Guide to Sweep Accounts

Guide to Sweep Accounts

A sweep account automatically transfers (or “sweeps”) money from one account into a separate account, with the aim of earning a higher rate of return. This is usually done to prevent excess cash from sitting in a low-rate account, but sweep accounts can also be used to pay off loans.

Sweep accounts are set up to make these transfers automatically, usually at the close of each business day.

If you have several different accounts with a particular bank or brokerage, you may be able to take advantage of a sweep account — and it may be a good idea to do so. Here’s what you need to know.

Recommended: How Does a Brokerage Account Work?

What Is a Sweep Account?

A sweep account is typically used when you hold more than one account (e.g. personal checking and savings accounts, or different brokerage or business accounts) at a single institution. To utilize a sweep account, you set a threshold — for example, a certain balance in a checking account — and the sweep account will automatically move funds above that threshold into another account that earns a higher return (typically a money market mutual fund).

This helps to insure that you don’t keep cash parked in low-interest accounts, and that you’re maximizing the total return across all of your accounts.

Ways to Use a Sweep Account

For example, you can keep a predetermined amount in the checking account to pay your bills. Then, at the end of each business day, any excess money is swept into a savings account or money market fund that earns a higher interest rate.

A sweep account may also be used at a brokerage, where your contributions or deposits (as well as dividends or profits from selling securities) are transferred to an investment account like an IRA or a taxable account, at regular intervals.

Benefits of a Sweep Account

Using a sweep account can offer a couple of benefits. It allows you to keep a set amount of money in your checking account, say, to make sure you have sufficient funds to pay your bills without overdrawing the account. It also allows you to take any funds above that amount and put them in an account with a higher return.

You can also set up a sweep account when you open a brokerage account. This can also be valuable because different investments may generate returns or dividends at different times — but the sweep account makes sure the money doesn’t sit in cash, but gets reinvested and put to work.

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How Do Sweep Accounts Work?

One of the golden rules of investing is to maximize your returns, subject to your risk tolerance. A sweep account can be a great tool to help you do that because it helps to overcome inertia — a common behavioral finance hurdle for investors.

Using a sweep account allows you to set an amount of money that you always want to keep in your main account. Then, at the close of each business day, any extra money is swept into a savings, money market fund, or brokerage account that may generate higher returns.

Depending on where you want to sweep the funds, they can remain fairly liquid and accessible or they can be part of a longer-term tax-efficient investing strategy.

You can also set up a sweep account to help pay off a loan or a line of credit — another worthy use of your spare cash.

Beware of fees, though. Some sweep accounts are complimentary, but some aren’t. You don’t want the cost of maintaining a sweep account to eat up the extra interest or returns you hope to earn.

There are no particular tax implications for using a sweep account.

Personal Sweeps vs Business Sweeps

Sweep accounts that are linked to your personal accounts work more or less the same as sweep accounts tied to business accounts. They both enable the swift transfer of funds from a low-interest-bearing account to one that potentially generates some income.

This is important for individual investors. Why leave money idling in a checking or savings account when it could earn a few more dollars?

A sweep account is also important for businesses, particularly small businesses, which have multiple accounts to handle various payments and cash flows. By setting up a sweep system, it’s possible to manage different income streams and get more growth, potentially, by investing the cash.

It’s possible to sweep money back into the main account, if cash is needed to cover expenses, but sometimes this process takes more time. As a business owner, be sure to clarify what the holding periods might be.

Types of Sweep Accounts

There are a number of different types of sweep accounts. Be sure to inquire at your bank or brokerage about the kinds of sweep accounts they offer, and ask about the terms and any fees that might apply.

•   Individual sweep account — Typically used by a brokerage to store funds from a client until they decide how to invest the money.

•   Loan payback sweep account — Instead of sweeping the money into a money market or savings account, you can sweep excess funds to help pay off a loan.

•   Business sweep account — Allows you to sweep excess money from business accounts.

•   External sweep account — Some institutions can sweep cash into deposit accounts externally, which can increase the amount of FDIC insurance coverage ($250,000 per account).

Pros of Sweep Accounts

•   May help you to earn higher interest rates or possibly investment returns.

•   Happens automatically at the close of each business day, so you don’t have to think about it.

•   Some sweep accounts are FDIC-insured (by the Federal Deposit Insurance Corporation), or they may be protected by SIPC (the Securities Investor Protection Corporation).

Cons of Sweep Accounts

•   Your bank or brokerage may charge additional fees for using a sweep account which might cancel out the interest earned.

•   If your money is swept into a brokerage account, it won’t be FDIC-insured (but it could be covered by the SIPC).

The Takeaway

A sweep account can be a great way to maximize the amount of interest that you earn, if you have multiple accounts. When you use a sweep account, you set a threshold amount that you want to keep in a specific account. Then, at the close of each business day, any excess funds are swept into an account that pays a higher interest rate (e.g. a money market fund).

Sweep accounts offer investors an effortless way to leverage their spare cash. Although returns can vary, and with brokerage accounts there is always the risk of loss, sweep accounts provide an important function by putting your cash to work.

If you want your cash to earn more, but you still want easy access to your money, consider SoFi’s mobile banking app. It’s a new all-in-one account with a competitive interest rate. Eligible account holders can earn 1.25% APY when they sign up for direct deposit. And SoFi doesn’t charge management or account fees.

Open a SoFi Checking and Savings today!

FAQ

Is a sweep account good?

Sweep accounts can be useful if you have multiple accounts with different cashflows, and you want to make sure your spare cash is always earning the most it can.

Can you lose money in a sweep account?

Not really. A sweep account generally does not hold money itself; it just sweeps funds from one account to another. So a sweep account itself will not lose money, though it is possible to lose money, depending on where you sweep the money to.

What is the benefit of a sweep account?

The main benefit of a sweep account is the ability to automatically control how much money is in your various accounts. With a sweep account, you can set a minimum threshold for your checking account, for example, and then automatically sweep any excess funds into a money market fund at the end of each day.


SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal. Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
SoFi members with direct deposit can earn up to 1.25% annual percentage yield (APY) interest on all account balances in their Checking and Savings accounts (including Vaults). Members without direct deposit will earn 0.70% APY on all account balances in their Checking and Savings accounts (including Vaults). Interest rates are variable and subject to change at any time. Rate of 1.25% APY is current as of 4/5/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet

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Guide to Vostro Accounts

Guide to Vostro Accounts

Vostro accounts are special types of international accounts that allow one bank to keep another bank’s money on deposit. Money in a vostro account is held in the home currency of the bank where the account is located.

“Vostro” is from the Latin, meaning “yours,” and the term is used to denote the account being held on behalf of the other bank. Vostro accounts can offer greater convenience for domestic banks operating in foreign countries.

What Is a Vostro Account?

What is a vostro account in banking? In simple terms, it’s another bank’s account with a reporting bank in another country. This arrangement can be used in situations where one bank needs a cross-border intermediary to complete international financial transactions. For example, businesses based in the U.S. may use vostro accounts at European banks, to manage global banking activity there, where they have customers or conduct transactions.

A vostro account describes a relationship between two banking institutions; it does not refer to personal accounts.

How a Vostro Account Works

Correspondent banking means formal arrangements or relationships that exist between domestic and foreign banks to facilitate cross-border transactions. The correspondent bank is the financial institution that provides services to another bank.

When vostro accounts are used in global banking operations, one bank acts as the account holder while a second bank is the account manager. The account manager is responsible for managing the account of the correspondent bank as a vostro account.

Vostro accounts work much the same as other bank accounts, in terms of how they’re used and the types of transactions that are completed. For example, vostro accounts enable you to make deposits and withdrawals as well as transfer money from one bank to another. They can also be used to complete foreign exchange transactions.

Recommended: Can I Open a Bank Account Online?

Why Are Vostro Accounts Used?

Vostro accounts are primarily used to make the settlement of international financial transactions easier. A vostro account handled by a correspondent bank acts as a bridge between domestic and foreign banking markets.

Entities that operate in one country can expand their financial footprint to other countries without having to base operations in those countries. They may pay fees to the correspondent bank in exchange for the banking services rendered. But those fees may be more cost-effective than establishing branches in a foreign market.

Vostro Account vs Nostro Account

It’s important to understand that vostro and nostro both describe the same bank account, but from each bank’s perspective. The correspondent bank looks at the money in a vostro account as belonging to the domestic bank. In other words, they see this money as “yours,” hence the use of the vostro label. Again, this money is held in the foreign bank’s home currency.

The domestic bank, meanwhile, views the money as “ours.” In Latin, nostro translates to “ours.” The money in the account is held in a foreign currency (i.e., the currency of the correspondent bank), then converted to local currency once the funds are transferred to the domestic bank.

Essentially, the terms vostro and nostro simply help to distinguish between the two sets of records that must be kept and reconciled by the two banks.

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Vostro Account Example

Here’s an example of how vostro accounts work. Say that a small domestic bank located in Portugal has a number of customers who are living and working in the U.K. temporarily. The Portuguese bank might establish a vostro account with a bank in the U.K. to offer services to those customers.

The U.K. bank would be the correspondent bank in this arrangement. As such, the U.K. bank could accept deposits on behalf of the domestic Portuguese bank into its vostro account. Those deposits would be denominated in British pounds sterling.

Funds, such as deposits, in the vostro account could then be forwarded to the domestic bank in Portugal through the SWIFT system. SWIFT is the Society for Worldwide Interbank Financial Telecommunications, a cooperative that offers safe and secure financial communications to facilitate cross-border transactions.

The Portuguese bank could then convert the deposits to euros, and credit customers’ accounts with the corresponding amount of money, minus any fees charged.

Vostro Account in an Agency Relationship

An agency relationship is a situation in which one entity has legal authority to act on behalf of another. Vostro accounts can be used when an agency relationship exists between a correspondent bank and a domestic bank. In this scenario, the correspondent bank is authorized to act on behalf of the domestic bank.

The correspondent bank has a fiduciary duty to the domestic bank, meaning it is obligated to act in the bank’s best interest. This is similar to how a fiduciary financial advisor must act when managing assets and making investment decisions on behalf of clients.

Vostro Account in an Intermediary Relationship

An intermediary is an individual or entity that acts as a go-between for other entities. In intermediary banking, one financial institution can receive funds from another bank on behalf of a third party at another bank.

In situations where a domestic bank does not have an established account with a foreign bank, a correspondent bank can step in to help complete transactions via a vostro account. For example, if Bank A needs to wire money to Bank B, they can send the funds to the vostro account. The correspondent bank can then forward the funds to Bank B, less any fees it may charge for doing so.

Advantages of a Vostro Account

Whether it makes sense for a bank to open a vostro account can depend on its individual needs. Here are the main advantages of vostro accounts:

•   Establishing a vostro account could make sense for domestic banks that want to be able to complete global banking transactions in other countries, without having to open branches in those locations.

•   Vostro accounts can be used to meet a variety of banking needs, including managing deposits, withdrawals, wire transfers, and foreign exchange transactions.

•   Setting up a vostro account can be a good way to establish positive relationships with international banks.

Disadvantages of a Vostro Account

While nostro accounts can serve a specific purpose for domestic banks, there are some downsides to consider. Here are the main disadvantages of a nostro account:

•   The fees associated with nostro accounts may be steep, meaning domestic banks pay a premium for the convenience they offer.

•   Nostro accounts may not earn interest and if they do, the rate may be well below what more traditional bank accounts offer.

•   Domestic banks may need to meet stringent requirements in order to establish a nostro account.

The Takeaway

A vostro account is held at one bank on behalf of another bank to facilitate international banking transactions. A vostro account handled by a correspondent bank acts as a bridge between domestic and foreign banking markets. This is one way that banks can offer services in other countries, without needing to establish operations abroad.

Vostro is Latin for “yours,” which is why the correspondent bank that holds the funds on behalf of the other institution uses that term. The originating bank calls the account a “nostro” account, meaning “ours,” because they are keeping a record of the transactions conducted via the foreign bank. Vostro and nostro refer to the same account, but different record keeping.

