Tips for Paying Childcare as a Student

Guide to Paying for Child Care While in School

Pursuing a college degree can put you on a path to the career of your dreams. But the price tag of tuition, housing, and textbooks can be pretty steep. And if you’re a parent or caregiver, you’re faced with an added obstacle: “How can I afford child care while I’m in school?”

Fortunately, there are a bevy of options out there for adult students with children. On-campus daycares, grants, scholarships, and refinancing student loans can all help alleviate the cost of child care. You don’t have to let the challenge of going to college with kids stop you from reaching your goals.

Paying for Daycare as a Student

One of the biggest financial struggles working parents face is paying for daycare. In 2020, American households spent more than $10,000 annually for child care costs, according to Child Care Aware of America . If you’re a parent returning to college, you may have the extra burden of tuition, housing, and textbooks. You may have to scale back your job hours to accommodate your schedule. Paying for child care while tackling college costs and a possible income reduction could feel like too much.

But child care is essential for adult students. Someone has to look after your little one while you attend class. Even if your school is 100% online, you’ll need uninterrupted time to study and crank out those papers.

Let’s take a look at some avenues of financial support, so you can focus on getting your degree while caring for your family.

Tips to Help Pay for Child Care as a Student

The decision to return to college may not have been in the budget when you financially planned for a family. And with the cost of child care being more than some tuition, the prospect of going back to college with kids can be daunting. Take solace in the fact that you are not alone.

Fortunately, there are resources to help you. Many higher education institutions provide child care grants and subsidies. You can also turn to federal student aid, private student loans, and scholarships to help get you that degree and daycare for your children.

Financial Aid

Student financial aid provides funding used to cover the costs of higher education. It can come in the form of student loans, either from federal or state governments. Scholarships and grants are another fantastic way to help ease your financial anxiety.

To apply for federal financial aid, including scholarships, grants, and federal student loans, students will need to fill out the Free Application for Federal Student Aid (FAFSA®) annually. This form will determine how much financial aid you qualify for. It’s also prudent to contact your school financial aid office directly. Talk to them about how they can help you factor child care into the cost of your attendance.

Private Scholarships

Because a private college scholarship doesn’t generally need to be repaid, it can be thought of as free money awarded to pay for school. Scholarships are available from numerous organizations. They are typically based on financial need or merit — grades, test scores, or talent — and (good news!) there are also scholarships available specifically for students with dependent children .

Scholarship money does not have to be paid back, so you may be better able to focus on career and family post-graduation instead of student debt.

You can find more information on scholarships and how to use them toward child care from government resources, a college financial aid office, or a high school counselor. Be sure and pay attention to scholarship submission deadlines so you don’t miss out on funds.

Federal Student Loans and Grants

Many students seek financial aid for college through federal student loans. Federal loans typically have low, fixed interest rates and don’t require a cosigner or a credit check. You don’t have to worry about repayment until after college. These student loan funds are used for tuition, housing, computers, and textbooks, but it’s also possible to put them toward child care. Reach out to your school to ask if they can factor in child care costs to the price of attendance.

A Federal Pell Grant is awarded by the government to students from low-income households, based solely on financial need. While a Pell Grant won’t guarantee you free child care, the expense of having a child reflects directly on your income, which can consequently raise the amount of funds you may be eligible to receive. That money could help pay for daycare. Like scholarships, grants also do not usually have to be repaid.

Private Student Loans

When scholarships, federal loans, and a Pell Grant, aren’t enough, you can turn to private student loans to help cover the cost of daycare. These loans are issued by online lenders, banks, and credit unions. The lender will check your financial history and credit score to calculate the amount you qualify for. If you have limited job experience or your credit score isn’t the greatest, a cosigner can pledge responsibility for your loan.

With private student loans, you can typically borrow up to the cost of tuition and other qualified educational expenses. Unlike federal loans with strict deadlines, you can apply for a private student loan at any time during the year. Private loans could also be an option for parent student loan refinancing.

Unfortunately, private loans tend to have higher interest rates, and some may require payment while you’re still attending college. Additionally, private student loans aren’t required to offer the same benefits or protections that are available to federal student loan borrowers, things like deferment options in the event of financial issues. For this reason, they are generally borrowed only after all other financing options have been thoroughly considered. Be sure to do your homework on the pros and cons of federal vs. private student loans before committing.

Seek Out Lower Cost Daycares

Once you’ve secured some financial wiggle-room via scholarships and student federal and private loans, another step is to find affordable daycare, so you can stretch your monetary aid to the fullest.

In 2018, Congress tripled what’s called CCAMPIS — Child Care Access Means Parents in School. CCAMPIS awards funds to educational institutions to help make child care affordable for low-income students, either at accredited daycares off campus, or on-campus centers. Contact your school to see if they’ve received such funds and have child care services available.

