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Do College Rankings Matter?

All articles about college rankings should perhaps be read with a grain of salt and primarily through a lens of what matters most to individuals about the college experience and what they’re hoping it will be an investment toward.

Prominent publications and people have conveyed a variety of views about whether college rankings matter:

The editor-in-chief of the Science Family of Journals said no in May 2020. “To any logical scientific observer, the fine distinctions of where schools show up on this (U.S. News & World Report Best Colleges) list are statistically meaningless—but try telling that to a roomful of alumni or parents,” H. Holden Thorp wrote.

Ian Bogost, distinguished chair at Georgia Tech, wrote in The Atlantic in June 2020: “The absurdity of a numerical ranking mechanism for colleges becomes apparent the moment you look at how U.S. News calculates it. The methodology reads like a Dungeons and Dragons character sheet: 8% for class size; 10% for high-school-class standing; 4.4% for first-to-second-year student retention, and so on.”

But just because the consensus leans toward “no” doesn’t mean it should be the last word on anyone’s ultimate decision about where to go to school.

Even U.S. News & World Report says on its best-colleges website: “The rankings provide a good starting point for students trying to compare schools. … The best school for each student, experts say, is one that will most completely meet his or her needs, which go beyond academics.”

What Are the College Rankings?

There is no single, ultimate, etched-in-stone set of college rankings. All over the world, there are entities using a wide array of criteria to appraise universities.

Rather than expecting a “yes” or “no” to the question of whether college rankings matter, it would be more beneficial to understand why “It depends” could be more appropriate.

If you’re aiming for an education from a prestigious school, and money is no object—well, first of all, congratulations and good luck.

Often, when college rankings come out from, for example, the National Center for Education Statistics—the primary federal entity for collecting, analyzing, and reporting data related to education in the United States and other nations—they’re looking at things like how future earnings from certain types of degrees from certain types of schools actually shake out along gender and other demographic lines.

In other words, they look at how college degrees pan out for real people in the real world.

But this is part of where “It depends” comes into play with assessing what the NCES or any other entity’s ratings say:

Do you know why you’re going to college, full stop? Do you know why you’re considering the schools you’re thinking about? Is how much you might earn from your degree a priority?

Is making the alumni connections that could set you up for success throughout your life the deciding factor?

Your answers to these questions—and more—may not be part of a college ranking list’s considerations whatsoever.

Before being inundated by college rankings and thinking about long-term goals and your budget, it probably would be wise to reflect on what you want out of a college.

It’s worth musing on your “best fit” college choices and how many schools to apply to.

While you’re doing so much big-picture thinking, it wouldn’t hurt to also give this ultimate college application checklist a glance as well.

Any decision about college likely will not be reached in a single sitting, so it’s also probably a good idea to bookmark and wade around in materials that even at first blush seem even halfway interesting or relevant.

Even if you wind up going with your first choice, in the end you’ll be able to feel that much more confident for giving the decision the deliberation it deserves.

What Really Matters

Although many groups rank colleges, commonly “college rankings” refers to the U.S. News & World Report list, which rewards graduation rates and reputation.

But there’s also The Princeton Review, which drills down on other factors like quality of life, extracurriculars, social scene, and town life—all aspects that reflect more on the student body being served than the quality of the institution.

Even these popular lists have no objective ultimate importance in your final decision—to wit, The Princeton Review also ranks “party schools,” a list “based on student ratings concerning the use of alcohol and drugs at their school, the number of hours they study each day outside of class time, and the popularity of fraternities/sororities at their school.”

Your mileage and what you are looking to get out of the college experience will most definitely vary.

If you have a lot of money, tons of connections, and a spotless academic record, then all things really are equal—you can probably pick any school you want.

But for others, who understand that all things are not equal, and are likely to have different priorities, it may be best to consider these lists at something of a distance.

If any of these lists and the metrics are appealing, that’s great. But make sure to read the fine print and think through the different standards of measurement—does reputation matter to all employers?

Is a small class size important to you when you understand that it can be a more intimate—but also potentially intimidating—learning environment?

Instead of placing absolute importance on any single, general list, it might be better to seek out lists more targeted to majors.

For example, use your favorite search engine to find lists of the best biology or microbiology programs.

Are you expecting to embark on a field where your future network will be important? Use that same method to find lists on the strength of different alumni networks.

Are you planning to go to grad school? If so, add “grad school” to those previous queries.

