Life Stages Archives

Jul

2025

What Is Student Loan Exit Counseling?

By Sarah Brooks | Fresh Out of School, Student Loans, student_loan, Terminology | No Comments

College students who took out federal student loans and graduate, withdraw, or drop below half-time enrollment must complete student loan exit counseling. Student loan exit counseling, or FAFSA exit counseling, helps students better understand their federal student loans and what their options for repayment are.

Key Points

• Exit counseling is a mandatory requirement for federal student loan borrowers.

• It provides a comprehensive overview of student loan details, interest rates, and repayment plans.

• Exit counseling explains consequences of default and options for deferment and forbearance.

• Basic financial planning and budgeting tips are included to help manage loan repayments.

• Private student loans are not covered in this counseling process.

What to Expect With Student Loan Exit Counseling

Depending on your school, students typically complete their exit counseling online or through an in-person meeting with a counselor at the school’s financial aid office. Schools may also offer online counseling programs to review all of the important information regarding paying back student loans. Each student should check their school’s website to find out what their options are.

How Long Does Exit Counseling Take?

Generally, student loan exit counseling takes about 20 to 30 minutes if completed online. If the student meets with a counselor or has specific questions, it might take longer. Although a presentation about financial planning might not sound all that exciting, it’s a great idea to take advantage of the learning and soak up as much knowledge as possible.

Recommended: 9 Smart Ways to Pay Off Student Loans

How to Prepare for Exit Counseling

Before student loan exit counseling, the student must prepare some information. First, they should know the outstanding balances on their current federal student loans. This can be found on the Federal Student Aid website.

The student should gather the names, addresses, email addresses, and phone numbers for a close relative, two references that live in the United States, and their employer, if they have one. The Department of Education requires this information in the event that a borrower defaults on their loans and cannot be contacted.

During the student loan exit counseling, the student will also spend some time mapping out their potential salary and living expenses, such as rent and utilities, so that they can create an expected budget.

Recommended: How to Create a Budget in Six Steps

Topics Covered in Student Loan Exit Counseling

Topics you’ll encounter in student loan exit counseling include understanding your loans, plans and options to repay, how to avoid default, prioritizing financial planning, and choosing a repayment plan.

Understanding Your Loans

During the first portion of student loan exit counseling, the student receives a summary of their federal student loans, including total balance, terms and conditions, and the date that the first payment is due.

Next, counseling will cover the interest rates on student loans. Each loan has a set interest rate that depends on the loan type (subsidized, unsubsidized, PLUS, etc.) and the year dispersed. Students may want to write these interest rates down so that they can calculate their monthly payments in a later section.

Plans to Repay

Next, student borrowers will learn all about the rules of student loan repayment. They typically have control over the repayment plan that they choose, so it is wise to understand the pros and cons of all options.

For example, income-driven repayment plans may lower the borrower’s monthly bill (in accordance with their income), but could cost them more in interest over time. Keep an eye out for the differences between plans.

Borrowers are provided with a number of helpful student loan repayment calculations. Most students going through student loan exit counseling will see calculations that show how expensive it can be to utilize a grace period. Interest still accrues during a grace period and as it accrues, it is capitalized, which means it is added to the balance of the loan. Yet another calculator shows the borrower how much can be saved by making additional payments.

Student borrowers are also provided with logistical repayment information, such as in what scenarios you should contact your loan service provider.

Avoiding Default

Not paying loans on time so that they fall into delinquency could have consequences in many areas of a borrower’s life. Therefore, during student loan exit counseling, there is a large focus on borrowers avoiding default on their student loans.

This section will discuss the consequences for both a borrower’s federal loans (such as loss of student loan deferment options) and for career and future income (such as wage garnishment and impact to credit scores).

It will also cover options in the event that a borrower cannot make payments, such as deferment and forbearance, and the pros and cons of each of these options.

This section will also explain federal loan consolidation, student loan forgiveness programs, loan discharge for the permanently disabled, and how to settle student loan disputes.

Prioritizing Financial Planning

The borrower’s program should discuss budgeting, credit management, and other basics of money management. Borrowers are encouraged to consider their short-term and long-term financial goals.

Repayment Information

Last, a borrower chooses a repayment plan, enters in their new contact information, employer or future employer’s information, and provides the names and contact information of references. The borrower’s loan servicer then reviews the information and provides the borrower with a repayment plan.

According to Federal Student Aid, the borrower is told to list their preferred repayment options, at which point their loan service will make a final decision and assign the borrower a repayment plan.

What Your Exit Counselor Doesn’t Tell You

Student loan exit counseling is necessary, important, and required of all students with federal student loans. But overall, the program is pretty light and quick.

Think about it: Some borrowers could have tens of thousands or even hundreds of thousands of dollars to pay back and get just 20 minutes of guidance as they click through some online slides. This information very easily could be part of a full, multi-credit course at a university.

Also, there is some important information that a borrower just won’t receive in exit counseling, and that’s information on how to handle their private student loans. While there are some similarities, private student loans will have many of their own nuances that are imperative to understand.