You can also investigate not-for-profit organizations such as Child Care Aware of America, who provides tools to search for lower-cost child care care facilities near your school.

Schools with Child Care Resources

Many schools, including community colleges, have low-cost child care facilities on campus for undergrad and graduate students. These supportive centers not only offer developmental programs for your child, but are tailored to the needs of student parents, with extended hours in the evening and weekends. Spots can go fast though, so be sure and inquire about program availability as soon as possible.

Some colleges offer child care subsidies to adult students in the form of daycare grants, a taxable subsidy. Whether you have a newborn or a high schooler, you may meet the criteria for these funds, and many have no requirement for the money to be used solely for daycare. Daycare grants are purely to support student-parents to achieve their dreams of higher education.

And don’t forget to ask about work-study programs through your college—jobs offering flexible hours to earn money toward your tuition and child care expenses. You can even come up with creative ideas for a passive income stream, so you can spend more time with your kid and with your studies.

Remember, it takes a village to raise a child, and a college is a community. Most institutions have online student-parent support groups, where you can search for daycare services, nanny shares, and babysitting services. Valuable information can often be found on the school’s website or through student services.

The Takeaway

Being a parent can be stressful. Being in college and a parent? At first thought, the idea may seem overwhelming. But between federal and private student loans, grants, and scholarships, you don’t have to wait until your baby’s all grown up to get that college degree. There are loads of resources to support you, from parent groups on campus, to outside sources on how to refinance a student loan once out of college.

Go for it! A college degree can bolster your self-esteem and create new career opportunities. With a higher paying, post-college job, you can start saving for your kid’s college tuition.

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

FAQ

Can I use student loans to pay for child care?

Student loans can be used to cover tuition and other qualified education expenses like books, room and board, and other supplies. In some cases, child care costs may also be paid for with a student loan. However, it’s generally best to prioritize a grant or scholarship first to cover the costs of child care.

What can I spend my maintenance loan on?

Student maintenance loans are issued by the United Kingdom for students attending a U.K. university. It can be used for everyday expenses, including child care, food, rent, restaurants, and clothes.

Can I get a student loan to take care of my child?

It is possible to use private student loans toward child care. It may be an option to use federal loans too. Talk to your school about factoring child care into the cost of attendance.


Photo credit: iStock/Moyo Studio

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 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 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.

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.
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How to Pay for Dental School

Dental care is an important part of maintaining a healthy lifestyle, as oral health is connected to health issues in other parts of the body.

The demand for dentists, like other health care professionals, is on the rise, partly due to an aging U.S. population and partly due to more attention on dental health with each generation. The aging population is likely to need additional oral care, some of which can include complicated procedures.

By learning about the average tuition costs and ways to pay for dental school, prospective students can figure out if a dental career is the right choice for their future.

Employment Outlook for Dentists

The U.S. Bureau of Labor Statistics (BLS) projects there to be a 6% increase in available dentist jobs from 2021 to 2031. Dentists can work in a variety of settings, such as in private practice — either on their own or with a partner — or in an outpatient care center, among others.

The median annual salary of a general dentist was $163,220 in 2021. For perspective, the median annual U.S. income in the same year was $70,784.

While dentistry pays well, it also costs a lot to become a dentist. Dental school programs typically take four years to complete after students have already completed a bachelor’s degree. A degree from an accredited dental school will be either a D.D.S. — Doctor of Dental Surgery — or a D.M.D. — Doctor of Dental Medicine.

Individual universities determine which degree is awarded, but they are both approved by the Commission on Dental Accreditation (CODA), a part of the American Dental Association (ADA). Whichever degree a dental graduate is awarded, chances are they may also have hundreds of thousands of dollars worth of student loan debt to contend with after graduation.

How Much Does Dental School Cost?

The range of dental school costs depends on whether a student is in state (resident) or out of state (non-resident), and whether attending a public or private school. In-state public school tuition is typically going to be the least expensive option for most students.

According to the ADA, the average first-year cost of dental school (public or private), including tuition and mandatory fees, in 2021-2022 was $53,601 for residents and $71,742 for non-residents.

The cost difference between public schools and private schools can be substantial. The average resident cost for the first year of a public dental school program was $39,662, while the resident cost for private dental school was $72,271. After four years in school, students are looking at between $158,648 and $289,084 worth of debt, on average.

According to the American Dental Education Association (ADEA), in 2021, 81% of dental school students graduated with dental school debt. The average debt for a dental school graduate for the same year was $284,855.

Prospective students can compare the cost of dental schools and then determine how much they are willing to pay for their education. According to the ADA, there are 70 accredited dental schools throughout the United States and 10 in Canada.

