Claiming unclaimed money from a deceased relative can be fairly straightforward — or more complicated — depending on state inheritance laws and the amount of supporting evidence to back the claim.
When a person dies without a will or other legally binding document outlining the distribution of their financial assets, that money may become “unclaimed” after a designated period of time. Unclaimed money is often turned over to the state in which that person lived. However, relatives can claim that money through the appropriate channels.
What Happens to Unclaimed Money From Deceased Relatives?
When no direct heir is identified, unclaimed money and assets from a deceased relative go to the state government. How soon the money goes to the state after the person dies will vary according to that state’s inheritance laws.
Once unclaimed money ends up in the hands of the government, the state authority will try to identify any relatives who are entitled to claim the money. Typically, a description of the assets and the name of the deceased are posted to one or several public and searchable websites. Some examples of these websites are:
• Unclaimed.org
• MissingMoney.com
• TreasuryDirect.gov
• FDIC.gov and NCUA.gov
• PBGC.gov
• UnclaimedRetirementBenefits.com
• ACLI.com
Can You Claim Unclaimed Money From a Deceased Relative?
If you believe you are entitled to an unclaimed financial asset of a deceased relative, you can file a claim with the state government or the business that is holding it. If you are specifically named as a beneficiary in the deceased relative’s will, the claim process can be relatively smooth. If not, you may still be able to claim that money, but it will require supporting documentation or potentially a decision from a presiding probate court judge to ultimately verify the claim.
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If you’re planning to claim unclaimed money, the process will vary depending on the state you’re filing in and the asset in question. In some cases, you can file a claim online, provide proof of identity and any documented proof of ownership, and wait for your claim to be processed. Once the claim is approved, you receive the money. A budget planner can help you make the most of any unclaimed money you receive and also provide valuable financial insights.
In situations where the deceased did not have a will or an executor for the will, a probate court will typically appoint someone to oversee any ownership claims and asset transfers. If this is the case, you may have to wait longer or provide more documented proof in court before your claim is approved.
Once your claim is approved and you receive the money owed to you, you may be required to pay inheritance tax. Again, this depends on which state the deceased lived in. However, spouses are exempt from paying inheritance tax in every state. It’s a good idea to consult with a financial advisor to guide you through the process.
Claiming unclaimed money from a deceased relative is possible. However, the complexity of the process will ultimately depend on the circumstances and the state in which the deceased lived. If you believe you’re entitled to claim unclaimed money from a deceased relative, leveraging an estate planning attorney or a financial advisor can help demystify the process and help you with your claim. Bottom line: It’s never too early to start thinking about your own estate planning needs and long-term financial goals.
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FAQ
How do you know if a deceased loved one has left you money?
If a deceased relative has named you as a beneficiary in their will or another legally binding contract, the executor of that document or a probate court will likely reach out to inform you of any unclaimed money you are entitled to. If not, you can still check to see if you are entitled to money by searching a public unclaimed-money database online or by reaching out to the deceased relative’s financial advisor or estate planner.
How do I find assets of a deceased person?
To find the assets of a deceased relative, try looking through their personal property or reaching out to relatives and other friends with knowledge of their financial affairs. You can also inquire with the local probate court or state government agencies.
What happens when you inherit money?
Depending on where you inherit money, you may be required to pay inheritance tax. Once you pay this, you can do as you please with the money.
Who can claim unclaimed money from deceased relatives?
Usually, estate executors and legal heirs can claim unclaimed money from deceased relatives. In cases where the deceased did not appoint an executor, a probate court will appoint someone to oversee the process.
What happens to an unclaimed inheritance?
If an inheritance is unclaimed, the money or assets go to the state, which will try to find any relatives entitled to make a claim. Each state has a process by which unclaimed property can be identified and reclaimed; these returned assets are worth billions of dollars each year.
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Certificate programs offer a flexible, focused, and often more affordable way for individuals to gain specialized skills and knowledge without committing to a full degree program. Whether you’re a student looking to supplement your education, a working professional seeking career advancement, or someone wanting to switch industries, certificate programs provide valuable credentials in a shorter time frame than a degree.
Keep reading to learn what certificate programs are, their benefits, and how to choose the right one to meet your personal and professional goals.
• Certificate programs teach targeted skills and can often be completed in less time than a degree.
• A certificate program is different from a professional certification, which may require an exam and ongoing renewal.
• Program length and cost vary by field, school, and whether the program is online or in person.
• Accreditation and licensing requirements can affect whether a program meets career goals.
• Students can pay for certificate programs with savings, aid (if eligible), or private student loans.
What Is a Certificate Program?
Certificate programs are courses or vocational training provided by colleges or professional associations that last less than two years, and they often last less than one year. They can prepare you for work in trade, technical, and vocational careers.
Trade schools prepare you for jobs such as a welder, electrician, and cosmetologist. Vocational schools focus on in-demand jobs that can be trained for in two years or less, such as a paralegal or a dental assistant. Technical schools teach skills for one trade and typically involve hands-on, practical training. Programs include HVAC, auto repair, and some nursing certifications.
Professional certifications are typically earned by passing an exam from a third-party professional group (and may need to be renewed). Licenses are awarded by government agencies and may require meeting certain requirements to work in a specific occupation. Certificates can also be career training programs for bachelor’s degree holders to expand their expertise without earning a degree. For instance, a marketing professional can enroll in a social media marketing course, a niche area of marketing, to broaden their skill set.
Certificate Programs vs College Degrees
Certificate programs and college degrees differ in curriculum, program length, cost, and program outcome.
