduce my loan balance faster?

Refinancing might help you lower your student loan balance, but it depends on your specific situation. For example, if you qualify for a lower interest rate when you refinance, your monthly payments may be lower, which might help you to repay your loans faster. You might also be able to shorten your loan term through refinancing and pay off your loan more quickly.

Photo credit: iStock/:Olemedia

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

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


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

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

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

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Jan
09
2026

30 College Scholarships for Minority Students

By | Going to College, Student Loans, student_loan | Comments Off on 30 College Scholarships for Minority Students

Scholarships are a type of financial aid that you don’t need to pay back. Students may find scholarships that are need-based or merit-based, as well as scholarships for minorities that are historically underrepresented on college campuses.

College scholarships for minorities are available for both undergraduate and graduate students. We’ve outlined a list of scholarships for minority students below, plus some tips for applying and what to expect for eligibility requirements.

Key Points

•   Scholarships for minorities are a form of grant aid that does not need to be repaid.

•   Minority scholarships come from many sources — federal, institutional, and private — and can target underrepresented ethnic groups.

•   Eligibility often depends on a mix of criteria: academic merit (GPA, leadership, talent), financial need (often via FAFSA), or shared cultural/ethnic background.

•   These scholarships cover a wide variety of fields and majors, including STEM, business, law, architecture, and the arts.

•   In addition to scholarships, minority students can rely on grants, federal student loans, and private student loans to pay for college.

Eligibility Requirements

It’s important to check the eligibility requirements before applying for scholarships and grants. There are multiple types of scholarships that students could qualify for based on where they live, their chosen field of study, or being recruited as a student athlete.

Academic, Financial, and Demographic Criteria

Minority scholarships are often based on financial need, academic merit, or a combination of the two. Competitive merit scholarships can involve GPA minimums, community service experience, or proficiency in the arts or a specific academic discipline.

Need-based scholarships, which are based on a student’s financial need, can help make college more affordable for students from low-income backgrounds. Whether applying for federal grants or private scholarships, students need to fill out the Free Application for Federal Student Aid (FAFSA®).

Additionally, demographic criteria — such as belonging to an underrepresented racial or ethnic group — are typically central to eligibility, with some scholarships further narrowing qualifications based on heritage, first-generation status, or intended career path.

Recommended: Balancing Being a Student Athlete & Academics in College

How to Find Minority Scholarships

There are many scholarship options for students from underrepresented populations. Finding minority scholarships begins with completing the FAFSA to determine eligibility for need-based awards, such as Pell Grants.

Resources for Locating Minority-Focused Awards

Finding scholarships designed for minority students can be easier with the right tools and support systems. Many colleges, nonprofit organizations, and government agencies maintain databases specifically dedicated to funding opportunities for underrepresented groups.

Helpful resources include:

•   University financial aid offices and multicultural resource centers

•   Scholarship search engines that filter by demographic criteria

•   Professional associations offering field-specific awards for minority students

•   Community-based organizations and local foundations

•   Government-sponsored directories of state and national programs

Using Scholarship Search Engines Effectively

Searching for scholarships online is a common approach. The Department of Labor maintains a scholarship database, known as CareerOneStop.

SoFi’s scholarship finder is another resource to find free money to help pay for college, graduate school, or trade school. Users can filter results by residency, field of study, ethnicity, and other criteria.

General Scholarships for Minority Students

Below are some scholarships for minority students to begin their search.

•   AMA Diversity Leadership Scholarship: Supports underrepresented marketing students who demonstrate leadership within their campus chapter or community.

•   Government Finance Professional Development Scholarship: Multiple scholarships for minority students enrolled in a course of study preparing for a career in state or local government.

•   Robert Noyce Teacher Scholarship Program: Scholarships to support undergraduate science, technology, engineering, and mathematics (STEM) majors become effective K-12 STEM teachers.

For a chance to win SoFi’s monthly $2,500 Scholarship Sweepstakes, simply let us know your name, email address, and school.

Scholarships for Specific Minority Groups

Scholarships for minorities can be specific to certain ethnicities and heritages, rather than open to all minority groups.

Minority students should also look into grants for college. Like scholarships, grants typically don’t need to be repaid. A couple distinctions to note: Grants are usually based on financial need versus academic merit, and funds are often from federal and state government instead of private and non-profit entities.

After scholarships and grants, students can rely on federal student loans and private student loans.

Here’s a look at college scholarship opportunities for several different minority groups.

Scholarships for African American Students

Black and African American students can apply for specific minority scholarships and grants to help minimize college debt. Scholarship eligibility may be based on a student’s major, location, and the type of institution.