For example, private loans determine their own repayment plans and generally don’t offer deferment or forbearance options, and they may or may not allow for advance prepayment on a loan.

Student Loan Refinancing

Federal student loan exit counselors and programs generally do not cover student loan refinancing. Refinancing is the process of paying off student loans—both federal and private—with a new loan, ideally at a lower rate of interest.

Refinancing could potentially help lower a borrower’s interest rate and combine multiple loan payments into one.This is different from federal loan consolidation, a program offered through the government that takes a weighted average of the existing loans’ interest rates. The main purpose of a federal loan consolidation is to simplify monthly payments; whereas a refinance through a private lender ideally lowers your interest rate.

With refinancing, the lender pays off your government loans with a private loan. It’s important to note that refinanced loans are not eligible for federal repayment programs such as income-driven repayment, deferment, and public service loan forgiveness.

For borrowers who have no plans to use these programs, it may be worth considering refinancing. You may qualify for a better interest rate through refinancing if your credit score or financial situation has improved since you initially took out your loans as a student.

Regardless, it is a great idea to go into student loans exit counseling with a clear head. Paying back your loans is no small feat, so it will be so worth it to do some hard work up-front to make the rest of the process as smooth as possible.

If you do decide to refinance your student loans now or down the line, consider SoFi. SoFi offers flexible terms and no origination or prepayment fees.

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

FAQ

What happens if you don’t complete exit counseling?

Exit counseling for federal student loans is required. Failure to complete exit counseling could result in your school withholding your diploma or official transcript. This could affect your ability to apply for a job that requires a transcript or diploma or apply to graduate school.

What is an exit interview for student loans?

Student loan exit counseling helps students understand their federal student loans, repayment options, and interest rates. It also provides students with tips for avoiding delinquency and default on their loans. At the end of exit counseling, students choose a repayment option.

What happens if you never pay off your student loans?

The consequences for failing to repay student loans can be severe. After 270 days of missed payments, federal student loans go into default. At that point, the entire unpaid balance of your loan and any interest owed is due immediately. Your wages may be garnished and your tax refunds withheld. The default is reported to the credit bureaus and damages your credit rating, which could take years to rebuild and impact your ability to buy a house or a car. And finally, your lender or loan servicer can take you to court.

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).

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

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

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

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

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

SOSLR-Q225-069

Jul

2025

What to Do After You Graduate From Law School

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

Life after law school can be an exciting time as you look forward to your new career. There are plenty of opportunities available to those with a JD. Some avenues to consider include practicing law at a firm; specializing as an attorney in a field like patents, contracts, immigration (and many more); working as general counsel in-house at a corporation; or even pursuing a career in government.

The path you choose depends on the type of law you studied, your interests, and your past experiences. According to the Bureau of Labor Statistics (BLS), the median salary for lawyers in 2024 was $151,160 annually.

Once you find your first post-law school gig, you will also likely have to start thinking about repaying any law school student loans.

Key Points

• Career paths after law school include working at a law firm, clerking for a judge, pursuing an advanced degree, or transitioning into non-legal careers like politics, journalism, or lobbying.

• Law school graduates often carry significant student loan debt, with an average of $130,000, making repayment strategies a key financial priority.

• Making interest payments while still in school can help reduce total loan costs and prevent interest from accruing.

• Budgeting effectively post-graduation can help balance savings, emergency funds, credit card payments, and student loan repayment.

• Refinancing law school loans may lower interest rates and simplify payments, but it removes access to federal benefits like income-driven repayment and loan forgiveness programs.

Finding Jobs After Law School

After getting a law degree, what to do really depends on why you decided to go to law school in the first place. Did you have dreams of working at a major law firm, becoming a public defender, or going solo with your own practice?

Maybe you’ve decided you no longer want to practice law and would rather apply your new skills to a relevant career or continue to further your education. If you are considering what to do after law school, you can start by examining what workplace environment you find the most exciting and attainable.

Landing at a Law Firm

A law firm is an obvious choice for where to work after getting your JD. But the size, location, and culture of the law firm can greatly impact your experience and job satisfaction. Attorneys working at smaller firms may offer stronger partnership prospects than larger law firms. However, depending on location, the pay could be comparatively lower, and your training may come in the form of on-the-job experience.

While the path to promotion may be longer at a larger firm, they may have more resources and a higher salary. Depending on your preferences and career interests, a major law firm with a big name might be a better fit to help you find your specialty.

Considering a Clerkship

A clerkship is an important career milestone for many attorneys. Usually taking place under the guidance of a certain judge, a clerkship allows law school graduates to see the inner workings of the legal system. Many are considered prestigious resume boosters and offer valuable first-hand experience working under a judge and a leg up on networking from the start.

There are federal and state court clerkships, but federal opportunities like with Supreme Court or circuit court judges can be more difficult to secure because of their prestige. However, state clerkships can also be beneficial, especially if you plan on practicing in the local area.

Getting an Advanced Degree

If you have a desire to specialize in a specific field of law, staying in school to get a post-JD degree is another avenue to consider after getting a law degree.

You might want to pursue this type of degree after having some relevant work experience, which can help you first figure out what particular field of law you want to study. These specialty degrees include Air and Space Law, Sports Law, Global Food Law, Cannabis Law, and more.