It’s helpful to look at and understand where value is being assigned on the broader lists, but the ones more directly related to your current goals are more likely to be more helpful—at least in terms of questions to ask academic or tuition advisors.

It might also be worth looking at 10 ways to prepare for college to help in brainstorming these kinds of questions.

The Bottom-Line Question

No discussion of college would be complete without touching on what you can afford to spend. Is $25,000, $50,000, or $100,000 or more in student loans worth it?

Projected earnings, length of education, and career choice can influence the answer.

Of people with $10,000 to $25,000 of student loan debt, 22% were behind on payments, but among those with $100,000 of student loan debt or more, only 16% were behind, according to a recent Federal Reserve survey of the economic well-being of U.S. households.

Applying for federal student aid via the FAFSA®—which considers eligibility for grants, federal student loans, and work-study programs—is the first step for most high school students planning to attend college, but even after scholarships, federal aid, and any college savings plans, many students come up short when all education expenses are tallied.

SoFi has several options for private student loans, which come with competitive rates, flexible repayment options, no origination or late fees, and a slew of benefits for SoFi members.

One of those perks is complimentary access to Edmit Plus, a tool that estimates financial aid, compares cost of attendance, and offers information about merit aid and scholarships available.

See if a private student loan from SoFi is a good fit.



SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

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 Lending Corp. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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How College Financial Aid Works

It doesn’t matter whether you’re the student or the parents wading through college application and tuition figures: Going to college is a huge life decision, almost always synonymous with huge sticker shock.

U.S. News & World Report clocks the average tuition cost among public and private institutions as slowly but steadily increasing annually: $36,801 for private schools, $22,577 for public schools as an out-of-state student, and $10,116 for public schools as an in-state student.

Tuition, it should be noted, does not include room and board and other living expenses, so it’s no wonder that as of 2019 there is approximately $1.6 trillion in student loan debt nationwide—it all adds up, quickly.

Fortunately, there are financial aid systems in place for college students to help offset all those accumulating costs. Unless you’re expecting a huge inheritance or some unexpected windfall, going to college will likely mean coming up with a game plan to make it possible.

Here’s a comprehensive guide to help familiarize yourself with the ins and outs of college financial aid.

NOTE: Many colleges and college students are influx due to COVID-19 regarding their upcoming academic calendar, whether classes will be taught face-to-face or online, and how this may or may not impact tuition—which in turn may or may not impact financial aid policies. This article is a general guide to help both students and parents get acquainted with how to get financial aid for college and devising strategies to make college a stronger possibility for those who want to attend and earn degrees.

What Is Financial Aid, Anyway?

Broadly speaking, the term “financial aid” refers to any number of funding channels that are available to assist students to cover the many costs incurred by pursuing a post-secondary school degree.

Financial aid is available from federal and state governments, educational institutions, and private organizations. It can also be awarded in the form of loans, grants, scholarships, and work-study programs.

Schools don’t typically expect enrollees to cover college costs from their savings and income alone. According to the 2019 Sallie Mae/Ipsos survey “How America Pays for College ,” the typical family covered 25% of college costs with scholarships and grants.

This 25% can come in the form of many different potential resources. There isn’t necessarily a “best” option, since selecting the one (hopefully ones) that can help bolster your future college plans comes down to the financial aid’s availability of funds, your goals, and your plans.

Also, the amount of aid a student can potentially receive varies depending on federal, state, and institutional guidelines. Additionally, the type of aid determines whether it will have to be repaid: federal grants don’t need to be repaid, for example, but a loan will.

Should you be fortunate enough to be awarded federal financial aid, you’ll receive a financial aid award letter. These can be confusing to decipher, but this guide to navigating it could come in handy.

In sum: Just because an offer is being made doesn’t mean you have to accept it and there isn’t wiggle room to argue for reconsideration.

This Offer Letter Decoder created by non-profit news site The Hechinger Report could be a helpful tool to help demystify an offer letter. SoFi also has resources with information on financial aid secrets worth reviewing if you’re pursuing college financial aid. And if you are in a position to accept financial aid, here’s a guide on how your financial aid potentially may shift year-to-year as a student.

It is also worth noting that the Sallie Mae/Ipsos survey taps into four strategies that some families may consider to help mediate college costs, even if they aren’t quite ready to apply for financial aid. These include things like enrolling in advanced placement courses, dual-enrolling in community college, or investing in talents to increase the chances of earning a scholarship.