Ways to Pay for Dental School

Even though dental school tuition can be expensive, students have options when figuring out how to afford it. Students can explore scholarships, grants, fellowships, or service programs to help pay for dental school.

Federal or private student loans are also an option. After graduating from dental school, some borrowers may consider refinancing their student loans as they pay off dental school debt. Continue reading for more details on ways to pay for dental school.

1. Scholarships and Grants

Scholarships and grants are awards that, in most cases, don’t have to be repaid. For students without the means to pay for tuition and other costs from personal savings, exploring these options may be a good place to start.

Dental schools may offer scholarships and grants to students who meet certain academic standards or who are working towards a certain type of degree, for example. When researching dental schools, prospective students may consider asking financial aid offices about available scholarships and grants.

Along with reaching out to schools, students may want to research scholarships and grants through organizations like The American Dental Association, The American Association of Public Health Dentistry, or The American Dental Education Association. There are also a variety of online scholarship search tools that students can use to find scholarships.

Recommended: What Is a Scholarship & How to Get One?

2. Employment

Dental school is rigorous, but if students have the time and energy, they may want to consider working to supplement their educational costs. The Federal Work-Study program is available to graduate and professional students with financial need, and has the same eligibility requirements and position availability as it does for undergraduate students. Financial aid offices at individual schools will have information pertaining to this program.

Training grants and fellowships, an option some dental students might find appealing, are sources of funding that often include a stipend and sometimes cover part of a student’s tuition.

These programs are designed to further a student’s education in a specific research area that interests them. They differ from simple grants in that there is a work component to them.

3. Service Programs

The Bureau of Health Workforce offers scholarships, loans, and loan repayment programs to eligible healthcare students and workers, including those in the dental field. One program, the National Health Service Corps (NHSC), provides scholarships to eligible students pursuing degrees in certain health professions.

In exchange for two years of full-time service in an underserved area, recipients will receive one year of scholarship support, up to a limit of four school years. The Bureau of Health Workforce also offers grants to eligible applicants through the Oral Health Workforce Development programs.

Service programs are also offered through the Indian Health Service (IHS). Eligible American Indian and Alaska Native students can apply for the IHS Scholarship, externship programs, or loan repayment programs. Scholarships are available to eligible students in pre-dental programs or for those completing dental school.

Recipients agree to serve a two-year commitment with the IHS. Third-year dental students can choose to apply for an externship, which typically spans two to four weeks, with placement in an Indian health facility. Loan repayment programs are either through the IHS or the NHSC. Both include a service commitment.

Students willing to serve in the military may want to consider programs through the United States Army, Navy, or Air Force. Each branch offers scholarships through the Health Professions Scholarship Program (HPSP).

Military scholarships cover full tuition and other related costs, plus a monthly stipend. Recipients agree to serve on active military duty in exchange for scholarship funds — the number of years varies with the branch and the number of years the student receives the scholarship.

Repay your way. Find the monthly student loan
payment and rate that fits your budget.


4. Federal Student Loans

Completing the FAFSA® (Free Application for Federal Student Aid) form is the first step students should take to determine eligibility for federal financial aid. To fill out the form, they will need to provide personal identification and financial records.

Federal student loans for graduate and professional school students are either Direct Unsubsidized Loans or Direct PLUS Loans. Students may borrow up to $20,500 each year in Direct Unsubsidized Loans, and eligibility is not based on financial need.

If a student has costs in excess of that borrowing limit, they may want to consider a Direct PLUS Loan. Like a Direct Unsubsidized Loan, eligibility for a Direct PLUS Loan is not based on financial need, although a credit check is required.

Students are encouraged to ask the financial aid office at their school about school-based loans that might be available. Some federal funds are offered to schools instead of directly to students and are tied to certain eligibility requirements.

5. Private Student Loans

It’s always recommended that students exhaust all federal student loan options before considering a private student loan. But if there is still a financial need, a private student loan may be the right choice for some students. Private student loans are available from private lenders and are awarded based on factors including your income, credit history, and credit score, among other factors.

Considering Student Loan Refinancing

After graduating, now-dentists may consider refinancing their student loans to secure a more competitive interest rate or more favorable terms. Refinancing also allows borrowers to combine all their loans into a single loan. This won’t be the right choice for all borrowers because when you refinance federal loans you’ll lose access to any federal benefits — like any loan forgiveness options.

Should you refinance your student loans? The answer is personal and will depend on factors including the amount of student debt you currently have, your credit score, income, and whether you are refinancing without a cosigner.

A cosigner is someone who agrees to repay the loan if you are unable to do so for any reason. Adding a cosigner can potentially strengthen your application, allowing you to secure more competitive terms than without the cosigner.