Curriculum: Colleges integrate general education courses with specialized study, whereas certificates teach only the skills for a trade or subject and typically have no education requirements
Length: Certificate programs are shorter. College degrees require a minimum of two to four years for full-time students. Certification can sometimes take just one month but is typically three to four months for one-off courses. Training programs for certifications are usually one to two years.
Cost: A college education has a substantial price tag. The average college tuition and fees for 2025-2026 were $11,950 for full-time in-state students at public four-year colleges and $45,000 at private nonprofit four-year institutions, according to College Board. Certificate program costs vary, but they generally have lower program costs than degrees.
Program outcome: Program outcomes differ. Certificates train students for a specific skill and immediate placement in careers with those skills, while college programs provide an extensive and expansive education that can provide opportunities in multiple disciplines within a field. For instance, someone who earns a bachelor’s in economics can enter finance analytics, business consulting, and various disciplines in finance-related fields.
Certificate programs can range from a few weeks to two years. The University of San Diego’s paralegal program can take four to eight months to complete, for example. A cosmetology program at Fullerton College in California requires 1,600 hours of instruction, so the program length depends on you and the field you are planning on studying.
Types of Certificate Programs
The two most common types of certificate programs are undergraduate and graduate. They follow compulsory education, and outside of a degree, provide education needed for specific fields such as business, administration, and healthcare.
Undergraduate
Undergraduate programs build technical skills and subject mastery via career training programs or one-off courses. Enrollees usually must have a high school diploma for certain courses. They can often be completed in one academic year or less.
Some programs, such as cosmetology, can lead to state licensure at the end of the program. Ensure your program is formally accredited by the state or professional organization and will prepare you for required licensing exams.
Graduate
Graduate courses enhance a college degree. Students test and earn a certificate to satisfy course completion without earning a degree. Some courses require prior knowledge of a topic. For example, students employed in computer engineering can earn a certificate in a new computer language.
They are offered by universities and colleges, and programs are credit-based. Some programs’ credits can be transferred to other colleges.
Online Certificate Programs
Online certificate programs offer multiple advantages, with convenience being at the top of the list. The online universe has a library of extensive certificate programs, and prestigious courses are accessible to everyday learners. For example, Coursera and edX offer online courses from university partners. Also, MOOCs (massive open online courses) offer free and paid programs from universities, nonprofits, and for-profit companies.
Online courses also offer flexibility. Asynchronous courses, those without a specific meeting time, allow students to take a course at their own pace. You can access pre-recorded content anytime and follow class discussion on comment boards. On the other hand, synchronous online programs are more restricted to a schedule. They work like in-person courses where students attend live online lectures, meet due dates, and engage in online class activities.
Finally, online courses may be less expensive than in-person ones. Cutting the commute and certain campus fees can result in lower overall prices than in-person learning.
Not all certificate programs offer online learning. Hands-on vocations, such as landscaping, plumbing, and electrical engineering, often require apprenticeships to demonstrate material understanding and to meet minimum requirements.
Is a Certificate Program Right for You?
Certificate programs might be a good fit if you want to try a trade career. They are a lower-cost way to test out vocations than a degree program. And college credits from some courses can be put toward a formal college degree if you decide to pursue a bachelor’s.
If you want to learn a new skill for work, graduate certificate courses are one alternative to a master’s or professional degree. For instance, some companies will pay employees to get a Project Management Professional (PMP) certificate to better equip their employees and improve workforce productivity.
Certificate programs are a great way to kick-start a career change. Some popular certificate programs for career changes include business analysis, law, human resources, and accounting. They are offered by professional organizations, such as the American Institute of Certified Public Accountants for accounting.
Program Type
Certificate Programs
Certification Programs
College Degrees
What do you gain?
Add skills with specific courses for your current job
Fast-track into trade careers or career advancement
Gain career opportunities not limited to trade vocations
How long do you study?
Programs last a few weeks to a few months
Programs last a few months and up to two years
Programs for full-time students last two to four years
How many credits are programs?
15-30 credits, though requirements may vary
4-30 credits, requirements may vary
60 for associate, 120-130 for bachelor’s, and 30-60 credits for graduate programs
This program is good for…
Kick-starting a career change; adding skills to your existing job
Starting a new career (usually in trade vocations); advancing careers into management
Starting a new career or changing a career
Benefits of a Certificate Program
Certificates can propel students directly into the workforce with in-demand skills. Future success in earnings depends on the trade field you choose. For instance, the median annual earnings for a dental hygienist were $94,260 in 2024, according to the Bureau of Labor Statistics (BLS). In comparison, the median wage for cosmetologists was $35,420 in 2024, according to the BLS.
Certificates can also complement a college degree or help a professional acquire skills to advance upward within a field. A marketing professional can expand their skillset with niche training. And it pays to learn. In Coursera’s 2025 Learner Outcomes Report, 91% of learners reported at least one positive career outcome after completing a course or program.
Certificate programs can also save time and money. Programs are fewer credits than full degrees and are shorter in length, so cost substantially less than a degree.
Drawbacks of a Certificate Program
Certificates alone can increase income value modestly — and the gains can be diminished in a rapidly evolving workplace. Some studies even show negative returns for certificate holders without a college degree, according to the nonprofit New America.
One BLS report shows bachelor’s degree holders earn median weekly earnings of $1,541, while “some college or associate degree” earners make $1,057 per week on average.
Furthermore, more vocations require a college degree. According to BLS, a bachelor’s degree is required for 178 occupations while an associate degree or a postsecondary nondegree award is required for only 99 occupations.
While certificate programs equip you with skills to land an entry-level job after a short time, they may not pay off in the long run.
What to Look for in a Certificate Program
Evaluate programs by accreditation: Quality courses are accredited by the U.S. Department of Education or the Council for Higher Education Accreditation. They might also be verified by certifying bodies within that industry, such as HRCI for Professional Human Resources certification.