Alternative Careers Outside Law

Pivoting after law school to a different career is another option to consider when looking at jobs. If you, like many, have graduated with six-figures worth of student loan debt, you’ll obviously want to find a steady job so you can make regular student loan payments.

Other jobs that may fit with the skill set you curated in law school may include political advisor, journalist, lobbyist, and teacher.

Tackling Law School Debt

Depending on your earning potential and chosen career path, it might make sense for you to aggressively pay off your law school debt in 10 years or less.

Another option is to try to maximize your law school loan forgiveness opportunities.

In order to make your degree count towards your personal and professional goals, figuring out how to approach your debt is a key part of what to do after law school.

Ready to tackle your law school debt?
Refinancing your student loans
could help you pay it off faster.

Making Payments While Still in School

While the government does not require you to make payments on most federal student loans while still in school, you could consider paying the amount of student loan interest that builds up each month to help keep your student loan debt from growing.

Whether you need to pick up a side hustle or prioritize how much you save, making at least interest-only payments on your student loans while still in school can help reduce the amount of interest that will accrue on your student loans. This can ultimately reduce the amount of interest that accrues and help set you up for success after law school.

Sticking to Budget Basics

After your law degree, it can be wise to take stock of your budget and work to balance your goals for savings, emergency funds, credit card payments, and student loans. The average student loan debt from law school currently sits at $130,000, so you’ll want to prioritize making a plan to get these paid off as quickly and efficiently as possible.

Ultimately, you’ll likely want to pick a student loan repayment plan that works for your personal budget, no matter what jobs after law school you are considering. You may decide to pay down debt while also building up a basic emergency fund as part of your financial foundation.

Refinancing Law School Loans

Refinancing your law school loans means that a private lender will issue one new loan that pays off your existing federal and/or private student loans. This new loan comes with new terms, ideally with a lower interest rate or shorter repayment period. Instead of paying multiple student loans, such as from undergraduate and graduate school, there is only one new loan to pay off.

While there are many advantages to student loan refinancing, be aware that refinancing federal loans means that you will not be able to take advantage of benefits like income-driven repayment plans and Public Service Loan Forgiveness. So it may not make sense if you are taking advantage of one of these benefits or plan to in the future.

The Takeaway

Life after law school can mean something different for everyone. Whether you pursue a private practice, family law at a small firm, or corporate law at a large one, there are many career opportunities to pursue as you pay off 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 is the next step after graduating law school?

There are many career opportunities available after graduating law school, including joining a law firm, doing a clerkship with a state or federal judge, getting an advanced degree to specialize in a specific type of law, or switching to a different career in which you can use the skills you learned in law school, such as a teacher, a political advisor, or a lobbyist.

What jobs can you get if you graduate law school?

Jobs you can get after you graduate law school include working at a small or large law firm, becoming a clerk to a state or federal judge, landing a position as in-house counsel at a corporation, or working for the government or a nonprofit. To help decide which path is right for you, consider your interests and career goals.

What field of law pays the most?

Typically, the highest-paid lawyers specialize in such areas as corporate law, tax law, intellectual property law, medical malpractice, and entertainment law.

SOSLR-Q225-068

Jul

2025

What Is College Tuition Reimbursement?

By Austin Kilham | Building Your Career, Financial Independence, Student Loans, student_loan, Terminology | No Comments

If you’re working and want to continue school but aren’t sure how to fund it, your employer may offer assistance. This is called tuition reimbursement, and it’s how many companies help employees pay for continuing their education. Tuition reimbursement programs are growing in popularity as companies work to attract and retain employees.

What is tuition reimbursement? It’s when companies offer programs to help employees pay for a portion of their educational costs. These programs vary by company. Some may only cover course costs if your continuing education is related to your job. Others may require employees to remain with the company for a certain period of time after completing their degree.

If you’re wondering, how does tuition reimbursement work?, read on to learn about the process of tuition reimbursement and find out the requirements involved.

Table of Contents

What Is Tuition Reimbursement?
Tuition Reimbursement Requirements
Tuition Reimbursement and the FAFSA®
Is Tuition Reimbursement Taxable?
What Are Other Options to Lower Education Costs?

Key Points

• Tuition reimbursement is an employee benefit where companies cover part or all of an employee’s educational costs, helping them pursue further education while working.

• Eligibility for tuition reimbursement often includes specific requirements, such as maintaining a minimum GPA and completing relevant coursework, with reimbursement typically occurring after course completion.

• Employers offer tuition reimbursement to attract and retain talent, as it equips employees with skills that can be beneficial to the company.

• Receiving tuition reimbursement does not prevent individuals from applying for federal financial aid, but it may affect the amount of aid offered.

• Tax implications exist for tuition reimbursement, with the first $5,250 being tax-free; amounts above this limit are considered taxable income for employees.

What Is Tuition Reimbursement?

Tuition reimbursement, or tuition assistance, is an arrangement where an employer pays for part or all of an employee’s continuing education whether an undergraduate degree or graduate school.