Recommended: Student Loan Refinance Guide

To get an idea of what refinancing could do for your student loans, take a look at SoFi’s student loan refinancing calculator.

The Takeaway

Dental school can be expensive but can lead to a fulfilling and lucrative career. When determining how to pay for dental school, students can explore dental school scholarships, grants, federal student loans, and private student loans. After graduating, former students may consider student loan refinancing, to combine their existing loans and hopefully secure more competitive terms.

Graduate school loans from SoFi have competitive rates, no fees, fixed and variable loan rates, and multiple repayment options. Pre-qualification can be completed in as little as three minutes.

SoFi members can access live customer support seven days a week, may qualify for rate discounts on additional SoFi loans, and have access to other exclusive member benefits.

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 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 looking to refinance federal student loans, please be aware that the White House has announced up to $20,000 of student loan forgiveness for Pell Grant recipients and $10,000 for qualifying borrowers whose student loans are federally held. Additionally, the federal student loan payment pause and interest holiday has been extended beyond December 31, 2022. Please carefully consider these changes before refinancing federally held loans with SoFi, since the amount or portion of your federal student debt that you refinance will no longer qualify for the federal loan payment suspension, interest waiver, or any other current or future benefits applicable to federal loans. If you qualify for federal student loan forgiveness and still wish to refinance, leave unrefinanced the amount you expect to be forgiven to receive your federal benefit.

CLICK HERE for more information.


Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.


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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Margin vs Options Trading: Similarities and Differences

Margin vs Options Trading: Similarities and Differences

Margin and options trading are two investment strategies that investors may utilize when investing in the financial markets. Investors who use margin and options trading rely on leverage to potentially accelerate their gains while also risking big losses if their trades do not work out.

While margin and options trading have several similarities, there are also subtle differences between the two investing strategies. Savvy investors will want to know how both margin and options work to know when to choose the best strategy for their unique situation.

Options Trading vs Margin Trading

Similarities

Here are some similarities between margin trading and options trading:

•   Both options trading and margin trading allow you to leverage your investment dollars.

•   Higher potential rewards but also higher risk.

•   Requires additional account approvals from your broker.

Differences

Here is a look at the differences between options trading and margin trading:

•   Margin trading involves a loan from your broker. You can get involved with options trading without borrowing.

•   Using margin directly increases your buying power, while options trading allows you to control shares of stock with less money.

Options Trading and How It Works

Options are financial derivatives that allow an investor to control a particular security, like a stock or exchange-traded fund (ETF), without needing all the money to buy or sell the asset directly. The purchaser of an options contract has the right to buy or sell a security at a fixed price within a specific period of time, paying a premium for that right.

There are two main types of options contracts: call options and put options. A call option gives the purchaser the right – but not always the obligation – to buy a security at a specific price, called a strike price. In contrast, the purchaser of a put option has the right – but again, not always the obligation – to sell a security at the strike price.

Buying and selling call and put options are some of the various ways investors can use leverage to accelerate their gains. And since options contracts fluctuate in value, traders can buy or sell the contracts before expiration for a profit or loss, just like they would trade a stock or bond. This process of buying and selling options contracts is known as options trading.

💡 Recommended: Options Trading 101: An Introduction to Stock Options

How Does Options Trading Work?

Suppose stock ABC is trading at $40 per share. If you buy the stock directly like a traditional investment and the stock price goes to $44, you will have made a 10% profit.

However, you could also buy a call option for stock ABC and potentially accelerate your gains.

Say that a call option with a strike price of $40 for stock ABC is selling for a $1 premium. When the stock price moves from $40 to $44, the call option premium might move to $2. You could then sell the call option, pocketing the difference between the price of the option when you sold it and what you paid for the option ($2 – $1). That would represent a 100% return on your investment, not including commissions and fees.

Calculating the pricing of options can be complicated, but this simple example shows one way investors can use options trading to leverage their investments.

There are many ways to trade options, depending on your outlook on a particular asset or the market as a whole. Investors can utilize bullish and bearish options trading strategies that target short- and long-term stock movements, allowing them to make money in up, down, and sideways markets.

Aside from speculating on the price movement of securities, investors can use options to hedge against losses or generate income by selling options for premium.

💡 Recommended: How to Trade Options: An In-Depth Guide for Beginners

Pros and Cons of Options Trading

Here are some of the pros and cons of options trading:

Pros of Options Trading

Cons of Options Trading

Allows you to use leverage for potentially increased returns Options generally have less liquidity than stocks
You can use options trading to speculate on the price movement of stocks, hedge against risk, or generate income Depending on your options strategy, you may have unlimited risk
Options trading may require a smaller upfront financial commitment than investing in stocks directly You need to be approved by your broker to trade options

Margin Trading and How It Works

Margin trading is an investment strategy in which you buy stocks or other securities using money borrowed from your broker to increase your buying power. You can potentially enhance your returns by using margin loans to purchase assets. However, using margin to buy securities can also magnify your losses.