Determine flexibility: Some learners might benefit more from in-person courses, while an online course can give busy learners an opportunity to gain valuable expertise and skills. Furthermore, an asynchronous program can provide further flexibility for students who have unpredictable schedules.
Look out for for-profit institutions: For-profit programs can be more expensive, and outcomes vary. Use tools such as the College Scorecard to compare costs, graduation rates, and typical earnings.
What Certificate Programs Are in Demand in 2026?
There’s no shortage of demand for certificate programs. The National Center for Education Statistics says the proportion of all certificates conferred by public institutions increased from 53% to 70% from 2011-12 to 2021-22.
Top certification categories in demand in 2024, according to the International Association of Career Coaches, included:
• Information Systems and Cybersecurity: ($73K to $123K average salary)
• Project Management: ($99K to $122K average salary)
• Healthcare: ($41K to $203K average salary)
• Finance and Accounting: ($72K to $111K average salary)
• Human Resources: ($65K to $128K average salary)
The top-paying certifications included:
• Certified Registered Nurse Anesthetist: $203K
• Google Cloud Professional Data Engineer: $129K
• Global Professional in Human Resources: $128K
• AWS Certified Solutions Architect: $123K
• Chartered Financial Analyst: $104K
• Certified Professional in Healthcare Quality: $100K
Coursera offers Professional Certificate programs, including Google Cybersecurity, Google Data Analytics, Google IT Support, Google Project Management, Google UX Design, IBM Data Analyst, IBM Data Science, and Microsoft Power BI Data Analyst.
How to Pay for Certificate Programs
When deciding how to pay for certificate programs, it’s important to explore all your options. Some might include savings, student loans, and other forms of financial aid.
To get a student loan for a certificate program, you can fill out the Free Application for Federal Student Aid (FAFSA®). The FAFSA will tell you what you qualify for, including federal student loans, grants, and scholarships.
You can also look into private student loans. Private student loans are given by banks, credit unions, and online lenders. While they don’t offer the same benefits and protections as federal student loans, they can be a good option for students who need funding to pay for their certificate program.
Certificate programs can start, enhance, or change careers for learners. They can prepare students for immediate placement in a specific trade without a college degree. They can also boost your career by providing specialized skills, enhancing your qualifications, and demonstrating expertise to employers.
Certificate programs are less expensive and shorter in duration than college degrees. To pay for a certificate program, you can look into employer assistance programs, use cash savings, or rely on federal or private student loans.
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.
FAQ
What does a certificate program mean?
A certificate program is a short-term educational course designed to provide specialized skills or knowledge in a certain field. It typically takes a few months to two years and is aimed at enhancing career opportunities, professional development, or gaining expertise in a particular subject.
Is a certificate program worth taking?
A certificate program can be valuable for gaining specialized knowledge quickly and affordably. However, it’s important to consider the program’s relevance to your field and potential return on investment.
What are the benefits of attending a certificate program?
Attending a certificate program offers three key benefits: It provides specialized skills and knowledge in a short time, enhances your qualifications to improve job prospects, and offers a flexible, cost-effective alternative to a degree, allowing you to advance your career or switch fields efficiently.
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Having children brings many joys. But for women, it can also have a financial dark side. Becoming a mother often results in lost pay and opportunities for career advancement, a phenomenon known as the motherhood penalty. In fact, according to the Census Bureau Current Population Survey, full-time working mothers with children under 18 earned 35% less than their male counterparts.
Many factors contribute to the motherhood penalty, and not every woman experiences it in the same way. Understanding the motherhood penalty can help women and their families sidestep this financial setback.
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Key Points
• Women who become mothers often experience a substantial drop in income.
• Mothers tend to work fewer hours in paid employment and take on more responsibility for caregiving and housework than fathers.
• Mothers are often discriminated against when it comes to pay, hiring, and promotion decisions.
• The motherhood penalty is worse in female-dominated and low-paid professions.
• You can protect yourself by knowing your net worth and choosing your industry carefully.
How Does the Motherhood Penalty Work?
If you want to avoid the motherhood penalty and keep your budget on track, it pays to know your enemy. According to a 2025 article published in the Review of Economics of the Household journal, the decrease in women’s earnings after they give birth is driven both by a reduction in employment and by lower earnings for those who remain employed. Let’s look at each of these factors.
Women today have achieved historic levels of education and are working at senior levels in the corporate world, but they are still more likely than men to cut back on their working hours or stop working altogether after their baby is born. Some women may choose jobs that allow for more flexibility in hours, even if those roles pay less.
Discrimination is a more insidious factor: Women make up nearly half of all U.S. workers and do the bulk of consumer spending, yet some managers see men as breadwinners who prioritize work and women as caregivers who are less committed to their jobs. This leads to women facing discrimination in hiring, salary, and leadership opportunities.
When two women are similarly qualified for a job, the one without children tends to earn more than the one who has kids. Comparatively, fathers working full-time earn more, on average, than men who don’t have children.
Households in which both spouses work have been common for decades. According to 2024 data from the Bureau of Labor Statistics, in about half of married-couple families, both spouses were employed. Families with two healthy incomes are most likely to be able to afford a home and cover other large expenses, including raising children, which is now estimated to be around $322,427.
But the motherhood penalty takes an especially hard toll on families in which women are the head of the household. According to the U.S Census Bureau, in 2022, 22% of U.S. children were growing up in a household led by a single mother, with many of these women relying on a single source of income. The motherhood penalty may contribute to the fact that nearly 30% of single mothers live below the federal poverty level.