How does tuition reimbursement work? Your employment contract may lay out the terms of the tuition reimbursement, including how much of your tuition your company will cover, what courses qualify, any minimum GPA requirements, and the minimum time period you must be employed by the company.

Tuition reimbursement is often offered as an employee benefit on top of a salary package, along with other benefits like health insurance, a 401(k), or transportation expenses.

This is different from student loan repayment assistance, when your company provides some amount of money toward student loans you already have.

Not every company offers tuition reimbursement, but many large ones do provide reimbursement or financial support for continuing education. Some companies may stipulate that courses must relate to your current work.

Why Companies Offer Tuition Reimbursement

Tuition reimbursement is a perk that helps a company attract and retain employees, while also benefiting the company itself, since the courses you take may provide skills or knowledge you can put into practice at work.

Some companies are upping their educational benefits as a way to stay competitive. They may offer a range of benefits to their employees like programs for refinancing student loans and student loan contributions.

Not sure if your employer offers tuition reimbursement? Check with your HR representative to see what options are available.

Tuition Reimbursement Requirements

The specifics of each company’s tuition reimbursement policy are likely laid out in an employment contract, but it’s common for a company to offer a tuition reimbursement only in accordance with certain eligibility requirements.

You’ll probably have to sign up and pay for the courses yourself first, so you’ll want to budget appropriately. In most cases you’ll need to pay for your courses out of pocket and then provide proof of completion and your grades in order to be reimbursed.

Program requirements

Your employer may limit its reimbursement program to certain institutions. For example, they may provide a list of accredited institutions you can choose from. Or they require that you attend a four-year program.

Coursework Requirements

Your company may reimburse you only for classes pertaining to your current job description.

Other times, companies will approve courses focused on moving you into a management role or on gaining skills you can put toward other future roles or assignments. For example, if you work in project management for a large corporation and are interested in learning how to use data visualization, you might be able to take community college courses in data production and visual graphics.

After understanding what courses qualify for tuition reimbursement, you could then look over the other requirements. For example, there may be minimum GPA or attendance requirements.

Timeframe Requirements

Sometimes a company will also require you to continue working with them for a set amount of time, since they’ve invested in your education and don’t want you to take those new skills to a competitor.

Tuition Reimbursement and the FAFSA®

An employer’s tuition reimbursement program doesn’t preclude you from filling out the Free Application for Federal Student Aid (FAFSA®) application. In most scenarios, an employer is unlikely to cover 100% of tuition costs, and you may still qualify for aid in the form of federal loans and grants.

That said, you will be asked to note how much you are reimbursed for, which may have an effect on how much financial aid you’re offered.

Is Tuition Reimbursement Taxable?

While you should always consult with a licensed tax professional regarding the current tax law, and in no way should any of this information be considered tax advice, the IRS’ website currently states that employers can deduct the cost of tuition reimbursement (up to $5,250 per employee annually). It’s a business expense for them. The IRS website also states that the first $5,250 of tuition reimbursement isn’t considered taxable income for employees. However, anything above that counts as part of your taxable wages and salary. Again, talking to a tax professional is always recommended.

The IRS does have some requirements on tax-free educational assistance benefits — which are not necessarily the same requirements your employer has.

Typically, for the IRS to consider tuition assistance as tax-free, it should be used to pay for tuition, fees, textbooks, supplies, or equipment.

And typically, it can’t be used for meals, lodging, transportation, or any equipment you keep after the course. It’s also not applicable to sports, games, or hobbies — unless they’re a degree requirement or you can prove they’re related to your employer’s business.

Again, consult with an accountant or tax attorney to get the complete picture.

What Are Other Options to Lower Education Costs?

The average cost of attending a four-year public college as an in-state student during the 2022-23 school year was $10,950, and that price tag only goes up for private schools and out-of-state students.

Federal Student Aid

For those who do not qualify for employer offered tuition reimbursement, there are other options that could be worth considering. As mentioned above, students can fill out FAFSA annually. This allows them to apply for all types of federal student aid, including scholarships and grants, work-study, and federal student loans.

Private Student Loans

Beyond that, some individuals may consider private student loans.

While one of the basics of student loans is that they offer students the opportunity to finance their education, private student loans don’t have the same borrower protections, like income-driven repayment plans, that are afforded to federal student loans. For this reason, they are most often considered only after all other options.

Recommended: Private Student Loans Guide

Refinancing Existing Student Loans

If you already have student loans, when it comes time to repay, you could consider refinancing to a lower interest rate, if you qualify. One of the advantages of refinancing student loans is that it could help you reduce the amount of money paid in interest over the total life of the loan; refinancing at a lower monthly payment could help with budgeting in the short term. However, lowering monthly payments is frequently the result of extending the loan term, which will result in increased cost over the life of the loan.

It’s important to know that federal student loans come with benefits such as income-driven repayment plans and deferment or forbearance options. Refinancing federal loans makes them ineligible for these programs and protections.

The Takeaway

Employers who offer tuition reimbursement programs will typically cover a portion of tuition costs if the employee meets specific program eligibility requirements. These requirements vary by company, but may include things like maintaining a minimum GPA, doing certain coursework, and stipulations around the length of employment.