Federal Student Aid

Here’s the first spoonful of alphabet soup: FAFSA®, the Free Application for Federal Student Aid, is often the first step when exploring federal financial aid for college. It’s an application used by many colleges, universities, and state agencies in deciding who gets aid—and how much. (Private colleges use a supplemental form called the College Scholarship Service Profile, or CSS, which is more detailed and can be more time-consuming to complete.)

The form itself is not overly cumbersome, but the US Department of Education includes a guide on what to do if you’re unsure how to fill in any of the blanks on your FAFSA. The important thing to keep in mind with the FAFSA are its deadlines.

The Federal Student Aid office advises filling out its form as soon as possible if you’re even loosely considering applying for federal financial aid.

There’s a run-down of the deadlines here , but the key ones for the 2020-2021 academic year, for example, is June 30, 2021 to submit your FAFSA, and the window for corrections or updates is by 11:59 p.m. Central Time, September 11, 2021. Note that each state and college may have its own deadlines on top of that.

The general recommendation to fill out the form as soon as possible should not be overlooked: Both the federal government and various states award financial aid that may include grants and scholarships which, if you qualify for, won’t have to be repaid.

Some states award aid on a first come basis, so submitting a FAFSA application early could be helpful. Another wrinkle to keep in mind is FAFSA is not an island unto itself. Many colleges use the FAFSA to in turn determine how much financial aid to award to students, if any.

A FAFSA application is also a pre-requirement to be considered for federal grants like the Pell Grant, which is “usually awarded only to undergraduate students who display exceptional financial need and have not earned a bachelor’s, graduate, or professional degree.”

The grant does not need to be repaid, though eligibility is based on a family’s expected family contribution (which is information that is supplied via the FAFSA).

FAFSA’s website has a comprehensive list of federal grants offered by the U.S. Department of Education, with options for military veterans and teachers. This one-sheeter has a quick overview of various federal grants available, thoughtfully condensed into an at-a-glance rundown.

Finally, federal work-study programs are available to eligible college students, providing part-time jobs to help pay for education expenses. Such programs usually encourage community service work and work related to the expected course of study. Here’s studentaid.gov’s official site tackling the FAQs of these highly variable programs.

State-Based Student Aid

Depending on where your school is, you’ll have many different options when it comes to getting the money you need to pay for school. SoFi has a state-by-state breakdown of grants, scholarships, and other information like average local student loan debt to keep in mind as your search continues.

Because there is so much variability across each state, one good thing to remember is to read the materials you come across when applying for state-level aid carefully, thoroughly, and repeatedly—including the fine print. Some aid opportunities have residency requirements, and some schools may also offer state-based aid or discounts.

Other Sources for College Financial Aid

A two-sided coin that factors into one of many, many ways to approach financial aid for college is need-based federal student aid versus merit-based aid.

Some federal aid is need-based—like the Pell Grant and Direct Subsidized Loans (more on this loan type below)—meaning eligibility is based solely on the assets and income of the prospective student and their family. Factors like test scores or athletic ability, for example, have no bearing here.

The reverse is true for merit-based scholarships, which can include a wide variety of talents and interests: artistic, academic, athletic, etc.

Publishing an exhaustive list of literally every merit- and need-based aid opportunity would be near impossible, so one of the best options to find information on them is to speak to someone in admissions or to your guidance counselor who can point you to ones that might apply or often apply based on their curricula, programs, school, or state.

There are tons of online scholarship search sites out there, and dedicating some time to finding and applying as many as make sense for you can be a valuable way to spend some time—and can hopefully help you pay for some of your education expenses.

Federal Student Loans

Most students’ federal financial aid packages include federal student loans, which are awarded based on financial need and the cost of attending college. These include Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans.

The advantages of federal student loans include low, fixed interest rates, no credit checks required to borrow them, unique borrower protections (like forbearance and deferment), and repayment plans based on income and/or your commitment to eligible public service work post-graduation.

With Direct Subsidized Loans , the government pays the interest while the student is attending school at least half-time. That’s what the “subsidized” means here. These loans are awarded based on financial need.

Direct Unsubsidized Loans are awarded regardless of financial need, but borrowers are responsible for paying the interest on these loans from the moment you get them—or you can defer interest payments and the total that adds up will be added back onto the loan principal (that is, the total base sum you were awarded) for you to repay.

This capitalized interest can lead to you paying substantially more for the money you borrowed, because the total dollar amount of interest you didn’t pay is added onto the total amount of the loan you took out in the first place, and then you have to pay interest on THAT new total.