Factors Contributing to the Motherhood Penalty
As noted above, the unspoken belief that women belong at home to care for their children or that they are not vital contributors to their family finances continues to be a driver of the motherhood penalty. This is despite the fact that households with two parents working outside the home are now the norm in the U.S.
But there is another troubling factor. Women may leave their jobs because childcare costs more than they earn. The monthly cost of caring for an infant ranges from $572 in Mississippi to $2,363 in Washington, D.C. And even when mothers continue working, they may scale back their hours or take more flexible but lower-paid positions.
The motherhood penalty is unfair, and an additional factor adds to the inequity: In households with two working parents, where each parent earns roughly the same amount, women still spend more time on caregiving responsibilities than men do — 12.2 hours per week on average, compared with 9 hours for men, according to a 2023 Pew Research Center report. Women also spend 5.1 hours doing housework, while men spend only 2.2 hours. Women’s work may be less valued, but as the old saying goes, it’s never done.
So, what can women do to safeguard their finances from the motherhood penalty?
Stand up for fair earnings. Exercise your right to be fairly compensated with every step you take in the working world. Applying for a job? Do your research to learn what a good entry-level salary is. Offered a position? Learn how to ask for a signing bonus. Unemployment is relatively low, and employers in industries from retail to engineering may pay you to come on board.
Change jobs. Switching jobs can be stressful, and time off is often allotted based on seniority, but changing jobs is one way to bump up your salary. But before you do so, make sure you understand what a competitive pay rate is for the role you’re applying for. A growing number of states, including California, Colorado, and New York, have passed pay transparency laws that require employers to post salary ranges when they advertise job openings.
Don’t share your status. It’s unlikely that your potential employer will ask you during a job interview whether you have caregiving responsibilities, as doing so may violate federal and state laws. But many women casually disclose that they have kids during the interview process without thinking about the consequences. Avoid talking about your personal life when interviewing for a job, and be aware that many employers examine applicants’ social media feeds during their screening process.
Advocate for fair pay and families. To help promote equitable pay that can sustain families, you can support raising the minimum wage. Speaking out in favor of government support for affordable childcare and for mandatory paid parental/caregiver leave can also help ensure that women who want to stay in the workforce after having a child can afford to do so.
The Takeaway
Even though women are working outside the home in historic numbers, the motherhood penalty still exacts a heavy price for many women and their families. Acknowledging that women are financially penalized for becoming parents is the first step in fighting back against the stereotyping and discrimination that is often at the root of this problem.
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FAQ
What is meant by the motherhood penalty?
The motherhood penalty refers to the fact that women’s earnings often suffer after they have children. The same effect does not apply to men, who typically earn more after becoming fathers.
What are the causes of the motherhood penalty?
A significant factor is that women often scale back on work or stop working altogether after having a child. However, they can also be discriminated against due to the stereotype that they are caregivers rather than breadwinners.
How does the motherhood penalty affect a woman’s career?
Mothers face lower pay, fewer promotion opportunities, and hiring discrimination compared to childless women. The motherhood penalty results in lower earnings, and because future earnings are often based on current salary, the reduced income often persists as a woman moves up the corporate ladder.
Which women are most affected by the motherhood penalty?
Discrimination due to becoming a mother exacerbates the difficulties experienced by women of color, low-income moms, and single parents. The motherhood penalty creates additional obstacles that make it harder for these groups to achieve economic stability and career success.
How can I avoid the motherhood penalty?
A good place to start is to know your worth. Do your research on salary before taking a job, and reevaluate your salary at least every year by looking at comparable positions.
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There are so many upsides to investing in your education — the personal enrichment and possibility of a bright and fruitful future being the most obvious. But, there are also some potential downsides that are hard to ignore, one of the main ones being the debt you may accrue.
If you’re a student loan borrower, you’ve probably noticed that your loans have a language all their own. Getting a grasp on terms such as interest rate vs. annual percentage rate (APR), subsidized vs. unsubsidized loans, and fixed vs. variable interest rates can help you make more informed, confident decisions.
Instead of enrolling in “Student Loan Language 101,” you can use our quick reference guide to find some answers without information overload. Borrowing money can have long-term financial consequences, so it’s important to fully understand the fees and interest rates that will affect the amount of money you owe.
• Understanding the specific vocabulary used in student borrowing is important for making informed financial decisions and managing educational debt effectively.
• Key concepts, such as interest rates, subsidized vs. unsubsidized borrowing, and repayment terms can impact the total amount owed.
• Understanding how interest accrues — and when it can be capitalized — can help borrowers estimate a student loan’s total cost.
• Federal borrowing options often offer lower interest rates and borrower protections, such as income-driven repayment plans and deferment, which are not typically available with private lenders.
• Knowing the differences between grants, scholarships, and various types of borrowing can help students prioritize sources of educational funding that do not require repayment.
Common Student Loan Terminology
Here are a few of the most important terms to understand before you take out a private or federal student loan.
Academic Year
An academic year is one complete school year at the same school. If you transfer, it is considered two half-years at different schools.
Accrued Interest
Accrued interest is the amount of interest that has accumulated on a loan since your last payment. You can keep private or federal student loan accrued interest in check by making your payments on time each month. However, after a period of missed or reduced payments, accrued interest may be “capitalized,” which essentially means you have to pay interest on the interest.
Adjusted Gross Income
Adjusted gross income (AGI) is an individual’s gross income, less any payroll deductions or adjustments. Income includes wages, salary, any interest or dividends you may earn, and any other sources of income. You can find your AGI on your federal income tax returns.
Aggregate Loan Limit
The aggregate loan limit is the maximum amount of federal student loan debt a borrower can have when graduating from school. The aggregate loan limits vary depending on whether you are a dependent or an independent student.