In contrast, when you buy a stock directly, you pay for it with money from your cash account. Then, when you sell your shares, your profit (or loss) is based on the stock’s current price. This traditional way of investing limits gains, at least compared to margin trading, but also curbs potential risk: you can only lose as much as you invest.

Like options trading, margin trading is another way to increase your leverage in a particular investment. If you want to start trading on margin, you’ll likely need to upgrade the type of account you have with your broker. There are some subtle differences between a cash and margin account, and you’ll want to ensure you have the proper account to trade on margin.

How Does Margin Trading Work?

After your broker approves you for a margin account, you can buy more stocks than you have cash available.

Here’s one example of how margin trading works: suppose that you have $5,000 in your account, and you want to buy shares of stock ABC, which is trading at $50 per share. With a regular cash account, you would only be able to buy 100 shares, since $50 multiplied by 100 equals $5,000. If the stock’s price goes up to $55, you can close your position with a 10% profit.

But if you have a margin account, you can buy additional shares. Your broker will approve you for a certain amount of margin. If your broker has approved you for a $5,000 margin loan, you now have $10,000 in buying power; you can buy 200 shares of stock ABC at $50 per share. If the stock’s price goes up to $55 in this example, your profits will be higher. You can sell your 200 shares for $11,000. Then, after repaying your margin loan, you still have $6,000 in your account, representing a 20% profit.

Keep in mind that the increased leverage works in both directions. If you buy a stock on margin and the stock’s price goes down, you will have higher losses than you would if you just purchased with your cash account.

If you enter into a margin position and the value of your account drops, your broker may issue a margin call and force you to either sell some of your holdings or put in additional cash. Your broker will require both an initial margin amount and a maintenance margin amount.

Pros and Cons of Margin Trading

Here are some of the pros and cons of margin trading:

Pros of Margin Trading

Cons of Margin Trading

Increased leverage and buying power on your investments Higher risk if your trades move against you
Buying on margin may enhance your investment choices Your broker may force you to add more cash and/or sell your investments if they issue a margin call
Margin loans are often more flexible than other types of loans Most brokers charge interest on the amount they loan you on margin

How to Decide Which Is Right for You

Both options and margin trading can be successful investment strategies under the right conditions.

You may consider margin trading if you want to enhance your buying power with additional capital. If you want a type of investment with more flexibility, options trading might be suitable for you.

In either case, make sure you manage your risk so that you aren’t put in a situation where you lose more money than you have available.

Investing with SoFi

Options and margin trading are just two of the many investing strategies you can use to grow your wealth. But you don’t have to utilize these risky trading strategies to build your portfolio. With a SoFi Invest® online brokerage account, you can trade stocks and ETFs with no commissions for as little as $5.

And if you’re up for the risk, SoFi offers margin trading that can increase your buying power. But before you get started, your account must have a balance of at least $2,000 and be approved for margin trading. Once approved, you can borrow money against your current investments to buy stocks and ETFs at a competitive interest rate and potentially increase your returns.

Get one of the most competitive margin loan rates with SoFi, 5.25%*

FAQ

Is margin trading better than options trading?

Neither margin trading nor options trading is necessarily better than the other. Both options trading and margin trading can make sense in specific situations. Which of these two investment options is best for you depends on your specific financial situation and goals.

How much margin is required to buy options?

Margin is not required to buy or sell options contracts. However, you may use a margin loan for options trading if it’s appropriate for your investing strategy.

Are options trading and margin trading the same thing?

While both options and margin trading allows you to use leverage to potentially increase your returns, they are not the same. Options trading involves trading options contracts, while margin trading involves borrowing money from your broker to make investments with more cash than you have in your account.


Photo credit: iStock/Just_Super

*Borrow at 5.25%. Utilizing a margin loan is generally considered more appropriate for experienced investors as there are additional costs and risks associated. It is possible to lose more than your initial investment when using margin. Please see SoFi.com/wealth/assets/documents/brokerage-margin-disclosure-statement.pdf for detailed disclosure information.
SoFi Invest®
The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results.
Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal. Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or prequalification for any loan product offered by SoFi Bank, N.A.
Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes.
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How to Make FAFSA Corrections

Oops! As with any lengthy application, it’s easy to make mistakes or omissions on the Free Application for Financial Student Aid (FAFSA). In other cases, an applicant’s personal information changes and has to be updated on the form. Some corrections are more important than others — like a typo in your Social Security number — and need to be handled with special care.

Luckily, most errors can be corrected fairly easily. We’ll discuss when you need to update your information, how to make FAFSA corrections, and some special cases that require guidance from your school of choice’s financial aid office.