Direct PLUS Loans are also unsubsidized, and are awarded to either eligible graduate students or parents of undergraduate students and require a credit check to ensure there’s no “adverse credit history.” In short, that means they can be more difficult to qualify for as compared to Direct Unsubsidized Loans.

Private Student Loans

If your federal student aid package and other forms of funding don’t quite cover your cost of attending college, there are also private student loans to consider.

The details on private student loans vary, because the terms and criteria will depend on both the individual lenders and the circumstances of the borrowers.

But if there’s any general way private student loans might be more appealing is because they, unlike some federal loans, can be made up in amounts up to 100% of the cost of college tuition and living expenses. (SoFi offers no-fee private student loans.)

Financial Aid Isn’t Just Loans

There’s a whole rainbow of options available to people who want to go to college and aren’t sure how they’ll ever be able to afford it. There are many more loans and programs that are available than listed here—but a good starting strategy is to see how much financial aid you can receive that does not require repayment, and if you come up short, start weighing your options.

Along with scholarships and state-based grants, start with the FAFSA because federal aid packages will likely have the best terms for students—and because it’s a requirement for many other aid options.

If you wind up coming short even with everything from here, private student loans can help fill in the gap. And, in addition to all these options, SoFi offers competitive, no-fee private student loans for undergrads, grads, and parents.

SoFi can make the process of paying for school and getting aid more stress-free with private student loans.



External Websites: The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Third Party Brand Mentions: No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
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 Lending Corp. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

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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The Ultimate GMAT™ Study Plan

Gearing up for a Master of Business Administration program involves a lot of prep, especially when it comes to taking the GMAT™—The Graduate Management Admission Test. It’s a standardized test that assesses potential business school students.

The GMAT was created by the Graduate Management Admission Council (GMAC) and is now the most widely used assessment for graduate management admissions.

It’s available in more than 100 countries and taken by more than 200,00 students annually.

The exam is important for prospective MBA students because it may carry a lot of weight in the application, with some experts estimating it accounts for up to 22% of admissions decisions.

Because of this, getting prepared for the GMAT is crucial to getting into an MBA program.

Important Facts About the GMAT

There are four sections in the GMAT: quantitative, verbal, integrated reasoning, and analytical writing. These sections are meant to test a student’s general knowledge—they’re not specific to business knowledge.

The total score a student can receive for this exam will fall somewhere between 200 and 800. This score is a combination of verbal and quantitative questions.

Students will also be given scores for each individual section. The section scores for the verbal and quantitative sections range from zero to 60.

The integrated reasoning score, which ranges from one to eight, requires students to analyze graphs and tables.

The analytical writing section is scored from zero to six and is based on how well students can analyze and write about an argument given in a provided text.

There is no set score that students must achieve to be accepted into a program, but students can figure out an estimate of how well they need to do by researching the average score accepted students got on their GMAT exam.

This can give prospective students a good idea of what score they should aim to receive to be considered for acceptance to a particular program.

Making a Study Plan

Making a GMAT study plan depends on when applications are due, which will differ by school.

It’s recommended that students take the exam at least three to four months before their application deadline.

This will give students enough time to retake the test if necessary. It can be taken up to five times within twelve months, with a lifetime limit of 8 times.

Once students know their application deadline, they can make a plan for when they want to take the exam.

Exams are available year-round, and students can register to take it in person or online at mba.com.

Each student will have to determine how much preparation is right for them, but usually, it’s recommended to spend three to six months preparing for the GMAT.

According to GMAC, the makers of the exam, students who studied 60 hours or more scored 500 or higher .

Studying more isn’t a guarantee of a high score, but it seems to help a majority of students find success. With this information, students can create a study plan that suits them and their timeline best.

Study Tips for the GMAT

With 60 or more hours of preparation recommended, how can students best spend those hours?

Here are some tips on how to study for the GMAT that may help students make the best of their prep time.

Taking Practice Exams

Familiarity with the format of the test means there are few surprises. Students will be familiar with each section of the test, the order of the sections, and how the instructions are worded.

Studying the content is important, but so is knowing what to expect when test day comes.

The most effective way to use practice tests is to take one first and use it as a baseline so it’s easy to see where improvements need to be made and how much progress is being made after each consecutive practice test.

When taking practice tests, students should try to reproduce the test experience as closely as possible, in a similar environment and with the same time constraints that the real test has.

The time allowable depends on whether the test is taken in person or online.

The online exam takes two hours and 45 minutes, whereas the in-person exam takes three hours and seven minutes because it includes the analytical writing assessment.