•   CBC Spouses Education Scholarship: Scholarships for African American or Black students who demonstrate leadership through community service, pursuing an undergraduate, graduate, or doctoral degree.

•   HBCU Sustainable Communities Initiative Scholarship: Awards for students attending Historically Black Colleges and Universities (HBCU) and majoring in STEM, business, or sustainability-related disciplines.

•   Historically Black Law School Scholarship Program: Awards a scholarship to one student at each historically black law school in the U.S.

•   National Forum for Black Public Administrators Scholarships: Awards for African American students enrolled in a four-year degree program who demonstrate leadership related to public service.

•   NSBE Scholarship Program: Multiple scholarships for African-American undergraduate and graduate students majoring in engineering.

Scholarships for Hispanic/Latino Students

Hispanic and Latino students have unique funding opportunities to apply for among the list of scholarships and minority grants for college. Eligibility may depend on the institution type and location, as well as a student’s location and financial need.

•   Café Bustelo® El Café Del Futuro Scholarship: Scholarships for college students with a passion for community involvement and enrolled at a Hispanic Association of Colleges and Universities member institution.

•   Dr. Juan Andrade Jr. Scholarship for Young Hispanic Leaders: Need-based awards for full-time students of Hispanic ancestry who are committed to servant leadership.

•   Hispanic Heritage Foundation Youth Awards: Scholarships for students of Hispanic heritage enrolled at an accredited higher education institution.

•   HSF Scholar Program: Merit-based awards for U.S. citizens, permanent residents, eligible non-citizens, or DACA of Hispanic heritage enrolling in undergraduate or graduate school.

•   Latinos in Technology Scholarship: Scholarships and summer internship opportunities for Latino and Hispanic students enrolled in a STEM program in their junior or senior year at a college in Northern California or a graduate of a high school in Northern California.

Scholarships for Native American Students

Some minority scholarships are available to Native American students exclusively. Tribal enrollment and field of study are two eligibility requirements to be mindful of.

•   American Indian Education Fund Scholarships: Awards for Native American, Alaska Native, and Native Hawaiian students pursuing undergraduate and graduate degrees.

•   Catching the Dream Scholarship: Awards for Native American and Alaska Native students to study business administration, economic development, and related subjects.

•   American Indian College Fund: Awards for American Indian and Alaska Native students seeking technical, undergraduate, and graduate degrees at tribal colleges or accredited non-profit schools.

•   Udall Undergraduate Scholarship: Awards undergraduates from Native American or Alaska Native backgrounds who commit to environmental stewardship, tribal public policy, or Native healthcare careers, including financial support and leadership training.

•   Native Forward Direct Scholarship: Offers financial assistance to American Indian and Alaska Native undergraduate, graduate, and professional students enrolled in U.S.-accredited institutions, helping cover educational costs mid-year for those who demonstrate unmet financial need.

Scholarships for Native Hawaiian Students

There are a variety of scholarships for Native Hawaiian students to help pay for the cost of college. Eligibility for scholarships may vary based on the field of study and a student’s residency.

•   AIANTA Tourism & Hospitality Scholarship: Financial assistance for Native Hawaiian, Alaska Native, and Native American students toward a degree or certificate in hospitality, culinary arts, or related fields.

•   AISES Scholarships: Scholarships for Native Hawaiian and Native American undergraduate and graduate students pursuing STEM degrees.

•   CCAPW Scholarships: Assistance for American Native Hawaiian and Pacific Islander women from specific central California communities.

•   Ho‘oilina Scholarship: Awards Hawai‘i public high school graduates who enroll in Travel Industry Management at University of Hawai‘i at Mānoa with a four-year scholarship to help cover tuition and related costs as they train to become future professionals in tourism and hospitality.

•   Native Hawaiian Health Scholarship Program: Scholarships for Native Hawaiians pursuing careers in primary and behavioral health disciplines.

Scholarships for Asian American Students

There are minority scholarships designated for Asian American students. Note that scholarship eligibility may be specific to certain ethnic groups and ancestry.

•   Asian Pacific Fund Scholarships: Offers multiple scholarship programs catering to various Asian and Pacific Islander communities, supporting undergraduate and graduate students in different fields based on heritage, financial need, and academic merit.

•   Kimbo Foundation Scholarship: Multiple awards for Korean-American college students who demonstrate academic achievement, leadership potential, financial need, and volunteer or community service commitment.

•   NSRCF Scholarships: Multiple awards for high school seniors of Southeast Asian ancestry living in designated areas of the United States.

•   Taiwanese American Scholarship Fund: Need-based scholarships for Taiwanese American college students of all majors.