Fortunately, most people don’t have to consider vostro or nostro systems when opening up a personal account. When you open a high yield bank account with SoFi, you’ll just enjoy the convenience of banking easily and securely from your phone or computer — and earning a competitive interest rate of 1.25% APY when you set up direct deposit. Also, SoFi members can access complimentary financial advice from professionals as needed.

FAQ

Who can open a vostro account?

Domestic banks can set up vostro accounts with correspondent banks abroad to facilitate international transactions.

What are vostro payments?

Vostro payments are transactions that occur within a vostro account. Correspondent banks can execute a number of transactions on behalf of domestic banks, including accepting deposits, completing withdrawals, and carrying out foreign exchange transactions.

What is the difference between a nostro and vostro account?

A nostro account and a vostro account are the same account. The correspondent bank views the account as a vostro account while the domestic bank views it as a nostro account. Using the two terms helps to distinguish between the recordkeeping for each.


SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
SoFi members with direct deposit can earn up to 1.25% annual percentage yield (APY) interest on all account balances in their Checking and Savings accounts (including Vaults). Members without direct deposit will earn 0.70% APY on all account balances in their Checking and Savings accounts (including Vaults). Interest rates are variable and subject to change at any time. Rate of 1.25% APY is current as of 4/5/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet

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Money Market Account vs Money Market Fund

Money Market Account vs Money Market Fund: What’s the Difference?

Money market accounts and money market funds may sound like the same thing, but the former is actually a savings account, while the latter is a kind of investment. It’s not a matter of one being better than another; they are simply different financial products, and each can play an important role in a person’s money management.

Here, learn more about them, including:

•   What is a money market account?

•   When to consider a money market account?

•   What is a money market fund?

•   When to consider a money market fund?

•   What are the similarities and differences between these two accounts?

What Is a Money Market Account?

A money market account (or MMA) is a kind of savings account, which is one of the most common types of bank accounts. It allows account holders to earn a higher savings rate compared to a conventional savings account.

Thanks to its higher-than-standard annual percentage yield (APY), it can be a good option to earn interest. Simply put, your money can grow faster than it would at a lower APY account. (Interest earned will be taxable, as with other savings accounts.)

Another benefit is that money market accounts usually have some of the features of a checking account. These may include a debit card and check-writing abilities. It gives you easy access for spending money from your savings account.

This account type, however, typically involves a higher minimum balance compared to a traditional savings account. There may also be a maximum of six withdrawals per month from a money market account, whether by ATM, check, debit card or electronic transfer.

If a money market account does have this kind of restriction, it may not be that problematic. Other types of high-yielding savings accounts can have stipulations as well. For instance, certificates of deposits (or CDs) have maturity dates and will likely enforce early withdrawal penalties if you need access to your cash prior to the account’s maturity. But money market accounts may allow you to access your money regularly without incurring any penalties.

Recommended: What is a Good Interest Rate on Savings?

Are Money Market Accounts Safe?

If you open a money market account with a bank that is insured by the Federal Deposit Insurance Corporation (FDIC), you can consider your money to be safe. FDIC-insured banks give account holders peace of mind because even in the rare event of a bank failure, your money is insured up to $250,000 per depositor, per insured bank. In other words, a money market account is a very safe deposit account.

When to Consider a Money Market Account

Account holders can consider a money market account if they want to improve their savings rate and get higher rates compared to traditional savings accounts. If you have an existing savings account and you want to put your extra cash to work for higher yield, a money market account could be a suitable option. It can be appropriate for short-term savings, though it may not be the best long-term savings account option.

Keep in mind that many money market accounts, unlike some other common types of savings accounts, may have minimum deposit requirements. The higher the yield you’re searching for, typically, the greater the minimum deposit may be. In addition, there may be monthly fees for these accounts.

Money market accounts are also great for account holders who want the flexibility to write checks, withdraw cash, and even a debit card for purchases. These features, which typically come with checking accounts, are some of the upsides of a money market account.

What Is a Money Market Fund?

Also sometimes referred to as money market mutual funds, money market funds are a type of mutual fund. Whichever term is used, these funds allow investors to purchase securities that may provide higher returns compared to interest-yielding bank accounts. There are a variety of types of money market funds, but many popular ones invest in debt securities with short-term maturities. This account is typically known as a lower-risk type of investment since it invests in high-quality, short-term debt securities.

Money market mutual funds are typically offered by brokerage firms and can be used as a savings or investing vehicle. The typical profile of a money market fund account holder is someone who wants to stow their cash away for a short period of time as an alternative to investing in the stock market. These funds tend to experience very low volatility compared to the stock market, which can have higher levels of short-term volatility.

Depending on the specific fund, earnings may or may not be taxable.

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Are Money Market Funds Safe?

Unlike a money market savings account, which is federally insured, money markets mutual funds are not FDIC-insured, though they are subject to the scrutiny of the Security and Exchange Commission. That means you could potentially endure a loss of your funds.

While there isn’t an FDIC safety net, money market funds likely invest in high-quality securities, so the risk of loss tends to be very low. The investments in the fund, for example, may be Treasury bills or certificates of deposit. For these reasons, money market funds have a reputation for being safe investments although you are not protected against losses.

When to Consider a Money Market Fund

You may want to consider opening a money market mutual fund vs. a money market account (or any other vehicle) if you are seeking a low-risk investment with what are probably higher yields compared with savings accounts. More specifically, they may be a good option if you are, say, an investor looking to build up cash holdings through a high-quality investment vehicle that pays dividends reflecting short-term interest rates.

That said, investors must consider the fees attached to money market funds. Many investment vehicles charge a management fee or an expense ratio. This can range considerably, but the average rate last year 0.12%, so if you had $20,000 invested, you’d pay $24. This expense can eat away at your investment returns.

Similarities Between a Money Market Account and Money Market Fund

Money market accounts and money market funds definitely have very similar names and actually overlap in some important aspects. Here are some of the key ways in which a money market account vs. fund are the same:

•   Both options are a great place to keep cash in the short-term.