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

Learn more about refinancing your student loans with SoFi.

FAQ

What does college tuition reimbursement mean?

With college tuition reimbursement, an employer pays for all or some of an employee’s continuing education. The employer typically has specific terms and conditions, such as the amount of tuition the company will cover, what courses qualify, minimum GPA requirements, and the amount of time you must be employed by the company in order to qualify.

Is tuition reimbursement a good idea?

For employees, tuition reimbursement is an employee benefit and is generally a good thing. It provides employees with financial assistance to attend school, which can save them a significant amount of money. It also allows them the opportunity to gain skills to help advance in their career. In return, the employee typically must remain with the company for a certain amount of time and meet certain other specific eligibility criteria, depending on the company.

Do I have to pay back tuition reimbursement?

As long as you meet the terms and conditions of the tuition reimbursement agreement, you should not have to pay back tuition reimbursement. However, if you leave the company voluntarily before the specified timeframe, you may be required to repay the money. Read the terms of the agreement carefully beforehand.

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).

SOSLR-Q225-067

Jul

2025

Tips on How to Pay for MBA School

By Sarah Brooks | Budgeting & Goals, Building Your Career, Fresh Out of School, Life & Career, Student Loans, student_loan | No Comments

Getting a Master of Business Administration is an investment. Tuition costs vary widely depending on the school, but the average cost of an MBA is $60,410 for a program in the U.S.

If you’re committed to pursuing an MBA, the reality is that a higher income is probably still a few years away. However, you’re responsible for the cost of schooling now. It can be daunting, but there are options for making business school more affordable. Here are a few tips to consider as you craft a plan to pay for your MBA program.

Key Points

• Earning an MBA degree is expensive. One way to help cover the cost is to save up if you’re currently employed to reduce the amount you may need to borrow in student loans.

• Take advantage of “free money”: Apply for need- or merit-based scholarships, grants, and fellowships from schools you’re considering attending.

• Find out if your company will pay for part or all of your MBA. In return, they may require that you commit to working at the company for a certain amount of time.

• Apply for federal loans student loans by filling out the Free Application for Federal Student Aid (FAFSA®); graduate students may qualify for Direct Unsubsidized and PLUS Loans.

• Research and compare private student loans if federal loans don’t cover the full costs of your degree.

Saving Up in Advance

If you’re already employed, and especially if you earn a high salary, it may make sense for you to stay in your gig for a few more years and put money away toward your degree. The more you save now, the less you may have to take out in loans later. If you’re interested in accelerating your savings, consider cutting your expenses to prepare for the lifestyle change of becoming a student again.

Taking Advantage of Free Money

There are a plethora of scholarships, grants, and fellowships available for business students. If you manage to land one, they can help reduce your costs slightly or significantly, depending on the size of the award.

When hunting for scholarships, consider starting with the schools you’re thinking of attending. Many institutions offer their own need- or merit-based scholarships and fellowships, some of which may even fund the entire cost of MBA tuition. Many of these are geared toward specific groups of students.

Awards may be based on academic excellence, entrepreneurship, and for those committed to careers in business or finance. Contact your school’s admissions or financial aid departments to learn about the opportunities you qualify for.

Getting Sponsored by a Company

Some employers offer to pay for all or part of an MBA degree. In exchange, they may require that you work there for a certain time period beforehand and commit to maintaining your employment for some time after you graduate.

Some companies may offer relatively modest grants, while others might offer to cover the bulk of tuition costs. Some companies that offer tuition reimbursement for employees pursuing MBAs include Deloitte, Google, Apple, Intel, AT&T, and Expedia Group.

If you can land a job at a company that offers this benefit, it can be a major help in paying for school and reducing your debt burden. Just be sure that you’re willing to meet the commitments, which in most cases means staying with your employer for a while.

Taking Out Student Loans

If you can’t cover the full cost of tuition and living expenses through savings, scholarships, or sponsorships, borrowing student loans is another option. You might first consider borrowing from the federal government, as federal loans offer certain borrower protections and flexible student loan repayment options.

Federal Student Loans

To apply for federal student loans, first fill out the Free Application for Federal Student Aid (FAFSA®). The school you attend will determine the maximum you’re able to take out in loans each year, but you don’t have to take out the full amount. You might choose to only borrow as much as you need, since you’ll have to pay this money back later—with interest, of course.

Graduate students are generally eligible for Direct Unsubsidized Loans (up to $20,500 each year) or Direct PLUS Loans. Neither of these loans is awarded based on financial need.

Both of them accrue interest while the student is enrolled in school. Unless you pay the interest while you’re in school, it will get capitalized (or added to the principal of the loan), which can increase the amount you owe over the life of the loan.

Direct Unsubsidized Loans have a six-month grace period after graduation in which you won’t have to make principal payments (remember, interest still accrues). Direct PLUS Loans do not have a grace period but grad students automatically get a six-month deferment after they graduate. No principal payments are due during this time.

Private Student Loans

If you aren’t able to borrow as much as you need in federal loans, you can also apply for MBA student loans with private lenders, including banks and online financial institutions.