Amortization refers to the amount of loan principal and interest you pay off incrementally over your loan term. Each payment is a fixed amount that contributes to both interest and principal. Early in the life of the loan, the majority of each payment goes toward interest. But over time, as you pay down your loan balance, the ratio shifts, and most of the payment goes toward the principal.
Annual Percentage Rate
APR is the annual rate that is charged for borrowing, expressed as an annual percentage. APR is a standardized calculation that allows you to make a fairer comparison of different loans. Consider the difference between interest vs. APR — APR reflects the cost of any fees charged on the loan, in addition to the basic interest rate. Generally speaking, the lower your APR, the less you’ll spend on interest over the life of the loan.
Annual Loan Limit
The yearly borrowing limit set for federal student loans.
Automated Clearing House
An electronic funds transfer is sent through the Automated Clearing House (ACH) system. The ACH is an electronic funds transfer system that helps your loan payment transfer directly from your bank account to your lender or loan servicer each month.
The benefits of ACH are two-fold — not only can automatic payments keep you from forgetting to pay your bill, but many lenders also offer interest rate discounts for enrolling in an ACH program.
Award Letter
An award letter is sent from your school and details the types and amounts of financial aid you are eligible to receive. This will include information on grants, scholarships, federal student loans, and work-study. You will receive an award letter for each year you are in school and apply for financial aid.
Award Year
The academic year that financial aid is applied to.
Borrower
The borrower is the person who took out a loan. In doing so, they agreed to repay the loan.
Campus-Based Aid
Some financial aid programs are administered by specific financial institutions, such as the federal work-study program. Generally, schools receive a certain amount of campus-based aid annually from the federal government. The schools are then able to award these funds to students who demonstrate financial need.
This refers to the cancellation of a borrower’s requirement to repay all or a portion of their federal or private student loans. Loan forgiveness and discharge are two other types of loan cancellation.
Capitalization
Capitalization is when unpaid interest is added to the principal value of the private or federal student loan. This generally occurs after a period of nonpayment, such as forbearance. Moving forward, the interest will be calculated based on this new amount.
Capitalized Interest
Accrued interest is added to your loan’s principal balance, typically after a period of nonpayment, such as forbearance. When the interest is tacked onto your principal balance, your interest is now calculated on that new amount.
Most federal and private student loans begin accruing interest as soon as you borrow them. While you are often not responsible for repaying your student loans while you are in school or during a grace period or forbearance, interest will still accrue during these periods. At the end of said period, the interest is then capitalized, or added to the principal of the loan.
When interest is capitalized, it increases your loan’s principal. Since interest is charged as a percent of principal, the more often interest is capitalized, the more total interest you’ll pay. This is a good reason to use forbearance only in emergency situations and end the forbearance period as quickly as possible.
Cosigner
A cosigner is a third party, such as a parent, who contractually agrees to accept equal responsibility in repaying your loan(s). A federal or private student loan cosigner, also known as an endorser, can be valuable if your credit score or financial history is not sufficient to allow you to borrow on your own.
With a cosigner, you are still responsible for paying back the loan, but the cosigner must step in if you are unable to make payments. A co-borrower applies for the loan with you and is equally responsible for paying back the loan according to the loan terms on a month-to-month basis.
Consolidation (Through the Direct Loan Consolidation Program)
Private or federal student loan consolidation is the act of combining two or more loans into one loan with a single interest rate and term. The resulting interest rate is a weighted average of the original loan rates — rounded up to the nearest one-eighth of a percentage point.
Only certain federal loans are eligible for the Direct Consolidation Program. Consolidating can make your life simpler with one monthly bill, but it may not actually save you any money. You may be able to reduce your monthly payments by increasing the loan term, but this means you’ll pay more interest over the life of the loan.
Consolidation (Through a Private Lender)
Consolidation is the act of combining two or more loans into one single loan with a single interest rate and term. When you consolidate loans with a private lender, you do so through the act of refinancing, so you’re given a new (hopefully lower) interest rate or lower payments with a longer term.
By refinancing, you may be able to lower your monthly payments or shorten your payment term. Keep in mind that you may pay more interest over the life of the loan if you refinance with an extended term. And federal student loans come with a host of benefits and protections that are forfeited should you refinance.
Cost of attendance is the estimated total cost for attending a college based on the cost of tuition, room and board, books, supplies, transportation, loan fees, and miscellaneous expenses. Schools are required to publish the cost of attendance.
Credit Report
Credit reports detail an individual’s bill payment history, loans, and other financial information. These reports are used by lenders to evaluate your creditworthiness.
Default
Default is the failure to repay a loan according to the terms agreed to in the promissory note. Defaulting on your private or federal student loans can have serious consequences, such as additional fees, wage garnishment, and a significant negative impact on your credit. It’s always better to talk to your lender about potential hardship repayment options, such as deferment or forbearance, before defaulting on a loan.
Deferment
Deferment is the temporary postponement of loan repayment, during which time you may not be responsible for paying interest that accrues (on certain types of loans). Federal student loan deferment can be useful if you think you’ll be in a better place to pay your loans at a later date. However, deferment is usually only available for certain federal loans. To potentially cut down on interest, it may be wise to weigh your deferment options.
Delinquency
When you miss a student loan payment, the loan becomes delinquent. The loan will be considered delinquent until a payment is made on the loan. If the loan remains in delinquency for a specified period of time (which varies for federal vs. private student loans), it may enter default.
Direct Loan
The Direct Loan Program is administered via the U.S. Department of Education. There are four main types of direct loans, including, Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans.