•   Both options are low-risk and offer yields that help boost your cash position.

•   These financial vehicles offer easy access to your funds.

Differences Between a Money Market Account and Money Market Fund

Now, here are some of the most important differences between a money market account and a money market fund:

•   A money market account is a savings account while a money market fund is an investment vehicle.

•   Money market accounts are insured by the FDIC while money market funds are not federally protected.

•   You open a money market account with a bank or credit union, but you invest in a money market fund via a brokerage firm.

•   Money market accounts may or may not charge account fees; money market funds probably carry maintenance fees.

The Takeaway

Money market accounts and money market funds can be great tools for safely building wealth. However, they are different kinds of products: A money market account is a savings account that earns interest while providing checking-account style access (say, via a debit card). Money market funds are an investment vehicle that puts your money in historically low-risk debt securities. Depending on your money goals and style, either or both can be a positive part of your financial portfolio.

If you’re looking to grow your personal finances day to day, consider using the mobile banking app from SoFi. When you open our Checking and Savings with direct deposit, you can earn 1.25% APY, which is 41 times that national checking account average. What’s more, you won’t pay any of those usual account fees that can eat away at your cash.

Watch your money grow faster with SoFi.

FAQ

Are money market funds safe in a crash?

While not immune to losses, money market funds are relatively safe investments since they invest in high-quality debt securities.

Can you lose money in a money market fund?

Since money market funds are an investment, they are not insured by the FDIC. There is a possibility of loss, but money market funds are known for investing in very low-risk debt securities.

What are money market funds?

Also known as money market mutual funds, money market funds are a low risk investment account. They allow investors to purchase securities that typically provide higher returns than interest-yielding accounts.

Is a money market account considered cash in the bank, like a savings account?

Yes. A money market account is a savings account with some checking account features. Money can be withdrawn at will, but there may be a limit regarding how many of these transactions you can complete in a given month. Check with your financial institution for specific account details.


SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
SoFi members with direct deposit can earn up to 1.25% annual percentage yield (APY) interest on all account balances in their Checking and Savings accounts (including Vaults). Members without direct deposit will earn 0.70% APY on all account balances in their Checking and Savings accounts (including Vaults). Interest rates are variable and subject to change at any time. Rate of 1.25% APY is current as of 4/5/2022. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet
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.
SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal. Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.

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Foreclosure Rates for All 50 States

Foreclosure Rates for All 50 States in May 2022

Amid rising mortgage rates and falling home sales, foreclosures are on the upswing. The number of U.S. properties with foreclosure filings in May was 30,881, according to ATTOM Data Solutions. This is up over 185% from a year ago and makes May the 13th consecutive month showing year-over-year U.S. foreclosure activity increases. And with the National Association of Realtors® reporting that the median home price has reached a record $407,600, home ownership is becoming more difficult for both new buyers as well as existing owners.

It is also worth noting that the rate of foreclosure filings was relatively flat from April to May, up by roughly 1%. The experts at ATTOM say this aligns with the slow, steady climb they expected. Foreclosure activity has begun returning to normal levels as government and industry programs that prevented unnecessary defaults due to the pandemic are ending. However, historically high inflation and its impact on prices for necessities is likely to trigger even more foreclosure activity.

According to ATTOM, year-over-year foreclosure increases will likely continue for the rest of 2022; however, they still expect foreclosures to stay below historic levels at least through the end of the year. Read on for the foreclosure rates in May 2022 – plus the five counties with the highest rates within those states.

50 State Foreclosure Rates

As just noted, foreclosures are up slightly from last month, but significantly compared to last year. Read on for May foreclosure rates for all 50 states — plus the District of Columbia — beginning with the state that had the lowest rate of foreclosure filings per housing unit.

District of Columbia

Ranking in population between Vermont and Alaska, the country’s 49th and 48th least populated states, Washington, D.C. had 29 foreclosures in May. With a total of 350,364 housing units, Washington, D.C.’s foreclosure rate was one in every 12,082 households, putting it in between the states of Idaho (#39) and Tennessee (#38).

50. Montana

The 44th most populated state nabbed the 50th spot. With four foreclosures out of 514,803 housing units, its foreclosure rate was one in every 128,701 homes. Only two counties saw foreclosures in May. The counties with the most foreclosures per housing unit were (from highest to lowest): Cascade and Yellowstone.

49. South Dakota

South Dakota slipped out of the 50th spot. Having 389,921 total housing units, the fifth least populated state had a foreclosure rate of one in every 48,740 households and saw eight foreclosures in May. Only three counties saw foreclosures. The counties with the most foreclosures per housing unit were (from highest to lowest): Codington, Minnehaha, and Lincoln.

48. Vermont

In 49th place for population, Vermont claimed the 48th spot for its foreclosure rate. Of Vermont’s 334,318 housing units, seven homes went into foreclosure at a rate of one in every 47,760 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Essex, Franklin, Orleans, Windham, and Washington.

47. North Dakota

North Dakota’s foreclosure rate was one in every 19,507 homes. That puts the fourth least populated state – with a total of 370,642 housing units, of which 19 were in foreclosure — in 47th place once again. The counties with the most foreclosures per housing unit were (from highest to lowest): Ward, Morton, Williams, Cass, and Burleigh.

46. Kansas

Kansas took the 46th spot. With 1,275,689 homes and a total of 70 housing units going into foreclosure, the 35th most-populated state’s foreclosure rate was one in every 18,224 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Meade, Scott, Butler, Kingman, and Montgomery.

45. Kentucky

With a total 1,994,323 housing units, Kentucky saw 112 homes go into foreclosure. That put the foreclosure rate for the 26th most populated state at one in every 17,806 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Carroll, Garrard, Henderson, Greenup, and Campbell.

44. Alaska

Alaska saw 20 foreclosures, making the foreclosure rate one in every 15,876 homes. That caused the third least populated state, with a total of 317,524 housing units, to take the 44th spot. Only two counties saw foreclosures in May (from highest to lowest): Anchorage and Matanuska-Susitna.