Private student loans have their own interest rates, terms, and possible benefits. Make sure to research the different lenders out there and see which is the best fit for your financial situation.

Paying Student Loans Back

Taking out a big loan can be daunting, but there are options for making repayment affordable, especially with federal loans. The government currently offers three income-based repayment plans that tie your monthly payment to your discretionary income and family size.

If you run into economic hardship, you can apply for a deferment or forbearance, which may allow eligible applicants to reduce or stop payments temporarily.

If you put your degree to use at a government agency or nonprofit organization, you may also qualify for Public Service Loan Forgiveness. If you meet the (extremely stringent) criteria, this program will forgive your loan balance after you make 120 qualifying monthly payments (10 years) under an eligible IDR plan.

Refinancing Student Loans

If you’re still paying off student debt from college or another graduate degree as you enter your MBA program, you could consider looking into student loan refinancing.

This involves applying for a new loan with a private lender and, if you qualify, using it to pay off your existing loans. Particularly if you have a solid credit and employment history, you might be able to snag a lower interest rate or reduced monthly payment.

While there are many advantages of refinancing student loans, there are also disadvantages, as well. If you refinance federal student loans, you lose access to federal forgiveness programs and income-based repayment plans. Make sure you do not plan on taking advantage of these programs before deciding to refinance your student loans.

The Takeaway

MBA programs can offer a valuable opportunity to advance your career and increase your income, but they can also come with a hefty price tag. Options to pay for your MBA degree can include using savings, getting a scholarship, grant, or fellowship, or borrowing student loans. Everyone’s plan for financing their education may be different and can include a combination of multiple resources.

Making existing loans manageable while you’re in school can go a long way to making your MBA affordable. Down the line, you can consider refinancing the loans you take out to get you through your MBA program. You can get quotes online in just a few minutes to help figure out whether refinancing can get you a better deal.

If you do decide to refinance your student loans, consider SoFi. SoFi offers flexible terms and no origination or prepayment fees.

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

FAQ

How do I fund my MBA program?

Ways to fund an MBA program include looking for scholarships, grants, and fellowships for business students (contact your school to see what’s available), checking to see whether your employer will pay some or all of the cost of your degree (ask your company’s benefits coordinator), or taking out federal and/or private student loans.

How can I get an MBA cheaper?

To reduce the cost of an MBA, look for scholarships that will pay some or all of the expense for earning your degree. Ask the schools you’re considering to see what they may offer — many institutions offer need- or merit-based scholarships for MBA students. In addition, if you are currently employed, check with your employer to find out if they will cover some of the costs of your degree. Some companies offer this as an employee benefit.

How much should I pay for an MBA?

The average cost of an MBA is $60,410 for two years. However, depending what school you attend, the cost may be well over $100,000. For example, the cost of earning an MBA at Harvard is approximately $161,304.

SOSLR-Q225-063

Jul

2025

What Is a Reverse Merger?

By Anna Davies | Growing Wealth, invest, Investing, Terminology | Comments Off

Table of Contents

Reverse Merger Meaning
Why are Reverse Mergers Important to Investors?
How Do Reverse Mergers Work?
Are Reverse Mergers Risky?
What Are the Pros and Cons of Reverse Mergers for Investors?
An Example of a Reverse Merger
Investor Considerations About Reverse Mergers
FAQ

In a traditional merger, a company may acquire another that is in a similar or complementary business in order to expand its footprint or reduce competition. A “reverse merger” works quite differently, and investors are eyeing the assets of a private company.

The acquiring company in a reverse merger is called a public “shell company,” and it may have few to no assets. The shell company acquires a private operating company. This can allow the private company to bypass an initial public offering, a potentially lengthy, expensive process. In essence, the reverse merger is seen as a faster and cheaper method of “going public” than an IPO.

Key Points

• A reverse merger involves a private company merging with a public shell to become publicly traded.

• Benefits include a potentially faster, cheaper, and less risky path to public trading.

• Risks include due diligence issues, and share value volatility.

• Reverse mergers can be completed through SPACs, typically quicker than IPOs.

• SPACs raise capital through IPOs to acquire private companies, facilitating public trading.

Reverse Merger Meaning

As mentioned, the meaning of the term “reverse merger” is when a group of investors takes over a company, rather than a competing or complementary business acquiring or absorbing a competitor. It’s a “reverse” of a traditional merger, in many ways, and appearances.

A reverse merger can also act as a sort of back door in. It can also be a way for companies to eschew the IPO process, or for foreign-based companies to access U.S. capital markets quickly.

Why are Reverse Mergers Important to Investors?

Investors may purchase units or shares in a shell company, hoping their investment will increase once a target company is chosen and acquired. This can be good for values of stocks when companies merge, netting those investors a profit.

In other cases, investors may own stock in a publicly traded company that is not doing well and is using a reverse merger to boost share values for shareholders through the acquisition of a new company.

In either case, shareholders can vote on the acquisition before a deal is done. Once the deal is complete, the name and stock symbol of the company may change to represent that of the formerly private company.