•   Korean American Scholarship Foundation Scholarship (KASF): Designed specifically for Korean-American high school seniors, undergraduates, and graduates; awards range generally from a few hundred to several thousand dollars, helping recipients with college expenses.

Scholarships for Pacific Islander Students

There are a variety of scholarships for Pacific Islander students to help cover the cost of college. Below are five to choose from.

•   Hoʻoulu Scholarship Fund: Offers financial support to Pacific Islander students who previously attended college but paused their studies and are now returning.

•   Ida M. Pope Memorial Scholarship: Awarded to Hawaiian‑ancestry women majoring in health, science, or education fields, recognizing academic achievement and supporting their continued education.

•   Kapiʻolani Pacific Islander Scholarship (via Kapiʻolani Community College): Provides tuition relief to students from U.S.-affiliated Pacific Islands, covering a portion of tuition costs for credit courses while enrolled.

•   Asian & Pacific Islander American Scholarship Fund (APIASF) Scholarship: Offers one-time or multi-year awards (from around $2,500 up to $20,000) to undergraduate students of Asian American, Native Hawaiian, or Pacific Islander heritage.

•   Blossom Kalama Evans Memorial Scholarship Fund: Administered by the Hawaiʻi Community Foundation, this fund supports Hawaiian‑ancestry students (including undergraduates, juniors, seniors, or graduate students) with financial need.

Scholarships for Middle Eastern and North African (MENA) Students

Scholarships for Middle Eastern and North African (MENA) students provide vital financial support to help these students pursue higher education in the U.S. and abroad. Here are five to choose from:

•   Arab America Scholarships: Financial award for U.S. students of Arab descent that helps cover college tuition and encourages educational and civic engagement.

•   AAMA Houston Chapter Scholarship: Offered to Arab American students in medical, dental, nursing, or related health fields.

•   Amideast Hope Fund Scholarship: Aimed at deserving Palestinian youth, this award supports those seeking undergraduate study in the U.S. who need financial assistance and academic opportunity.

•   U.S.-MEPI Student Leaders Program Scholarship: From the U.S.–Middle East Partnership Initiative, this scholarship supports undergraduate or graduate students from MENA countries with academic funding and leadership training.

•   ExxonMobile MENA Scholars Program: A competitive scholarship for students from the Middle East and North Africa pursuing advanced degrees (often in STEM or related fields) at U.S. universities.

Recommended: How Do Student Loans Work? Guide to Student Loans

Tips for Applying

Applying for scholarships can be made easier with some prior planning. After identifying scholarship options, making note of application deadlines is a useful place to start.

Tailor Your Personal Statement

If a scholarship requires an essay or personal statement, double check that you’re following the prompts and word limit requirements. Highlighting your personal experience, strengths, and achievements can help you stand out as an applicant.

Request Letters of Recommendation Early

Letters of recommendation are a common application requirement. Think about which teachers or employers would be best suited to write a recommendation — and give plenty of notice if asking them to do so.

Organize Deadlines and Materials

Staying organized is key when applying for scholarships, as missing a deadline or submitting incomplete materials can disqualify you. Create a calendar or spreadsheet to track each scholarship’s due date, required documents, and submission method. Keep copies of transcripts, recommendation letters, essays, and financial information in one easily accessible folder, ensuring you can quickly tailor materials for each application.

The Takeaway

Scholarships and grants are a great way for minority students to pay for college and reduce student debt. But many students require additional financing, such as federal and private student loans, to fund their 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.

FAQ

Are there scholarships for multi-racial students?

Yes, multi-racial students can access minority scholarships that relate to any part of their multicultural heritage or ancestry. Eligibility requirements for minority status or specific ethnic groups are typically outlined in the scholarship description.

Do minority scholarships consider financial need?

Entities offering minority scholarships may consider a student’s financial need, academic merit, or a combination of the two.

What documents are required for minority scholarships?

To apply for minority scholarships, students may need to submit their transcripts, letters of recommendation, standardized test scores, essays, and the FAFSA.

Are there scholarships for undocumented minority students?

Yes, there are scholarships specifically for undocumented minority students. Many come from nonprofit organizations, community foundations, and state or private scholarship funds dedicated to helping undocumented or DACA‑eligible students. These scholarships often focus on financial need, academic merit, and community involvement.

Can I apply for more than one minority scholarship at a time?

Yes, you can apply for multiple minority scholarships at the same time. Each scholarship has its own eligibility requirements and deadlines, so applying to several increases your chances of receiving funding.

Photo credit: iStock/Maca and Naca

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

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.