43. Washington

Ranked 13th for most populated state, Washington came in 43rd place for highest foreclosure rate. It has 3,202,241 housing units, of which 202 went into foreclosure, making the state’s foreclosure rate one in every 15,853 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Island, Clallam, Pacific, Lewis, and Grant.

42. West Virginia

The 39th most populated state, West Virginia, ranked 42nd. It has 855,635 homes, of which 56 went into foreclosure. That means the foreclosure rate was one in every 15,279 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Wetzel, Raleigh, Cabell, Kanawha, and Barbour.

41. Arkansas

Ranked 33rd for most populated state, Arkansas once again took the 41st spot for highest foreclosure rate. It has 1,365,265 housing units, of which 90 went into foreclosure, making the state’s latest foreclosure rate one in every 15,170 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Woodruff, Crittenden, Mississippi, Saint Francis, and Chicot.

Recommended: Tips on Buying a Foreclosed Home

40. Oregon

The 27th most populated state ranked 40th for highest foreclosure rate. Of Oregon’s 1,813,747 homes, 137 went into foreclosure, making for a foreclosure rate of one in every 13,239 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Wallowa, Umatilla, Columbia, Clackamas, and Multnomah.

39. Idaho

The 38th most populated state, Idaho had 60 homes go into foreclosure. With 751,859 total housing units, the state’s foreclosure rate was one in every 12,531 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Boundary, Power, Jefferson, Lemhi, and Payette.

38. Tennessee

In Tennessee, the 16th most populated state, there were 271 foreclosures out of 3,031,605 housing units. That put the foreclosure rate at one in every 11,187 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Houston, Decatur, Henderson, Hardeman, and Moore.

37. Wisconsin

With 262 foreclosures out of 2,727,726 total housing units, Wisconsin, the 20th most populated state, had a foreclosure rate of one in every 10,411 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Juneau, Marquette, Dodge, Marathon, and Sauk.

36. Massachusetts

The 15th most populated state ranked 36th for highest foreclosure rate. Of Massachusetts’ 2,998,537 housing units, 304 went into foreclosure, making for a foreclosure rate of one in every 9,864 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Hampden, Franklin, Plymouth, Worcester, and Berkshire.

35. Mississippi

In Mississippi, the 34th most populated state, there were 139 foreclosures out of 1,319,945 housing units. That put the foreclosure rate at one in every 9,496 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Wayne, Forrest, Warren, Leake, and Tunica.

34. New Hampshire

The 41st most populated state, New Hampshire, ranked 34th for highest foreclosure rate. Of 638,795 homes, 77 went into foreclosure, making for a foreclosure rate of one in every 8,296 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Sullivan, Cheshire, Rockingham, Grafton, Coos, and Merrimack.

33. Virginia

The 12th most populated state ranked 33rd for highest foreclosure rate, with 453 homes going into foreclosure. Having 3,618,247 total housing units, the state saw a foreclosure rate of one in every 7,987 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Colonial Heights City, Covington City, Martinsville City, Sussex, and Portsmouth City.

32. Hawaii

The 40th most populated state, Hawaii came in 32nd for highest foreclosure rate. Of 561,066 homes, 72 went into foreclosure, making for a foreclosure rate of one in every 7,793 households. Only three counties in the state had foreclosures. They were (from highest to lowest): Hawaii, Maui, and Honolulu.

31. Rhode Island

The eighth least populated state took the 31st spot for highest foreclosure rate. A total of 63 homes went into foreclosure out of 483,474 total housing units, making the foreclosure rate for the Ocean State one in every 7,674 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Providence, Kent, Bristol, Washington, and Newport.

Recommended: What Is a Short Sale?

30. Colorado

The 21st most populated state ranked 30th for highest foreclosure rate. Of Colorado’s 2,491,404 housing units, 381 went into foreclosure, making for a foreclosure rate of one in every 6,539 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Pueblo, Lincoln, Logan, Adams, and Weld.

29. Arizona

In Arizona, the 14th most populated state, there were 483 foreclosures out of 3,082,000 housing units. That put the foreclosure rate at one in every 6,381 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Cochise, Yuma, Pinal, Greenlee, and Graham.

28. Wyoming

Ranked the least populated state in the country, Wyoming claimed the 28th spot for highest foreclosure rate. With 271,887 housing units, of which 43 went into foreclosure, the state’s foreclosure rate was one in every 6,323 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Campbell, Weston, Sweetwater, Carbon, and Uinta.

27. Pennsylvania

Pennsylvania has the 27th highest foreclosure rate. The fifth most populated state had a total of 953 housing units out of 5,742,828 homes go into foreclosure, making the state’s foreclosure rate one in every 6,026 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Cameron, Fayette, Delaware, Philadelphia, and Fulton.

26. Nebraska

Ranked 37th for population, Nebraska claimed the 26th spot with a foreclosure rate of one in every 5,946 homes. With a total 844,278 housing units, the state had 142 foreclosure filings. The counties with the most foreclosures per housing unit were (from highest to lowest): Red Willow, Deuel, Colfax, Frontier, and Clay.

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25. New Mexico

The 36th most populated state took the 25th spot for highest foreclosure rate. Of its 940,859 homes, 162 went into foreclosure, making for a foreclosure rate of one in every 5,808 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Chaves, Valencia, Eddy, Otero, and Socorro.

24. Louisiana

Ranked 25th for population, Louisiana took the 24th spot, with 357 homes out of a total of 2,073,200 housing units going into foreclosure. That means Louisiana had a foreclosure rate of one in every 5,807 households. The counties with the most foreclosures per housing unit were (from highest to lowest): West Baton Rouge, Livingston, Iberville, Plaquemines, and Ascension.

23. New York

With 1,564 out of a total 8,488,066 housing units going into foreclosure, the fourth most populated state took the 23rd spot. New York’s foreclosure rate was one in every 5,427 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Suffolk, Nassau, Herkimer, Orleans, and Putnam.

22. Texas

The Lone Star State saw 2,152 foreclosures. With a foreclosure rate of one in every 5,385 households, this put the second most populous state with 11,589,324 housing units into the 22nd spot. The counties with the most foreclosures per housing unit were (from highest to lowest): Ector, Liberty, Scurry, San Patricio, and Wood.