How To Make Simple Updates to FAFSA

The FAFSA asks for your personal information as it stands on the day you sign your form. It’s understood that details may change, and making updates is not a problem. (Of course, it’s best to avoid FAFSA mistakes altogether.)

Some FAFSA changes are easier to make than others. A good example is adding or dropping colleges on your schools list. The process begins with correcting your FAFSA online, followed by submitting an updated Student Aid Report (SAR) by mail. Here are the steps:

1. Make Changes Online

You can make simple changes to your FAFSA on the Federal Student Aid website.

•   Go to FAFSA.gov and log on with your FSA ID

•   On the “My FAFSA” page, choose “Make Corrections”

•   Create a save key

•   Enter your updates and corrections

•   Submit the form

2. Mail in a Corrected SAR

The SAR is a document summarizing the info on your FAFSA. When you first submitted your FAFSA, you should have received either an email with a link to your SAR or a paper copy by mail. You can also find it on the FAFSA site by choosing “View SAR.”

After you’ve made changes online, it’s a good idea to correct your SAR (there’s a field for updates), sign it, and mail it to the address listed on your form. Now you have two separate records of your changes, which should ensure your updates get made.

Recommended: Ca$h Course: A Student’s Guide to Money

Deadlines for FAFSA Updates

The federal deadline for submitting the FAFSA is June 30, but corrections are accepted several weeks after that date. For the 2022-2023 academic year, the last day for corrections and updates is Sept. 9, 2023. For 2023-2024, the deadline is Sept. 14, 2024.

Keep in mind that state and college deadlines vary, and that some financial aid is given out on a first come, first served basis. If you need to make substantial changes, call your financial aid office to find out about any other deadlines you should be aware of.

For more important dates, check out our guide to FAFSA deadlines.

Important Updates

Some corrections and updates need to be handled with special urgency and care. This includes your contact information and anything that affects your dependency status — including if you become pregnant.

To make updates, follow the steps above and watch out for your updated SAR to confirm the changes have been made.

Other important updates require a call to your school of choice’s financial aid office. The office will tell you whether your FAFSA needs to be updated and the best way to do it. In some cases, the office can make changes electronically, so the student doesn’t have to do anything.

Call the financial aid office first for the following:

•   Change in marital status.

•   Significant changes to income (yours or your parents’) for the current year.

•   Change in the number of family members in the household (yours or or your parents’).

•   Change in the number of people who are in college in the household (yours or your parents’).

•   You or your parents filed an amended 1040-X tax return.

•   Other changes in circumstance that cannot be reported on the FAFSA.

Recommended: SoFi’s Scholarship Search Tool

Updating Your Social Security Number

Your SSN is a special case, since you cannot update it on the FAFSA website. If you entered your number wrong on your FAFSA, the Department of Education recommends that you complete and submit a whole new FAFSA form. This is the most foolproof way to ensure the mistake doesn’t haunt you longer than it should. Just be aware that this method will change the submission date for your FAFSA, which can affect your eligibility for state and college aid.

Another option is to call one of the schools on your FAFSA list and ask them to try and update your SSN on their system. If successful, this will update your record across all schools, without changing your submission date.

You may also want to mail in an updated SAR. Follow the instructions above.

If You Miss the Deadline for Updates

If you made an error on your FAFSA that results in your receiving less financial aid than you should have, there’s not much you can do. Still, it’s a good idea to call your school’s financial aid office and explain your situation. They may be able to help you find any remaining financial aid — especially state grants and scholarships — to cover your cost of attendance until the following year.

Another option is private student loans. Educational loans disbursed by a private lender can help students who didn’t qualify for enough federal aid. It’s important to note that private student loans do not come with the same protections that are baked into federal aid, such as deferment and income-based repayment plans. Here’s a good summary of the differences between private student loans vs. federal student loans.

Still, for students who do not qualify for federal loans or who need additional funds to cover the cost of college, private student loans can help bridge the gap.

The Takeaway

Making corrections and updates to your FAFSA is typically straightforward. Simple changes can be made on the FAFSA website even after the deadline for submitting the application. It’s a good idea to follow up by mailing a corrected Student Aid Report (SAR) to the address listed on the back. A new SAR will confirm that your changes were made. For some important updates, it’s recommended that you call your school of choice’s financial aid office. They include changes in marital or dependency status, and significant financial changes. For changes to your SSN, the DOE recommends filing a whole new FAFSA.

Once your federal student aid options have been tapped out, other student loan options may still be needed to pay for college.

Private lenders like SoFi offer in-school loans to help cover the cost of attending college. SoFi’s no-fee private student loans come with flexible repayment plans and competitive rates.

Curious about private student loans with SoFi? Check your interest rate in just minutes.