Taking practice exams is also a good way for students to learn how to pace themselves through each section of the test.

Strategies recommended are keeping a consistent pace throughout the entire exam, keeping in mind how many questions are in each section, and estimating how much time is allotted for each question.

•   The quantitative section includes 37 questions over 75 minutes.
•   The verbal section gives test takers 75 minutes for 41 questions.
•   The 12 integrated reasoning questions average two minutes and 30 seconds each for the section’s time allotment of 30 minutes.

Students may choose to use official GMAT exam prep packages, which vary in cost (one is free).

Hundreds of quantitative and verbal questions, as well as integrated reasoning questions can be accessed through these official packages.

Students can also purchase unofficial GMAT practice tests if they need more resources.

Tutoring and Peer Study Groups

For students who want extra help preparing for the GMAT, getting a private tutor, taking a prep course, or finding a study group may be options to consider.

A benefit to these strategies is the addition of regular feedback and accountability, which can help students stick to their GMAT study plan.

For students with a tighter budget, finding a GMAT support group and free practice exams may be more affordable routes.

Staying Healthy

Performing well during a stressful examination can be made easier by maintaining good physical and mental health.

It’s recommended that students get plenty of rest in the days before the exam, as well as keep up a healthy diet.

Both rest and nutrition can impact physical wellbeing. Going into the GMAT in good physical condition can help students reduce stress and build confidence.

During practice tests, students can practice stress management techniques, which may make it easier to use them during the official test.

Test-taking anxiety is a common phenomenon, and each student may want to learn which coping techniques work best for them.

What About Finances?

Students who are considering an MBA program may be shocked when they see the high cost of tuition.

For a few of the most prestigious schools, the cost averages $137,500, a price that may be out of reach for students.

Options for decreasing the cost of earning an MBA may be getting a master’s degree online or getting financial aid to help cover the cost.

There are a few options when it comes to paying for graduate school. As with undergrad, students can start by applying for federal financial aid.

Filling out the Free Application for Federal Student Aid (FAFSA®) as a graduate student means the aid is given based on the student’s income, not their parents’. This could help students receive more federal aid than they did as undergraduates.

After submitting the FAFSA, students will receive their Student Aid Report (SAR), which provides information about their federal student aid eligibility.

The schools to which a student has applied and been accepted will send a financial aid package offer letter, and the student can decide whether to accept or decline the offer.

Federal student financial aid can come in the form of work-study, grants, or loans. Grants usually don’t need to be repaid, but loans do. Graduate students are not eligible for subsidized student loans, only unsubsidized, so interest will start accruing as soon as the loan is disbursed.

Another option may be working while getting an MBA, with some employers helping to pay for tuition. There are more part-time and online MBA options than there used to be, making it easier for students to work while finishing school.

Students can also apply for scholarships through the school they are attending, as well as from private or professional organizations. Scholarships usually vary in their eligibility requirements, and it’s recommended that students seek out and apply for all they may be eligible for.

Another option for funding an MBA program may be private student loans. Private student loans do not come with the same benefits and protections that federal loans do, like income-driven repayments and fixed low-interest rates. The interest rates and repayment options vary by lender, so students are encouraged to do their research carefully before considering this option.

The Takeaway

Students who already have student loans from their undergraduate education may want to consider refinancing their student loans, which could mean a lower interest rate or a repayment plan that works better for their particular financial situation. The choice to refinance student loans depends on a lot of factors, like whether those loans are federal or private and whether or not the new loan will be beneficial to the borrower. Figuring out how to prepare for and pay for graduate school can feel overwhelming, but help is available for both.

Learn more about private student loans and student loan refinance options from SoFi.



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SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

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IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF DECEMBER DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE
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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 or products 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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A Guide to Real Estate Counter Offers

Unless you’re fresh out of a Negotiating 101 final and ready to huck your textbook straight into the trash, navigating real estate counter offers might not be at the top of your mind.

That’s OK. For most folks, the wild and sometimes-bumpy ride of buying or selling a house isn’t something they’re necessarily prepared for.

Home sellers are free to make a counter offer if they’re dissatisfied with a buyer’s initial bid. Usually, that counter offer indicates they’ve accepted the buyer’s offer subject to certain changes, including updates to contingencies, closing date, and sales price.

Counter offers are a fairly standard part of the home buying process, but the “rules” of engagement might not seem remotely intuitive at the time. To help understand how counter offers work, what the typical negotiating steps look like, and how to counter offer real estate, here’s a little guide you can cram with.