Direct PLUS Loan
Direct PLUS Loans are types of federal loans that are made to graduate or professional student borrowers or to the parents of undergraduate students. Direct PLUS Loans made to parents may be referred to as Parent PLUS Loans.
Note that, starting July 1, 2026, no new Direct PLUS loans will be offered to graduate and professional students. Any borrowers who received a Direct PLUS loan before that date can continue borrowing under the current terms through the 2028-29 academic school year.
Disbursement
When funds for a loan are paid out by the lender.
Discharge
Student loan discharge for private and federal loans occurs when you are no longer required to make payments on your loans. Typically, discharge occurs when there are extenuating circumstances, such as the borrower has experienced a total and permanent disability or the school at which you received your loans has closed.
Discretionary Income
Discretionary income is the money remaining after you pay for necessary expenses. An individual’s discretionary income is used to help determine their loan payments on an income-driven repayment plan.
Enrollment Status
Determined by the school you attend, your enrollment status is a reflection of where you stand with the school. It includes full-time, half-time, withdrawn, and graduated.
Expected Family Contribution
The expected family contribution was an estimation of the amount of money a student and their family were expected to pay out of pocket toward tuition and other college expenses. It is now known as the Student Aid Index (SAI).
Federal Work-Study
A type of financial aid, students who demonstrate financial need may qualify for the Federal Work-Study program, where they work part-time to earn funds to help pay for college expenses.
Financial Aid
Financial aid is funds to help pay for college. Financial aid includes grants, scholarships, work-study, and federal student loans.
Financial Aid Package
An overview of the types of financial aid you are eligible to receive for college, financial aid packages provide information on all types of federal financial aid and college-specific aid, such as scholarships, grants, work-study, and federal student loans.
Fixed interest rates remain the same for the life of the loan. The interest rate does not fluctuate.
Forbearance
Forbearance is the temporary postponement of loan repayment, during which time interest typically continues to accrue on all types of federal student loans. If your student loan is in forbearance, you can either pay off the interest as it accrues or allow it to accrue, and it will be capitalized at the end of your forbearance.
Use forbearance wisely, because interest that accrues during the forbearance period is typically capitalized, making your loan more expensive. If you can afford to make even small payments during forbearance, it can help keep interest costs down.
You will usually have to apply for student loan forbearance with your loan holder and will sometimes be required to provide documentation proving you meet the criteria for forbearance. For a loan to be eligible for forbearance, there must be some unexpected temporary financial difficulty.
Forgiveness
Loan forgiveness is another situation in which you are no longer responsible for repaying all or a portion of your federal student loans. Public Service Loan Forgiveness and Teacher Loan Forgiveness are two types of loan forgiveness programs in which your loans are forgiven after meeting specific requirements, such as working in a qualifying job and making qualifying loan payments.
Free Application for Federal Student Aid (FAFSA)
This is the application students use to apply for all types of federal student aid, including federal loans, work-study, grants, and scholarships. The FAFSA must be completed for each year a student wishes to apply for financial aid.
The grace period is a period of time after you graduate, leave school, or drop below half-time during which you’re not required to make payments on certain loans. Some loans continue to accumulate interest during the grace period, and that interest is typically capitalized, making your loan more expensive.
Grad PLUS Loans
Another term to refer to a Direct PLUS loan, specifically one borrowed by a graduate or professional student.
Graduate or Professional Student
A student who is pursuing educational opportunities beyond a bachelor’s degree. Graduate and professional programs include master’s and doctoral programs.
Graduated Repayment Plan
A type of repayment plan available for federal student loan borrowers. On this repayment plan, loan payments begin low and increase every two years. This plan may make sense for borrowers who expect their income to increase over time.
Students who are enrolled at least half-time in school are eligible to defer their federal student loans. This type of deferment is generally automatic for federal student loans. Note that unless you have a subsidized student loan, interest will continue to accrue during in-school deferment.
Interest
Interest is the cost of borrowing money. It is money paid to the lender and is calculated as a percentage of the unpaid principal.
Interest Deduction
A tax deduction that allows you to deduct the student loan interest you paid on a qualified student loan for the tax year. Interest paid on both private and federal student loans qualifies for the student loan interest deduction.
Lender
The financial institution that lends funds to an individual borrower.
Loan Period
A loan period is the academic year for which a private or federal student loan is requested.
Loan Servicer
A loan servicer is a company your lender may partner with to administer your loan and collect payments. For questions about your private or federal student loan payments or administrative details such as account information, you should contact your student loan servicer.
Origination Fee
Some lenders charge an origination fee for processing a loan application, or in lieu of upfront interest. To minimize incremental costs on your loan, look for lenders that offer no or low fees.
Part-Time Enrollment
Students who are enrolled in school less than full-time are generally considered part-time students. The number of credit hours required for part-time enrollment is determined by your school.
Pell Grant
The Pell Grant is awarded by the federal government to undergraduate students who demonstrate exceptional financial need.
Perkins Loan
Perkins Loans were a type of federal loan available to undergraduate and graduate students who demonstrated exceptional financial need. The Perkins Loan program ended in 2017.
PLUS Loans
Another way to describe Direct PLUS Loans, PLUS Loans are federal loans available for graduate and professional students or the parents of undergraduate students.
Prepayment
Prepayment is paying off the loan early or making more than the minimum payment. All education loans, including private and federal loans, allow for penalty-free prepayment, which means you can pay more than the monthly minimum or make extra payments without incurring a fee. The faster you pay off your loan, the less you’ll spend on interest.
Prime Rate
The Prime rate is the interest rate that commercial banks charge their most creditworthy customers. The basis of the prime rate is the federal funds overnight rate. The federal funds overnight rate is the interest rate that banks use when lending to each other. The prime rate can be used as a benchmark for interest rates on other types of lending.