💡 Quick Tip: Did you know that opening a brokerage account typically doesn’t come with any setup costs? Often, the only requirement to open a brokerage account — aside from providing personal details — is making an initial deposit.

How Do Reverse Mergers Work?

A shell company may have a primary purpose of acquiring private companies and making them public, bypassing the traditional IPO process. These types of companies can also be called special purpose acquisition companies (SPACs) or “blank check companies,” because they usually don’t have a target when they’re formed.

They may set a funding goal, but the managers of the SPAC will have control over how much money they will use during an acquisition.

A SPAC can be considered a sort of cousin of private equity in that it raises capital to invest in privately traded companies. But unlike private equity firms, which can keep a private company private for however long they wish, the SPAC aims to find a private company to turn public.

During its inception, a SPAC will seek sponsors, who will be allowed to retain equity in the SPAC after its IPO. There’s a lot to consider here, such as the differences and potential advantages for investors when comparing an IPO vs. acquisition via SPAC.

The SPAC may have a time limit to find a company appropriate to acquire. At a certain point during the process, the SPAC may be publicly tradable. It also may be available for investors to buy units of the company at a set price.

Once the SPAC chooses a company, shareholders can vote on the deal. Once the deal is complete, managers get a percentage of the profits from the deal, and shareholders own shares of the newly acquired company.

If the SPAC does not find a company within the specified time period — or if a deal is not voted through — investors will get back their money, minus any fees or expenses incurred during the life of the SPAC. The SPAC is not supposed to last forever. It is a temporary shell created exclusively to find companies to take public through acquisition.

Are Reverse Mergers Risky?

Investing in a SPAC can be risky because investors don’t have the same information they have from a publicly traded company. The lack of transparency and standard analytical tools for considering investments could heighten risk.

The SPAC itself has little to no cash flow or business blueprint, and the compressed time frame can make it tough for investors to make sure due diligence has been done on the private company or companies it plans to acquire.

Once a deal has gone through, the SPAC stock converts to the stock of the formerly private company. That’s why many investors rely on the reputation of the founding sponsors of the SPAC, many of whom may be industry executives with extensive merger and acquisition experience.

💡 Quick Tip: How to manage potential risk factors in a self-directed investment account? Doing your research and employing strategies like dollar-cost averaging and diversification may help mitigate financial risk when trading stocks.

What Are the Pros and Cons of Reverse Mergers for Investors?

For investors, reverse mergers can have advantages and disadvantages. Here’s a rundown.

Pros of Reverse Mergers

One advantage of a reverse merger — being via SPAC or some other method — is that the process is relatively simple. The IPO process is long and complicated, which is one of the chief reasons companies may opt for a reverse merger when going public.

As such, they may also be less risky than an IPO, which can get derailed during the elongated process, and the whole thing may be less susceptible to the overall conditions in the market.

Cons of Reverse Mergers

Conversely, a reverse merger requires that a significant amount of due diligence is done by investors and those leading the merger. There’s always risk involved, and it can be a chore to suss it all out. Further, there’s a chance that a company’s stock won’t see a surge in demand, and that share values could fall.

Finally, there are regulatory issues to be aware of that can be a big hurdle for some companies that are making the transition from private to public. There are different rules, in other words, and it can take some time for staff to get up to speed.

Pros and Cons of Reverse Mergers for Investors
Pros	Cons
Simple	Homework to be done
Lower risks than IPO	Risk of share values falling
Less susceptibility to market forces	Regulation and compliance

An Example of a Reverse Merger

SPACs have become more common in the financial industry over the past five years or so, and were particularly popular in 2020 and 2021. Here are some examples.

Snack company UTZ went public in August 2020 through Collier Creek Holdings. When the deal was announced, investors could buy shares of Collier Creek Holdings, but the shares would be converted to UTZ upon completion of the deal. If the merger was successful, shareholders had the option to hold the stock or sell.

But sometimes, SPAC deals do not reach completion. For example, casual restaurant chain TGI Fridays was poised to enter a $380 million merger in 2020 through acquisition by shell company Allegro Merger — a deal that was called off in April 2020 partially due to the “extraordinary market conditions” at the time.

Allegro Merger’s stock was liquidated, while the owners of TGI Fridays — two investment firms — kept the company.

Investor Considerations About Reverse Mergers

Some SPACs may trade in exchange markets, but others may trade over the counter.

Over-the-counter, or off-exchange, trading is done without exchange supervision, directly between two parties. This can give the two parties more flexibility in deal terms but does not have the transparency of deals done on an exchange.

This can make it challenging for investors to understand the specifics of how a SPAC is operating, including the financials, operations, and management.

Another challenge may be that a shell company is planning a reverse merger with a company in another country. This can make auditing difficult, even when good-faith efforts are put forth.

That said, it’s a good idea for investors to perform due diligence and evaluate the shell company or SPAC as they would analyze a stock. This includes researching the company and reviewing its SEC filings.

Not all companies are required to file reports with the SEC. For these non-reporting companies, investors may need to do more due diligence on their own to determine how sound the company is. Of course, non-reporting companies can be financially sound, but an investor may have to do the legwork and ask for paperwork to help answer questions that would otherwise be answered in SEC filings.