21. Alabama

Ranked 24th for most populated, Alabama came in 21st for highest foreclosure rate – the same ranking it held in April. Of its 2,288,330 homes, 425 went into foreclosure, making for a foreclosure rate of one in every 5,384 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Lowndes, Hale, Wilcox, Jefferson, and Morgan.

Recommended: 4 Signs You May Be Ready to Buy

20. Minnesota

Ranked 22nd for most populated state, Minnesota took the 20th spot for highest foreclosure rate. It has 2,485,558 housing units, of which 467 went into foreclosure, making the state’s foreclosure rate one in every 5,322 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Wadena, Isanti, Faribault, Morrison, and Mower.

19. Missouri

The 19th most populated state, Missouri came in 19th for highest rate of foreclosures. Of its 2,786,621 homes, 524 went into foreclosure, making for a foreclosure rate of one in every 5,318 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Atchison, Stoddard, Scott, Clinton, and Buchanan.

18. Utah

Utah placed 18th for highest foreclosure rate. Of the Beehive State’s 1,151,414 housing units, 221 homes went into foreclosure, making the 30th most-populated state’s foreclosure rate one in every 5,210 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Juab, Tooele, Carbon, Wasatch, and Uintah.

17. California

The country’s most populated state ranked 17th for highest foreclosure rate. Of its 14,392,140 housing units, 3,126 went into foreclosure, making California’s foreclosure rate one in every 4,604 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Lake, Trinity, Plumas, Kern, and San Bernardino.

16. Oklahoma

Oklahoma claimed the ninth spot. With housing units totaling 1,746,807, the 28th most populated state saw 392 homes go into foreclosure at a rate of one in every 4,456 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Greer, Jackson, Canadian, Beckham, and Kingfisher.

15. Maine

Ranked as the ninth least populated state, Maine placed 15th for highest foreclosure rate. With a total of 739,072 housing units, the Pine Tree State saw 168 foreclosures for a foreclosure rate of one in every 4,399 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Androscoggin, Washington, Oxford, Waldo, and Penobscot.

14. Nevada

Ranking 32nd in population, Nevada took the 14th spot for foreclosure rate. With one in every 4,313 homes going into foreclosure, and a total of 1,281,018 housing units, the state had 297 foreclosure filings. The counties with the most foreclosures per housing unit were (from highest to lowest): Lincoln, Humboldt, Mineral, Clark, and Nye.

13. Iowa

Iowa had the 13th highest foreclosure rate. With 341 housing units out of 1,412,789 homes going into foreclosure, the 31st most populated state’s foreclosure rate was one in every 4,143 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Decatur, Adair, Pottawattamie, Union, and Jones.

12. Georgia

The eighth most populated state, Georgia ranked 12th for highest foreclosure rate. Of its 4,410,956 homes, 1,066 were foreclosed on. That put the state’s foreclosure rate at one in every 4,138 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Butts, Bibb, Seminole, Crawford, and Bleckley.

11. Michigan

Ranking 10th in population, Michigan took the 11th spot with a foreclosure rate of one in every 3,936 homes. With a total of 4,570,173 housing units, the state had 1,161 foreclosure filings. The counties with the most foreclosures per housing unit were (from highest to lowest): Shiawassee, Genesee, Saint Joseph, Calhoun, and Osceola.

Recommended: Your 2022 Guide to All Things Home

10. Indiana

The 17th largest state by population, Indiana took the 10th spot with a foreclosure rate of one in every 3,877 homes. Of its 2,923,175 homes, 754 homes were foreclosed on in May. The counties with the most foreclosures per housing unit were (from highest to lowest): Howard, Grant, Clinton, Madison, and Lake.

9. Connecticut

With 399 of its 1,530,197 homes going into foreclosure, Connecticut had the ninth highest foreclosure rate at one in every 3,835 households. In the 29th most populated state, the counties that had the most foreclosures per housing unit were (from highest to lowest): Windham, Litchfield, New London, and New Haven, and Hartford.

8. North Carolina

The ninth most populated state took eighth place for highest foreclosure rate. Out of 4,708,710 homes, 1,258 went into foreclosure. That put the Tar Heel State’s foreclosure rate at one in every 3,743 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Gates, Onslow, Scotland, Jones, and Vance.

7. Maryland

Ranked 18th for most populated state, Maryland took seventh place for highest foreclosure rate. With a total of 2,530,844 housing units, of which 815 housing units went into foreclosure, the state’s foreclosure rate was one in every 3,105 households. The counties with the most foreclosures per housing unit were (from highest to lowest): Charles, Kent, Prince George’s County, Garrett, Caroline, and Washington.

6. South Carolina

With one in every 3,045 homes going into foreclosure, South Carolina took the sixth spot. Ranked 23rd for population, South Carolina has 2,344,963 housing units and saw 770 foreclosure filings. The counties with the most foreclosures per housing unit were (from highest to lowest): Darlington, Lexington, Mccormick, Dorchester, and Laurens.

5. Florida

The third most populated state in the country has a total of 9,865,350 housing units, of which 3,538 went into foreclosure. The state’s fifth highest foreclosure rate is one in every 2,788 homes. The counties with the most foreclosures per housing unit were (from highest to lowest): Baker, Osceola, Okeechobee, Duval, and Clay.

4. Ohio

Ohio claimed the fourth spot, with a foreclosure rate of one in every 2,667 homes. With a total of 5,242,524 housing units, the seventh most populated state had a total of 1,966 filings. The counties with the most foreclosures per housing unit were (from highest to lowest): Cuyahoga, Huron, Darke, Preble, and Lake.

3. Delaware

The sixth least populated state in the country, Delaware entered the top three, taking the third spot for highest foreclosure rate. With one in every 2,426 homes going into foreclosure and a total 448,735 housing units, Delaware saw a total of 185 foreclosure filings. With only three counties in the state, the most foreclosures per housing unit were in (from highest to lowest): Kent, New Castle, and Sussex.