Common Reasons for Counter Offers

From the beginning of the homebuying process, unexpected twists and turns can arise. After sifting through hundreds of listings, attending several showings, and putting an offer in on a dream home (or two, or three), the deal can be far from done.

There are many reasons why it takes time to buy a house, and counter offers can certainly be one of them. A real estate counter offer can come into play in these scenarios:

A Change in Sales Price

One of the most commonly contested items in the closing of a house is the sales price. If buyers come in lower than the asking price with their offer, sellers might counter with the original asking price (if they’re unwilling to negotiate) or somewhere between the asking price and the offer.

Requesting a Later Closing Date

Sometimes sellers simply need more time to vacate the premises. Whether they have unfinished business or unexpected plans, they may present a counter offer that extends the escrow period to allow them more time to move out.

Increasing the Earnest Money Deposit

In some cases, the seller could up the ante by increasing the earnest, or “good faith,” money deposit the buyer submits with the offer. Earnest money deposits are typically between 1% and 3% of the purchase price, but in a hot market, there’s a chance the seller could ask for more to ensure the buyer is serious about purchasing the property.

The Removal of Certain Contingencies

Contingency clauses are actions or conditions that must be met before a real estate contract becomes binding. Common contingencies, which most sellers will see as standard in a real estate offer, are:

•   An appraisal contingency to protect buyers if the property is valued lower than the amount they offer.
•   A financing contingency that allows buyers adequate time to obtain a mortgage or other financing to purchase the property.
•   An inspection contingency that ensures buyers have the right to a thorough inspection of the property within a specified period of time.

Some contingencies, however, are considered less than standard. For example, a home sale contingency grants buyers a set amount of time to sell their existing home so they can finance the new property. Some sellers may find this contingency burdensome, particularly in a hot market, so they could make a counter offer that removes the home sale contingency. They can also counter with a “kick-out clause” that gives a real estate agent the right to keep showing the house while buyers attempt to sell their existing home.

Requesting Repairs

If a home inspection reveals necessary repairs or renovations to the property, the buyer could submit a counter offer to negotiate a lower price or ask the seller to complete the repairs before closing.

Deciding Who Covers Closing Costs

In a buyer’s market, it might be possible to negotiate some or all of the closing costs to be paid by the seller. These costs include appraisal fees, settlement fees, title policies, recording fees, land surveys, and transfer tax. Many home buyers are surprised by how expensive closing costs are, but in particularly hot markets with multiple offers, sellers can counter with a simple “no” to indicate they won’t be covering those costs for the buyer.

What’s the Typical Counter Offer Process?

While real estate counter offers vary depending on the market, the seller’s unique circumstances, and other standalone factors, there are some fairly standard parameters to the counter offer process:

What’s a ‘Normal’ Number of Counter Offers?

There’s no legal limit to the number of counter offers that can occur in a real estate transaction. Initial offers, counter offers, and subsequent counter offers could ping pong back and forth for weeks or more.

Knowing the local real estate market can be key here. In a buyer’s market with plenty of houses for sale, sellers might want to be cautious about submitting an unnecessary number of counter offers.

Similarly, in a seller’s market where inventory is low and buyer competition is high, buyers might want to limit the number of counter offers they push back at the seller.

Can a Seller Make Simultaneous Counter Offers?

Depending on the state where the real estate transaction takes place, a seller may or may not be able to make counter offers to more than one buyer. That said, most real estate agents advise against multiple simultaneous counteroffers, as it could end up in two legally binding contracts for the seller.

How Long Does the Process Take?

Number of counter offers aside, home buyers can expect a closing to take 45 days on average. But how long it takes still varies from buyer to buyer, with factors like whether they’re paying cash, how long it takes them to find an inspector, and if the house appraises at a lower value, affecting the overall timeline.

How to Counter Offer in Real Estate

To some degree there’s such a thing as real estate counter offer etiquette. Here are a few things to consider when engaging in the counter offer process:

Having a Comprehensive Picture of Costs

For buyers, having an accurate handle on what it will cost to buy the house is essential for negotiating counter offers discerningly.

Closing costs can be one of the most negotiated items between buyers and sellers and add up to as much as 5% of the mortgage amount. Having a firm grasp of how much to expect in closing costs can help guide the counter offer process.

Setting realistic expectations for the monthly housing payment (including the mortgage principal and interest, insurance, maintenance, any HOA fees, and other costs) and what they can afford to pay as a lump sum at closing can help shape this picture for the buyer.