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 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.

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Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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What Are Bull Put Spreads & How Do They Work?

Bull Put Spread: How This Options Strategy Works

A bull put spread is an options trading strategy that someone may use when they have a moderately bullish view of an asset, meaning they think the price will increase slightly. The strategy allows you to profit from an increase in an underlying asset’s price while limiting losses if an asset’s price declines.

Bull put spreads and options trading are not for everyone, but learning the ins and outs of this strategy may help your financial portfolio.

What Is a Bull Put Spread?

A bull put spread is an options trading strategy that involves buying a put option and selling another put option on the same underlying asset with the same expiration date, but at different strike prices. The trade is considered a neutral-to-bullish strategy, since it’s designed so the maximum benefit occurs when an asset’s price moderately increases.

To execute a bull put spread, a trader will simultaneously sell a put option at a specific strike price (the short leg of the trade) and buy a put option with a lower strike price (the long leg of the trade).

The trader receives a premium for selling the option with a higher strike price but pays a premium for buying the put option with a lower strike price. The premium paid for the long leg put option will always be less than the short leg since the lower strike put is further out of the money. The difference between the premium received and the premium paid is the maximum potential profit in the trade.

The goal of the bull put spread strategy is to finish the trade with the premium earned by selling the put (sometimes referred to as writing a put option) and lose no more than the premium paid for the long put.

A bull put spread options trading strategy is sometimes called a short put spread or a credit put spread.

💡 Recommended: Options Trading 101: An Introduction to Stock Options

How a Bull Put Spread Works

Bull put spreads focus on put options, which are options contracts that give the buyer the right – but not always the obligation – to sell a security at a given price (the strike price) during a set period of time.

The bull put spread strategy earns the highest profit in situations where the underlying stock trades at or above the strike price of the short put option – the put option sold with the higher strike price – upon expiration. This strategy, therefore, works best for assets that the traders of a bull put spread believe will trade slightly upwards.

The strategy provides a way to profit from a stock’s rising price without having to hold shares. An options strategy like this also caps downside risk because the maximum loss is the difference between the strike prices of the two puts minus the net premium received.

Even though the risk is limited, there can still be times when it makes sense to close out the trade.

💡 Recommended: How to Trade Options: An In-Depth Guide for Beginners

Max Profit and Risk

A bull put spread is meant to profit from a rising stock price, time decay, or both. This strategy caps both potential profit and loss, meaning its risk is limited.

The profit of a bull put spread is capped at the premium you receive by selling the short leg of the trade, minus the premium you spent to buy the long leg put option. You achieve this maximum profit if the underlying asset finishes at any price above the strike price of the short leg of the trade.

Maximum profit = premium received for selling put option – premium paid for buying put option

The maximum losses (i.e., the risk) of a bull put spread is the difference between the strike price of the short put option and the strike price of the long put option, minus the net premium you received.

Maximum loss = strike price of short put – strike price of long put – net premium received

The breakeven point of a bull put spread is the price the underlying asset trades at expiration so that the trader will come away even. The breakeven point will equal the difference between the net premiums you receive up front and the strike price of the short put option. At the breakeven, the trader neither makes nor loses money, not including commissions and fees.

Breakeven point = strike price of short put – net premium received

Bull Put Spread Example

Alice would like to use a bull put spread for XYZ stock since she thinks the price will slowly go up a month from now. XYZ is trading at $150 per share. Alice sells a put option for a premium of $3 with a strike price of $150. At the same time, she buys a put option with a premium of $1 and a strike price is $140. Both put options have the same expiration date in a month.

Alice will collect the difference between the two premiums, which is $2 ($3 – $1). Since each option contract is usually for 100 shares of stock, she’d collect a $200 premium when opening the bull put spread.

Maximum Profit

As long as XYZ stock trades at or above $150 at expiration, both puts will expire worthless, and she will keep the $200 premium she received at the start of the trade, minus commissions and fees.

Maximum profit = $3 – $1 = $2 x 100 shares = $200

Maximum Loss

Alice will experience the maximum loss if XYZ stock trades below $140 at expiration, the strike price of the long leg of the trade. In this scenario, Alice will lose $800, plus commissions and fees.

Maximum loss = $150 – $140 – ($3 – $1) = $8 x 100 shares = $800

Breakeven

If XYZ stock trades at $148 at expiration, Alice will lose $200 from the short leg of the trade with the $150 stock price. However, this will be balanced out by the initial $200 premium she received when opening the positioning. She neither makes nor loses money in this scenario, not including commissions and fees.

Breakeven point = $150 – ($3 – $1) = $148

Bull Put Spread Exit Strategy

Often, trades don’t go as planned. If they did, trading would be easy, and everyone would succeed. What sets successful traders apart from the rest of the pack is the ability to make winning trades, mitigate risk, and limit losses.