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

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

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

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

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Jan
07
2026
Step-by-Step Guide to Filling out a FAFSA Form for the First Time

9 Steps to Filling Out the FAFSA Form for School Year 2026-2027

By | Going to College, Student Loans, student_loan | Comments Off on 9 Steps to Filling Out the FAFSA Form for School Year 2026-2027
Editor’s Note: The new FAFSA form for the 2025-2026 academic year is available. Based on early testing by students and families, the process seems to be improved from the 2024-2025 form. Still, it’s best to get started on the form and aim to submit your application as soon as possible.

Filling out the Free Application for Federal Student Aid (FAFSA®) is one of the most important steps in paying for college. Completing the form accurately and on time can unlock access to federal grants, work-study opportunities, and student loans. Many states and individual colleges also rely on FAFSA information to determine eligibility for their own need-based and merit-based scholarships and grants.

Although recent updates have significantly simplified the FAFSA, the process can still feel intimidating — especially for first-time applicants and their families. This guide walks you through what you need to know, from gathering the right documents before you begin to what to expect when completing the application online.

Key Points

•   The FAFSA for the 2026-2027 school year is open, and submitting it early is strongly recommended for maximizing financial aid eligibility.

•   Applicants must consent to the IRS Direct Data Exchange to automatically import 2024 federal tax information directly into the FAFSA.

•   Both the student and parent contributors (if dependent) must create a StudentAid.gov account to complete and sign the form.

•   The former Expected Family Contribution (EFC) has been replaced by the Student Aid Index (SAI), which determines aid eligibility.

•   The simplified “Better FAFSA” includes fewer questions and allows students to list up to 20 colleges on their application.

Completing the FAFSA for the 2026-2027 Academic Year

The FAFSA for the 2026-2027 school year determines financial aid eligibility for students attending college between July 1, 2026 and June 30, 2027. The application typically opens in the fall of the prior year, allowing students and their families ample time to prepare and submit their information.

However, because some types of financial aid are awarded on a first-come, first-served basis, it’s strongly recommended to complete the FAFSA as early as possible. Submitting early can increase your chances of receiving the maximum amount of aid you may qualify for and make it easier to pay for college.

💡 Quick Tip: Fund your education with a competitive-rate, no-fees-required SoFi private student loan that covers up to 100% of school-certified costs.

Documents You’ll Need to Fill Out the FAFSA

Before starting the online FAFSA form, it’s helpful to gather all required documents in advance. Having this information ready can make the process smoother, faster, and less stressful while reducing the likelihood of errors or delays.

Information and documents you may need to complete the FAFSA include:

•  Your Social Security Number

•  Your Alien Registration Number (A-Number), if you’re not a U.S. citizen

•  Federal income tax returns

•  Records of child support received

•  Current balances of cash, savings, and checking accounts

•  Bank statements and records of investments (if applicable)

•  Records of net worth of investments, businesses, and farms

•  Records of untaxed income (if applicable)

If you’re classified as a dependent student, your parents will also need most of the same information for their portion of the FAFSA.

9 Steps to Filling Out the FAFSA

Below are the key steps to completing the FAFSA online for the 2026-2027 school year.

1. Create a StudentAid.gov Account

Before you can begin the FAFSA, both you and your parent(s), if required, must create a StudentAid.gov account. This account provides a username and password that allows you to securely log in, complete the FAFSA electronically, and sign the form digitally.

2. Start a New FAFSA Form

To begin, navigate to the FAFSA application page and select “Start New Form.” You’ll be prompted to log in using your StudentAid.gov account credentials. After logging in, you’ll select “Student” to indicate that you are completing the form as the student applicant.

3. Enter Your Personal Information

You’ll be asked to provide basic personal details, including your full name, date of birth, Social Security number, and contact information. It’s important to double-check all entries for accuracy, as errors in this section can cause processing delays or issues matching your information with official records.

4. Provide Personal Circumstances

This section is designed to determine if you’re a dependent or independent student for financial aid purposes. If you’re classified as a dependent student, you’ll need to include both your financial information and your parent’s information.

Being a dependent student does not mean your parents are required to pay for your education, but it does affect how your financial aid eligibility is calculated.

5. Complete the Financial Information Section

To be eligible for federal student aid, you must provide consent for the FAFSA to import your tax information directly from the Internal Revenue Service (IRS) using the IRS Direct Data Exchange. For the 2026–2027 FAFSA, the form uses 2024 federal tax information. Once consent is given, relevant tax data will automatically populate your application, helping to save time and reduce errors and omissions.