2. New Jersey

With a foreclosure rate of one in every 2,346 homes, New Jersey held on to second place. The 11th most populated state has 3,761,229 housing units, of which 1,603 went into foreclosure. The counties with the most foreclosures per housing unit were (from highest to lowest): Cumberland, Salem, Sussex, Warren, and Camden.

1. Illinois

Illinois took the number one spot again in May. Of its 5,426,429 homes, 2,000 went into foreclosure, making the sixth most populated state’s foreclosure rate one in every 2,713. The counties with the most foreclosures per housing unit were (from highest to lowest): Kendall, Whiteside, Ford, Kankakee, and Rock Island.

The Takeaway

Of all 50 states, Florida had the most foreclosure filings (3,538); Montana had the least (4). As for the states with the highest foreclosure rates, Illinois, New Jersey, and Delaware took the top three spots, respectively.

Three regions – The Great Lakes, the Mideast and Southeast – tied for having the largest presence among the 10 states that ranked the highest for foreclosure rates. The states in the Great Lakes region were (from highest to lowest): Illinois, Ohio, and Indiana. The states in the Mideast region were (from highest to lowest): New Jersey, Delaware, and Maryland. The states in the Southeast region were (from highest to lowest): Florida, South Carolina, and North Carolina.

The Plains region and the Southeast region tied for the largest presence among the 10 states that ranked the lowest for foreclosure rates. The states in the Plains region were (from highest to lowest): Kansas, North Dakota, and South Dakota. The states in the Southeast region were (from highest to lowest): Arkansas, West Virginia, and Kentucky.

Discover more about home loans at SoFi.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC), and by SoFi Lending Corp. NMLS #1121636 , a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law (License # 6054612) and by other states. For additional product-specific legal and licensing information, see SoFi.com/legal.

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Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

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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College Graduation Rates: How Many People Graduate College?

College Graduation Rates: How Many People Graduate College?

It may seem to you that droves of college students collect diplomas every year, but how many students actually start college and graduate — at the same college?

The most recent data from the U.S. Department of Education National Center for Education Statistics (NCES) reported in 2019 that the overall six-year graduation rate for bachelor’s degree-seeking full-time undergraduate students at four-year degree-granting institutions in fall 2013 was 63%.

Graduation rates refer to the percentage of a school’s students who complete their program within 150% of the published time for the program. It’s important not to confuse graduation rates with retention rates, which refer to the percentage of students who continue at a particular school the next year. In other words, the retention rate is the percentage of students who finish their first year and return for a second year.

We’ll walk through what the college graduation rate can tell you about a school, why it’s important, as well as outline a good graduation rate. We’ll also break down graduation rates by state and colleges (from lowest to highest), discuss some reasons that students might not graduate, and how to overcome some of these obstacles.

What Does the College Graduation Rate Tell Us?

As a prospective student, understanding the difference between graduation rates and retention rates, you are better prepared to compare these percentages against the schools on your list. Comparing the graduation rate of your first-choice college gives a definite indication of whether the schools fall above or below the average. It’s a quick way to find out how many students finish their degrees “on time” and also tells you the type of institutions that deliver the highest graduation rates. Based on available statistics, private, nonprofit institutions graduate students at a higher rate.

Why Is Knowing the Graduation Rate Important When Selecting a College?

When you’re researching colleges, many different things matter to different students. Athletes may want to know more about their individual athletic programs. English majors may want to know how many professors are published writers.

However, among all the different factors you can research, graduation rate remains one of the most important for all prospective students to understand.

Why? The graduation rate serves as a gauge for many things — student satisfaction and happiness in addition to indicating how many students graduate in a timely manner. However, it’s not the only metric you want to consider when you choose a college. Other priority considerations include teacher-to-student ratio, retention rate, loan default rates, and selectivity.

Two trusted websites compile information on graduation rates: College Navigator and College Results Online.

•  College Navigator : College Navigator compiles information from about 7,000 colleges and universities in the United States. College Navigator breaks down both retention rates and graduation rates on its site, and you can also access these rates by race/ethnicity and gender.

•  College Results Online : College Results Online also lists both rates and retention rates for institutions. You can also cross-index certain peer institutions against each other to compare graduation and retention rates.

What Is a Good Graduation Rate for a College?

The best graduation rates in the U.S. are from schools that have a graduation rate in the 90th percentile, which many of the Ivy League schools have. For example, let’s take a look at a few six-year graduation rates based on College Navigator data:

•  Harvard University: 98%

•  Yale University: 96%

•  Cornell University: 95%

However, you can still find high graduation rates within highly selective liberal arts colleges:

•  Amherst College: 95%

•  Davidson College: 93%

•  Claremont McKenna College: 92%

It’s important to remember that since these highly selective schools only admit students with top-tier credentials, they naturally attract some of the most driven students on the planet, resulting in a high graduation rate.

So, what is a good graduation rate for a college? Does this mean that a college in the 80th or even 70th percentile isn’t a good school or that it isn’t the right school for you? Absolutely not. As mentioned before, other factors play into the mix as well, based on your personal preferences and interests. The right fit for you may be a school with a 70% graduation rate. The better the fit, the more likely you will graduate on time.

Lowest Graduation Rate College in the United States

Unfortunately, the college with the lowest graduation rate in the U.S. isn’t a highly popularized statistic. However, if, during your own research, you see a school that graduates at or below 60%, you may want to probe your admissions counselor at the college for the reasons why rates are so low and find out more about how the college plans to improve.

Average College Graduation Rate in the United States

When digging a bit more into the 2019 NCES report, it states that the average college graduation rate (more specifically, the six-year graduation rate) was:

•  62% at public institutions

•  68% at private nonprofit institutions

•  26% at private for-profit institutions

Overall, 60% of males and 66% of females graduate within six years, and females had a higher six-year graduation rate at the following types of institutions:

•  Public institutions (65% female vs. 59% male)

•  Private nonprofit institutions (71% female vs. 64% male)

However, at private for-profit institutions, males had a higher six-year graduation rate than females (28% vs. 25%).

How does the U.S. Department of Education arrive at this data? The NCES uses Integrated Postsecondary Education Data System (IPEDS), a system of interrelated surveys conducted annually by NCES through institutions.