A mortgage calculator helps buyers break down the cost of purchasing a home.

Going In With a Strong Offer

A “strong” offer is backed by data that defines what’s happening in the market, and research (with the help of an agent) around what’s considered “fair market value.”

Coming in at 15% or more under the fair market value is generally considered a “lowball” offer and can start buyers off on the wrong foot. In some cases, sellers might skip right over anything that isn’t considered a strong offer.

Knowing What Can Be Negotiated

One of the first steps in making a real estate counter offer is knowing what can be negotiated:

•  Possession date. Giving the sellers more time to move out could mean an exchange for a condition the buyer desires. Buyers hoping to move in sooner might make a counter offer requesting an earlier possession date.
•  Personal property. Some of the seller’s personal property like furniture, window treatments, artwork, or gardening tools could be negotiated into the contract in a counter offer.
•  Home warranty. Older houses can come with their own unique sets of systems and appliances, so buyers might make a counter offer asking the sellers to cover the cost of a one- to two-year home warranty ($350 to $600 annually, on average) if unexpected repairs need to be made after move-in.
•  Earnest money deposit. Whether buyers are trying to reduce their risk of something going wrong during closing or strengthen their offer, they can negotiate a lower or higher earnest money deposit with a counter offer.

Being Timely and Responsive

Real estate offers and counter offers often come with a set expiration date, so time is usually of the essence. Forty-eight hours is a standard acceptance window in many real estate markets, but in hot markets offers might expire within 24 hours or less.

Some sellers take this concept to a whole new level, setting stringent requirements around offer acceptance. It’s up to buyers to determine whether or not they’re willing to reply quickly enough to meet the sellers’ time demands or risk losing the deal.

Trying Not to Take Things Personally

It might not feel like “all’s fair in buying and selling a home” since it’s one of the biggest financial transactions many will make in their lifetime. But buyers and sellers shouldn’t be surprised if it comes with a little bit of literal give and take.

And while it might seem like a personal affront to have a real estate offer rejected, it’s possible (and even likely) that the seller has multiple offers or was simply able to strike a better deal.

When push comes to shove and purchase comes to close, buying a house is a matter of business, no matter how personal the home buying journey can feel.

The Takeaway

Real estate counter offers are a common form of business negotiation, and a first step in making a counter offer is knowing what can be negotiated. Being cognizant of counter offer etiquette can be helpful.

Having your home financing lined up can also be helpful. SoFi offers home loans with competitive rates and no hidden fees.

Get pre-qualified for a SoFi home loan in two minutes.



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SoFi loans are originated by SoFi Lending Corp (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

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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 or products 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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Where to Cash a Check Without Paying a Fee

With the popularity of digital payment apps and credit cards, checks are being used less than ever. According to a Federal Reserve study , for the first time ever in 2018, check payments fell below the number of total ACH (automated clearing house) transfers.

But, whether it’s a birthday gift from a grandparent or a medical reimbursement, checks are still kicking around. Checks are often considered a secure form of payment, and they might be the only form of payment some people (like your landlord) accept.

While they might be less popular now, at the end of the day, they’re still money. Don’t make the mistake of cashing a check just anywhere, read further for a few suggestions for where you could be able to deposit a check, fee-free.

How to Cash a Check

Before running off to the bank or ATM around the corner, a person may want to ensure they have what they need to successfully deposit their check. Generally, in order to cash a check, the following information is required:

•  Bank account. You’ll generally need an account to deposit a check. Most banks will allow you to cash a check, but if you don’t have an account with them, they may charge a fee.
•  ID or debit card. Depending on the means used to deposit the check, a person might also need a form of ID or their debit card to successfully complete the transaction.
•  PIN number. Whether banking by ATM or teller, oftentimes a person will be required to enter their PIN number to confirm the transaction.
•  Completed deposit slip. Each bank has a variation in the deposit slip, but most ask for a person’s name, account numbers, and the amount of cash and check the customer is depositing. This typically needs to be completed for the transaction to go through.

Another thing to keep in mind is the timing of the deposit. Personal checks are valid up to six months after they’ve been issued, but it’s generally agreed that they should be deposited as quickly as possible. Otherwise, the issuer might forget about the check, and the person depositing the check could be doing so with insufficient funds in the issuer’s account—leading to high fees on both sides from a bounced check .

The only exception to the above rules is US Treasury checks, traveler’s checks, or USPS money orders. US Treasury checks are valid for a year after issuing. Traveler’s checks and money orders never expire.