The Takeaway

Understanding reverse mergers can be helpful as SPACs become an increasingly important component of the IPO investing landscape. It can also be good to know how investments in reverse merger companies may or may not align with financial goals. Many investors get a thrill from the “big risk, big reward” potential of SPACs, as well as the relatively affordable per-unit price or stock share that may be available to them.

Due diligence, consideration of the downsides, and a well-balanced portfolio may lessen risk in the uncertain world of reverse mergers. If you’re interested in learning how they could affect your portfolio or investing decisions, it may be a good idea to speak with a financial professional.

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Opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

FAQ

What is an example of a reverse merger?

A SPAC transaction is an example of a reverse merger, which would be when a SPAC — or special purpose acquisition company — is founded and taken public. Shares of the SPAC are sold to investors, and then the SPAC targets and acquires a private company, taking it public.

Why would a company do a reverse merger?

A reverse merger can be a relatively simple way for a company to go public. The traditional path to going public, through the IPO process, is often long, expensive, and risky, and a reverse merger can offer a simpler alternative.

How are reverse mergers and SPACs different?

The term “reverse merger” refers to the action being taken, or a company being taken public through a transaction or acquisition. A SPAC, on the other hand, is a vehicle or business entity used to facilitate that acquisition.

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Dollar Cost Averaging (DCA)
Dollar cost averaging is an investment strategy that involves regularly investing a fixed amount of money, regardless of market conditions. This approach can help reduce the impact of market volatility and lower the average cost per share over time. However, it does not guarantee a profit or protect against losses in declining markets. Investors should consider their financial goals, risk tolerance, and market conditions when deciding whether to use dollar cost averaging. Past performance is not indicative of future results. You should consult with a financial advisor to determine if this strategy is appropriate for your individual circumstances.

Investing in an Initial Public Offering (IPO) involves substantial risk, including the risk of loss. Further, there are a variety of risk factors to consider when investing in an IPO, including but not limited to, unproven management, significant debt, and lack of operating history. For a comprehensive discussion of these risks please refer to SoFi Securities’ IPO Risk Disclosure Statement. This should not be considered a recommendation to participate in IPOs and investors should carefully read the offering prospectus to determine whether an offering is consistent with their investment objectives, risk tolerance, and financial situation. New offerings generally have high demand and there are a limited number of shares available for distribution to participants. Many customers may not be allocated shares and share allocations may be significantly smaller than the shares requested in the customer’s initial offer (Indication of Interest). For more information on the allocation process please visit IPO Allocation Procedures.

Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

SOIN-Q225-120

What Is Student Loan Exit Counseling?

What to Expect With Student Loan Exit Counseling

How Long Does Exit Counseling Take?

How to Prepare for Exit Counseling

Topics Covered in Student Loan Exit Counseling

Understanding Your Loans

Plans to Repay

Avoiding Default

Prioritizing Financial Planning

Repayment Information

What Your Exit Counselor Doesn’t Tell You

Student Loan Refinancing

FAQ

What happens if you don’t complete exit counseling?

What is an exit interview for student loans?

What happens if you never pay off your student loans?

What to Do After You Graduate From Law School

Finding Jobs After Law School

Landing at a Law Firm

Considering a Clerkship

Getting an Advanced Degree

Alternative Careers Outside Law

Tackling Law School Debt

Ready to tackle your law school debt? Refinancing your student loans could help you pay it off faster.

Making Payments While Still in School

Sticking to Budget Basics

Refinancing Law School Loans

The Takeaway

FAQ

What is the next step after graduating law school?

What jobs can you get if you graduate law school?

What field of law pays the most?

What Is College Tuition Reimbursement?

What Is Tuition Reimbursement?

Why Companies Offer Tuition Reimbursement

Tuition Reimbursement Requirements

Program requirements

Coursework Requirements

Timeframe Requirements

Tuition Reimbursement and the FAFSA®

Is Tuition Reimbursement Taxable?

What Are Other Options to Lower Education Costs?

Federal Student Aid

Private Student Loans

Refinancing Existing Student Loans

The Takeaway

FAQ

What does college tuition reimbursement mean?

Is tuition reimbursement a good idea?

Do I have to pay back tuition reimbursement?

Tips on How to Pay for MBA School

Saving Up in Advance

Taking Advantage of Free Money

Getting Sponsored by a Company

Taking Out Student Loans

Federal Student Loans

Private Student Loans

Paying Student Loans Back

Refinancing Student Loans

The Takeaway

FAQ

How do I fund my MBA program?

How can I get an MBA cheaper?

How much should I pay for an MBA?

What Is a Reverse Merger?

Reverse Merger Meaning

Why are Reverse Mergers Important to Investors?

How Do Reverse Mergers Work?

Are Reverse Mergers Risky?

What Are the Pros and Cons of Reverse Mergers for Investors?

Pros of Reverse Mergers

Cons of Reverse Mergers

An Example of a Reverse Merger

Investor Considerations About Reverse Mergers

The Takeaway

FAQ

What is an example of a reverse merger?

Why would a company do a reverse merger?

How are reverse mergers and SPACs different?

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