Principal
The Principal is the original loan amount you borrowed. For example, if you take out one $100,000 loan for grad school, that loan’s principal is $100,000.
Private Student Loan
A private student loan is lent by a private financial institution, such as a bank, credit union, or online lender. These loans can be used to pay for college and educational expenses, but are not a part of the Federal Direct Loan Program. These loans don’t offer the same borrower protections available to federal student loans — like income-driven repayment plans or deferment options.
Promissory Note
A promissory note is a contract that says you’ll repay a loan under certain agreed-upon terms. This document legally controls your borrowing arrangement, so read it carefully. If you don’t fully understand the agreement, contact your lender before you sign.
Repayment
Repayment is repaying a loan plus interest.
Repayment Period
The agreed-upon term in which loan repayment will take place.
The Secured Overnight Financing Rate (SOFR) is an interest rate benchmark that is commonly used by banks and other lenders to set interest rates for loans. The SOFR is the cost of borrowing money overnight collateralized by Treasury securities.
Stafford Loans
Stafford loans were a type of federal student loan made under the Federal Family Education Loan Program. Beginning in 2010, all federal student loans are now loaned directly through the William D. Ford Federal Direct Loan Program.
Standard Repayment Plan
The Standard Repayment Plan is one of the repayment plans available for federal student loan borrowers. This repayment plan consists of fixed payments made over a 10-year period.
Student Loan Refinancing
Student loan refinancing is using a new loan from a private lender to pay off existing federal or private student loans. This allows you to secure a new (ideally lower) interest rate or adjust your loan terms. You may pay more interest over the life of the loan if you refinance with an extended term.
Subsidized Loan
A Direct Subsidized Loan is a type of federal loan available to undergraduate students where the government covers the interest that accrues while the student is enrolled at least half-time, during the grace period, and other qualifying periods of deferment.
Term
The Term is the expected amount of time the loan will be in repayment. Generally speaking, a longer term will mean lower monthly payments but higher interest over the life of the loan, while a shorter term will mean the opposite. Loan terms vary by lender, and if you have a federal loan, you are usually able to select your federal student loan repayment plan.
Tuition
The cost of classes and instruction.
Undergraduate Student
A college student who is enrolled in a course of study, typically lasting four years, with the goal of receiving a bachelor’s degree.
Unsubsidized Loan
A Direct Unsubsidized Loan is a type of federal loan available to undergraduate or graduate students. The major difference between subsidized vs. unsubsidized loans is that the interest on unsubsidized loans is not paid for by the federal government.
Variable Interest Rate
Unlike a fixed interest rate, a variable interest rate fluctuates over the life of a loan. Changes in interest rates are tied to a prevailing interest rate.
The Takeaway
Understanding key terms is essential for navigating student borrowing. Prioritizing sources of financial aid that don’t need to be repaid, such as scholarships and grants, can be helpful. But these don’t always meet a student’s financial needs.
Federal student loans have low interest rates and, for the most part, don’t require a credit check. Plus, they have borrower protections in place, such as income-driven repayment plans and deferment options, which make them the first choice for most students looking to borrow money to pay for college.
If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.
Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.
FAQ
What are common student loan terms?
Common federal and private student loan terms include the principal (the original borrowed amount), interest rate (the cost of borrowing), and repayment term (the length of time to repay the loan). Other terms involve grace periods (time before payments start after graduation), deferment, forbearance (temporary relief from payments), and fixed or variable interest rates.
What are the most important loan terms to understand?
It’s important to understand terms associated with borrowing because you’ll be required to repay the loan. Understand the interest rate and any fees associated with the loan.
What does APR mean in relation to student loans?
APR is a reflection of the interest rate on the loan, in addition to any other fees associated with borrowing. APR helps make it easier to compare loans from different lenders.
SoFi Private Student Loans Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
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The average square footage of new single-family homes in the U.S. is currently 2,405 square feet. That figure varies significantly from state to state, however, with averages ranging from 1,164 square feet (Hawaii) all the way up to 2,800 square feet (Utah).
Homes tend to be larger in areas where prices are lower and smaller in more expensive locales, though other factors also come into play. Understanding the average square footage of houses in your area can help you set realistic expectations for your house hunt and determine how much house you can afford.
Key Points
• The rise of the suburbs, highway development, and increased levels of homeownership all influenced the increase in home size since the 1940s.
• The average size of a house in the U.S. is 2,405 square feet, down slightly from 2,480 in the early 2020s.
• Several factors influence home size, including interest rates, affordability, location, and land costs.
• Smaller homes offer numerous advantages, from reduced maintenance costs to smaller mortgages.
• The 28/36 rule is helpful when calculating the size of the home you can afford.
Home Square Footage Trends in the US
The size of homes in the U.S. has increased significantly over the past several decades. In 1949, the average size of a house for one family was 909 square feet. By 2021, it had almost tripled to 2,480 square feet, according to American Home Shield’s American Home Size Index.
One of the reasons behind expanding home sizes was migration from cities to the suburbs following World War II. During these years, new highways were built, demand for housing grew, and homeownership rose. People moved into bigger houses with more land outside the densely packed cities.
Overcrowding decreased at the same time. In 1950, 15.7% of U.S. homes were considered overcrowded. By 2000, the proportion had dropped to 5.7%. Today, older homes tend to have smaller floor plans, while more recent constructions are more spacious.
That said, home sizes have been generally decreasing since 2015 due to rising interest rates and home prices, which make affording a house more difficult. Home size increased during the Covid-19 pandemic in 2021 when interest rates reached historic lows, and homebuyers were often looking for a house that could serve as a home, a workplace, and a school at the same time. Home sizes trended downward in 2022 and 2023 as interest rates rose again and housing became less affordable. Learn more about how to save money for a house.