Branch Bank

Perhaps the most old-school way to cash a check is going into a bank branch or credit union and depositing the check with a teller in-person. This can be faster because the amount being deposited is confirmed on-site—there’s less likely to be a delay in the funds hitting a person’s account.

To deposit a check at a bank branch, a person will need to complete a deposit slip, and endorse their check. To endorse a check for a teller, a person needs to sign the back of the check, where indicated.

With a deposit slip and endorsed check in hand, customer’s might also be asked for their bank’s corresponding debit card or a photo ID for verification. From there, the check is validated and funds will be available in the account once the check clears, which can take up to two days.

While depositing to a bank branch can be fast, people are limited by the branch’s hours and locality. If a person has an account with an online-only financial institution, visiting a brick and mortar location to deposit a check may not be an option.

Similarly, they might be in an area where there are no nearby retail locations. If that’s the case, there are other methods to cash a check.

ATMs

Depositing a check via ATM has its advantages and disadvantages. Unlike bank branches, many ATMs are open 24-hours and with smaller square footage, they can be more common than brick and mortar ATMs.

Depositing a check by ATM varies by the technology it uses. Older ATM models may ask a customer to fill out a deposit slip envelope before inserting the check into the machine. Other, more modern models simply use on-screen prompts and scanning to verify the deposit amount. Regardless, customers are generally required to endorse the check with their signature before depositing it in an ATM. Using an ATM also typically requires someone to enter their pin number before accessing the account. Reading the on-screen prompts can help clarify the steps at the specific ATM you are using.

On the downside, checks deposited via ATM may take longer to be available in the bank account. This is because ATMs are only serviced at specific times, and while people enter the amount they’re depositing, it often needs to be verified in person by a teller at the bank . Customers are also limited to depositing checks in the ATMs of banks that they are a member of.

Additionally, because the extra step of validation is required, there is a possibility of human error incorrectly validating the correct amount or losing the check altogether . Some ATMs now have scanning capabilities, allowing them to instantly read checks which can alleviate some errors. However, an individual might want to keep a close eye on their bank statements in the days following an ATM deposit.

Mobile Deposit

Using mobile deposit to cash a check is as simple as taking a photo. Some financial institutions, including SoFi, allow the mobile deposit of checks through their app. Customers take an image of the front of the check, then the back so the financial institution can create a “digital copy” of the check. Instead of endorsing the check with only a signature, customers may be required to write “For Mobile Deposit Only” or a similar message on the back of the check.

Once the bank or financial institution accepts the images, the funds can sometimes immediately become available in the customer’s account. However, depositors should keep the check on hand for up to two weeks, or until the amount is cleared. Otherwise, they could end up over-drafting in the event that the funds are pulled.

Mobile deposits come with many advantages. As long as a phone has charge, checks can be deposited. Additionally, money is almost immediately available in a checking account. However, most mobile deposits only allow for one deposit at a time, and some accounts may have daily or monthly deposit limits. And if the handwriting on the check is unclear, the app might not recognize it.

Mail-In

Another option a depositor might choose is to mail the check into their bank. This will likely take the most time to become available in a bank account, but most banks will offer this option.

To mail a check in for deposit, first, check with your bank to confirm its mailing address. Depending on the size of the bank, there may be multiple addresses where the check can be sent.

Before sending the check to the approved address, depositors should generally endorse the back of their check with their signature. Some financial institutions also recommend including a note that says “For deposit only” with the endorsement. Depositors may also be required to fill out a deposit slip to include with the check. Confirm the specific requirements with your bank or financial institution.

To be safe, people might want to take a picture of the check or make a photocopy of it for proof in case it goes missing in the mail. It may also be beneficial to use certified mail so tracking the check is an option. Mailing a check is a relatively safe manner to deposit a check, however, it will likely take longer than the above alternatives.

Fee-Free Deposit with SoFi

Whether it’s a refund, birthday gift, or payment for watching the neighbor’s cat, checks still fall into our hands every once in a while. While you may not get them frequently, there are numerous ways to deposit them, all with their own unique benefits and drawbacks.

SoFi Money® makes accessing your cash easy with fee-free access to 55,000+ ATMs worldwide and online mobile check depositing. SoFi Money makes it easy to manage your finances with a mobile-first experience where members can access their money anytime, anywhere.

Learn more about how SoFi Money® can simplify your money.



SoFi Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank. SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
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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