The IPEDS graduation rate is calculated like this:

Graduation Rate =
Number of students who completed their program within a specific percentage of normal time to completion / Number of students in the entering cohort

College Graduation Rates by State

Here are the college graduation rates by state, according to World Population Review :

State

College Completion (or Higher)

Massachusetts 44%
Colorado 41%
New Jersey 40%
Maryland 40%
Virginia 39%
Connecticut 39%
Vermont 38%
New York 37%
New Hampshire 37%
Washington 36%
Minnesota 36%
Illinois 35%
Utah 34%
Rhode Island 34%
Oregon 34%
California 34%
Kansas 33%
Hawaii 33%
Nebraska 32%
Montana 32%
Maine 32%
Delaware 32%
Pennsylvania 31%
North Carolina 31%
Georgia 31%
Wisconsin 30%
Texas 30%
North Dakota 30%
Florida 30%
Arizona 30%
Alaska 30%
South Dakota 29%
Missouri 29%
Michigan 29%
Iowa 29%
South Carolina 28%
Ohio 28%
Idaho 28%
Wyoming 27%
Tennessee 27%
New Mexico 27%
Indiana 27%
Oklahoma 26%
Alabama 26%
Nevada 25%
Louisiana 24%
Kentucky 24%
Arkansas 23%
Mississippi 22%
West Virginia 21%

Number of College Graduates in the 21st Century

In the past 20 or so years, the number of college graduates has increased. According to information published by Education Data , in 2001 approximately 1.24 million students graduated from college with a bachelor’s degree. In 2018, that number reached 1.98 million.

Reasons Why College Students Don’t Graduate

When looking at graduation rates, let’s turn the tables a bit and take a look at a few reasons why students might not graduate. Depending on the student, these could include things like the high cost of tuition, trying to balance work and school, or poor academic performance.

Cost

The increasing price tags aren’t a new reason that students leave school. When it gets too expensive, they may feel they have no way out. According to the National Association of School and Financial Aid Administrators (NASFAA) , an analysis of 2,000 colleges and 10 theoretical students found that 48% of families with annual incomes above $160,000 could afford the colleges on the list. Those with a family income over $100,000 could afford more than one-third of the colleges. Finally, the theoretical students from lower-income backgrounds could only afford up to 5% percent of the colleges.

Recommended: What is the Average Cost of College Tuition? 

Balancing Work and School

Many undergraduates work part-time jobs to help pay their way through college. Students often get stuck in the quagmire of trying to keep up with both work and school, which can be a challenging balancing act. Many seasonal jobs for college students exist, which means you might be able to get a job during the summer instead of working during the school year.

Transferring

Transferring colleges sometimes means some credits get lost in translation. When transfer students are forced to retake classes, it not only costs more financially, but they also have to spend extra time pursuing their degree. This sometimes means that students often face trouble getting enough credits to graduate.

Poor Grades

Sometimes, students simply can’t make the grades. Even if it happens during just one semester, it can cause students to shy away from college altogether. In particular, first-generation college students, those who are low-income students, as well as minority students, are vulnerable and question whether they really belong in college.

Being Denied a Student Loan

Being denied a student loan or other types of financial aid can be a huge deterrent to continuing on in college. However, remember that there are ways around it — including seeking a loan through a different lender.

Recommended: I Didn’t Get Enough Financial Aid: Now What?

Overcoming the Obstacles as a College Student

What can you do to overcome the obstacles and successfully graduate from college? Let’s find out. We’ll list a few things you can do to help you stay the course:

•  Get organized with everything — school work, athletics, homework, and more.

•  Get support from family and friends.

•  Create healthy habits. Eat nutrient-dense meals, get enough sleep, and stay healthy.

•  Carefully consider the best ways to pay for college and focus on managing your money.

•  Get to know professors and academic support professionals at your college or university.

•  Work on your time management skills so you have the time you need for important assignments.

•  Take care of your mental health. If you are struggling to balance the many priorities of being a college student, reach out to family or friends for help. If you need additional support, contact your campus’ health and wellness center to see what counseling resources are available to students.

•  Investigate transfer options early on if you attend a community college so you know how to make the transition smoother.

Recommended: FAFSA Guide

Ways to Fund College

Making sure you have a concrete plan to pay for college is one of the best ways to make sure you successfully graduate. Let’s walk through a few tips for making sure you have all your ducks in a row.

•  Fill out the Free Application for Federal Student Aid (FAFSA®).
This is the first step in applying for federal financial aid, including grants, scholarships, and low-interest-rate federal student loan options.

•  Search for scholarships. Ask the college or university you plan to attend about scholarships they offer. Don’t forget to search around in your community as well.

•  Get a work-study job. If you qualify for work-study this can be an opportunity to earn a bit of money for college expenses. This is a federal program in which you earn money and your school pays you for that work via a check, usually every week, every two weeks, or every month.

•  Look into private loans. If you need to fill the gap between scholarships, grants, and federal student loans, look into private loans to help you make it across the graduation stage. These may lack the borrower protections afforded to federal student loans (like deferment options or income-driven repayment plans) and are therefore generally only considered after other financing sources have been exhausted.

Recommended: The Differences Between Grants, Scholarships, and Loans

The Takeaway

A school’s graduation rate is a reflection of the percentage of students that graduate within 150% of the published time frame. This is different from a school’s retention rate which is a measurement of how many students remain at a school from year to year. A school’s graduation rate can be an informative benchmark as you evaluate and compare schools during the application process.

If you are a current college student, you can do a lot to make sure you stay the course, including taking care of yourself, using scholarships and grants to your advantage, getting academic help, and making sure (if needed) that you have the right private loans to make it all happen.

Ready to find private student loans to make sure you get to throw your cap at graduation? Visit SoFi and learn more about private student loans and the low rates we have to offer. Our friendly experts can also help you decide your best course of action.


Photo credit: iStock/digitalskillet

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC), and by SoFi Lending Corp. NMLS #1121636 , a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law (License # 6054612) and by other states. 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.

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.
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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