Still, the mean square footage for new single-family homes was 2,405 square feet in the third quarter of 2025, a huge increase from the 909-square-foot average of 1949.
States With the Largest Average Homes
On average, the state with the largest homes is Utah, followed by other states in the Mountain West, including Colorado, Idaho, and Wyoming. This chart shows the 10 states with the largest average home sizes in the U.S., along with their median price per square foot.
State
Average home square footage
Median price per square foot
Utah
2,800
$259.05
Colorado
2,464
$279.55
Idaho
2,311
$286.85
Wyoming
2,285
$189.87
Delaware
2,277
$223.75
Georgia
2,262
$180.61
Maryland
2,207
$234.53
Montana
2,200
$324.53
North Dakota
2,190
$139.12
Washington
2,185
$335.73
States With the Most Expensive Cost per Square Foot
In states with a high cost per square foot, homes tend to be smaller on average. The smallest homes are in Hawaii, where the median price per square foot is nearly $744. New York has the next smallest real estate, with a median price per square foot of more than $421. (New York City, however, has a median price of $1,519.57 per square foot.)
That said, home prices and size don’t always have an inverse relationship. California has some of the most expensive real estate in the country, but its home sizes average 1,860 square feet. Along with cost per square foot, some other factors that influence average home size include income levels and the age of the homes.
This chart shows states with the highest median price per square foot, along with their average house sizes. If you’re looking to buy in a less pricey locale, consult a list of the best affordable places to live in the U.S.
Buying a larger home might be appealing if you have a growing family and want space to spread out, but it could have downsides. These are some of the factors to consider before splurging on extra space.
More Expensive Maintenance Costs
Not only may a larger home have a higher initial price tag, but it could also cost you more in maintenance and upkeep. A home repair project can easily cost thousands of dollars, and prices only go up when you have more house to maintain. Before opting for a big home, consider what shape it’s in and any potential renovation costs. You could also do some research on the cost of services in your area to estimate future expenses.
More Time to Clean and Organize
Larger homes take longer to clean and organize than smaller ones. You’ll have to purchase more furniture and spend more time on general upkeep. If you hire cleaners for your house, the cost of each visit will be higher if you have additional rooms that need cleaning.
Located Farther From the City Center
Homes in and around a city are often smaller, while houses with more square feet and land are typically located outside of the urban center. This may not be ideal if you prefer to live near restaurants, theaters, and other urban activities. It could also be a downside if you work in the city and would have a longer and more expensive daily commute.
A Bigger Carbon Footprint
A larger home will require more heat in the winter and air conditioning in the summer. Not only will your energy bills cost more, but your bigger house will use more resources and have a greater impact on the planet. Some newer constructions may offset this footprint with energy-efficient features.
Before starting the house hunt and the quest for a mortgage loan, it’s worth considering how much square footage you can afford. Even if you get preapproved for a mortgage of a certain amount, you might prefer a smaller loan with lower monthly costs to avoid overburdening your budget. Many first-time homebuyers opt for a smaller starter home before eventually upsizing. One way to figure out how much house you can afford is with the 28/36 rule.
The 28/36 Rule
The 28/36 rule is a guideline that can help you estimate what price house you can afford. This rule suggests spending no more than 28% of your gross monthly income on housing costs and no more than 36% on all your debt combined, such as housing costs, car payments, and student loans.
Let’s say, for example, that your monthly gross income is $6,000. Using this guideline, you’d want to keep housing costs at $1,680 per month or lower. If you have other debts, you wouldn’t want to spend more than $2,160 on those debts and housing costs combined.
Key Reasons to Purchase a Smaller Home
Purchasing a smaller home can have several benefits, including:
• A smaller mortgage: A smaller home may have a lower cost, so you might be able to make a lower down payment and take out a smaller mortgage loan.
• More affordable bills: With less square footage, you’ll have lower monthly bills when it comes to electricity, heating, and cooling. Plus, you won’t have to pay as much in property taxes.
• Easier and cheaper maintenance: Smaller homes can be easier to clean and maintain, and you won’t have to spend as much on furniture and decorations.
• Extra room in your budget for other goals: If you’re saving money on housing, you’ll have more money for other things, such as home renovation projects, travel, investing for the future, and dining out.
The Takeaway
The average size of a U.S home is more than 2,400 square feet, but sizes have slightly decreased recently due to rising costs and interest rates. Home sizes also vary greatly by state, with the average square footage in some states more than double that in others.
Before splurging on a big house, consider your budget carefully. Use the 28/36 rule to estimate how much house you can afford, and take your other financial goals into account when considering how much you want to spend on housing each month. With careful planning, you can find a house that meets your needs without overstretching your budget.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
SoFi Mortgages: simple, smart, and so affordable.
FAQ
Are basements included in home square foot calculations?
Basements may or may not be included in home square foot calculations, depending on the state where you live and the basement’s condition. If the basement is included, it generally must meet certain criteria for living space, such as having an entrance and exit point that leads outside the home.
How much square footage does a family of four need?
While everyone’s needs are different, one guideline for determining the ideal square footage for one’s family size is 600 to 700 square feet per person. For a family of four, that would be a home with 2,400 to 2,800 square feet.
Is the average house size in the US increasing or decreasing?
The average house size in the U.S. increased significantly over the past 75 years, from 909 square feet in 1949 to 2,405 square feet in 2025. However, the past couple of years have seen a slight decrease in house sizes, largely due to rising interest rates and worsening affordability.
Photo credit: iStock/years
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Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.
*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