You’ll also need to report information about your financial assets, such as cash in bank accounts and any investments you own. If you are married, your spouse’s financial information may also be required. Do not include your parents’ assets in this section — they will provide their information separately in their portion of the FAFSA.

6. Provide List of Colleges

You can list multiple colleges on your FAFSA, and each school you include will receive your financial information to determine your financial aid package. Even if you haven’t finalized your college decision, it’s wise to include all schools you’re seriously considering.

You can add or remove schools later if your plans change. Importantly, colleges cannot see which other schools you’ve listed on your FAFSA.

Recommended: College Search Tool

7. Invite Parent Contributors (If Required)

If you are a dependent student, you’ll need to invite your parent(s) to complete their portion of the FAFSA. This is done by providing their email address, which triggers an invitation allowing them to access the form.

If your parents are married and file a joint tax return, only one parent needs to fill out the FAFSA. If they are married but filed separately, both parents are contributors. If your parents are divorced or separated and do not live together, the parent who provided more financial support during the past 12 months is the required contributor.

8. Review and Submit your FAFSA

Before submitting, carefully review all responses to ensure everything is accurate and complete. You’ll then acknowledge the terms and conditions, provide your electronic signature, and submit your section of the form.

If a parent or another contributor is required, the FAFSA will not be processed until all contributors have completed and signed their respective sections. Once all signatures are submitted, your FAFSA is considered complete.

9. Review Your Submission Summary

One to three days after submitting your completed FAFSA, you’ll receive a FAFSA Submission Summary. This document summarizes your responses and provides a basic estimate of your eligibility for federal student aid. It also includes your Student Aid Index (SAI), which colleges use to determine your eligibility for Federal Pell Grants and other federal, state, and institutional aid programs.

💡 Quick Tip: 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.

What’s Different About the 2026-27 FAFSA

The U.S. Education Department launched the new “Better FAFSA” form, mandated by the FAFSA Simplification Act, beginning with the 2024-2025 aid year. The 2026–2027 FAFSA continues these updates, including:

•  Fewer questions: The FAFSA has been reduced from over 100 questions to approximately 36.

•  Direct data exchange: Applicants must consent to the IRS Direct Data Exchange, which automatically imports federal tax information to reduce errors.

•  Student Aid Index (SAI): The former Expected Family Contribution (EFC) has been replaced by the SAI, which can range as low as -1,500 to better identify students with the greatest financial need.

•  Expanded school list: Students can now list up to 20 colleges on the online FAFSA, doubling the previous limit.

•  FAFSA Submission Summary: Instead of a Student Aid Report (SAR), you receive a FAFSA Submission Summary after filing the FAFSA form.

The Takeaway

Completing the FAFSA is a critical step in securing financial aid for college. While the “Better FAFSA” updates have made the application more streamlined — with fewer questions and direct IRS data exchange — it still requires careful attention to detail. By following these nine steps, from creating your StudentAid.gov account and gathering required documents to inviting parent contributors and reviewing your submission, you can navigate the process with confidence.

Submitting your FAFSA as early as possible is strongly recommended, as some aid is awarded on a first-come, first-served basis. Your resulting Student Aid Index (SAI) will play a key role in determining your eligibility for grants, loans, and scholarships that can make college more affordable.

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


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

FAQ

What is the #1 most common FAFSA mistake?

One of the most common FAFSA® mistakes is failing to submit the form early enough. While the federal deadline for the FAFSA is generally late, state and college-specific deadlines are often much earlier, and some aid is awarded on a first-come, first-served basis. Submitting the FAFSA as close to its opening date as possible (typically October 1st of the prior year) maximizes your chances of receiving the most aid.

Are parents or students supposed to fill out FAFSA?

Both students and parents may need to fill out the FAFSA®, depending on the student’s dependency status. The student is responsible for starting and submitting the application using their own Federal Student Aid (FSA) ID. If the student is considered dependent, a parent must also provide financial information and sign the form with a separate FSA ID, which is common for undergraduates applying for aid.

What three things will you need to fill out the FAFSA?

While several documents are helpful, three crucial items needed to fill out the FAFSA are:

•  Social Security number: Your valid Social Security card and number are required. (If you are not a U.S. citizen, you may need your Alien Registration Number instead).

•  Federal income tax information: You’ll need access to information from your federal income tax returns from the relevant tax year, which can be transferred automatically using the IRS Direct Data Exchange.

•  Records of other income and assets:This includes information on current balances of cash, savings, and checking accounts, as well as the net worth of any investments, businesses, or farms. You may also need records of untaxed income received, such as child support.

Photo credit: iStock/Vladimir Sukhachev

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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.

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