Having an exit strategy can help by providing a plan to cut losses at a predetermined point, rather than being caught off guard or simply “waiting” and “hoping” that the market turns around in your favor.

An exit strategy may be a little complicated for a bull put spread. Before the expiration date, you may want to exit the trade so you don’t have to buy an asset you may be obligated to purchase because you sold a put option. You may also decide to exit the position if the underlying asset price is falling and you want to limit your losses rather than take the maximum loss.

To close out a bull put spread entirely would require that the trader buy the short put contract to close and sell the long put option to close.

💡 Recommended: Buy to Open vs Buy to Close

Pros and Cons of Bull Put Spreads

The following are some of the advantages and disadvantages of bull put spreads:

Bull Put Spread Pros

Bull Put Spread Cons

Protection from downside risk; the maximum loss is known at the start of the trade The gains from the strategy will be limited and may be lower than if the trader bought the underlying asset outright
The potential to profit from a modest decline in the price of the underlying asset price Maximum loss is usually more substantial than the maximum gain
You can tailor the strategy based on your risk profile Difficult trading strategy for novice investors

Impacts of Variables

Several variables impact options prices, and options trading terminology describes how these variables might change in a given position.

Because a bull put spread consists of a short put and a long put, the way specific changes in different variables impact the position can be different than other options positions. Here’s a brief summary.

1. Stock Price Change

A bull put spread does well when the underlying security price rises, making it a bullish strategy. When the price falls, the spread performs poorly. This is known as a position with a “net positive delta.” Delta is an options measurement that refers to how much the price of an option will change as the underlying security price changes. The ratio of a stock’s price change to an option’s price change is not usually one-to-one.

Because a bull put spread is made up of one long put and one short put, the delta often won’t change much as the stock price changes if the time to expiration hasn’t changed. This is known as a “near-zero gamma” trade. Gamma is an estimation of how much the delta of a position will change as the underlying stock price changes.

2. Changes in Volatility

Volatility refers to how much the price of a stock might fluctuate in percentage terms. Implied volatility (IV) is a variable in options prices. Higher volatility usually means higher options prices, assuming other factors stay the same. But a bull put spread changes very little when volatility changes, and everything else remains equal.

This is known as a “near-zero vega” position. Vega measures how much an option price will change when volatility changes, but other factors are unmoved.

3. Time

Time decay refers to the fact that the value of an option declines as expiration draws near. The relationship of the stock price to the strike prices of the two put options will determine how time decay impacts the price of a bull put spread.

If the price of the underlying stock is near or above the strike price of the short put (the option with a higher strike price), then the price of the bull put spread declines (and makes money) as time goes on. This occurs because the short put is closest to being in the money and falls victim to time decay more rapidly than the long put.

But if the stock price is near or below the long put’s strike price (the option with a lower strike price), then the price of the bull spread will increase (and lose money) as time goes on. This occurs because the long put is closer to being in the money and will suffer the effects of time decay faster than the short put.

In cases where the underlying asset’s price is squarely in-between both strike prices, time decay barely affects the price of a bull put spread, as both the long and short puts will suffer time decay at more or less the same rate.

4. Early assignment

American-style options can be exercised at any time before expiration. Writers of a short options position can’t control when they might be required to fulfill the obligation of the contract. For this reason, the risk of early assignment (i.e., the risk of being required to buy the underlying asset per the option contract) must be considered when entering into short positions using options.

In a bull put spread, only the short put has early assignment risk. Early assignment of options usually has to do with dividends, and sometimes short puts can be assigned on the underlying stock’s ex-dividend date (the date someone has to start holding a stock if they want to receive the next dividend payment).

In the money puts with time value that doesn’t match the dividends of the underlying stock are likely to be assigned, as traders could earn more from the dividends they receive as a result of holding the shares than they would from the premium of the option.

For this reason, if the underlying stock price is below the short put’s strike price in a bull put spread, traders may want to contemplate the risk of early assignment. In cases where early assignment seems likely, using an exit strategy of some kind could be appropriate.

Start Investing Today With SoFi

Trading options isn’t easy and can involve significant risk. Many variables are involved in options trading, some of which have been notorious for catching newbie traders by surprise. While we’ve answered the fundamental question “what is a bull put spread” here, new investors looking to implement this strategy will still have a lot to learn.

For investors not quite ready to dive into bull put spreads and other options trading strategies, you can still start building a portfolio with SoFi. With a SoFi Invest® online investment account, you can trade stocks and exchange-traded funds (ETFs) with no commissions for as little as $5.

Ready to start investing the simple way? Open a SoFi account today.


Photo credit: iStock/kate_sept2004

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Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes.
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