Can You Go to Jail for Not Paying Student Loans?

Can You Go to Jail for Not Paying Student Loans?

The national student loan debt reached $1.6 trillion in 2022. With such a large amount of debt, staying on top of debt and other financial obligations can be challenging.

If you’re having trouble making monthly payments, you might be wondering what happens if you don’t pay your debt.

While you cannot be arrested or put in jail for failing to pay your student loans, there are repercussions for missing student loan payments, including damage to your credit and wage garnishments.

This guide will examine the potential legal and financial consequences of not paying debt, as well as offer tips for tackling student loan debt.

Going to Jail for Debt

Not all debt is treated equally by the law. So when can you go to jail for debt?

When debt is ordered by a court, which is the case for child support, missing payments could put you at risk of jail time. To clarify, an arrest would be made for violating a court order, rather than being unable to pay child support.

Failing to pay federal taxes is another situation that could result in jail time, depending on the circumstances. Not paying your taxes could lead to a civil suit with fees and fines, whereas tax evasion or fraud can carry a prison sentence with a conviction.

The key difference is that the latter involves knowingly misrepresenting your finances to get out of paying taxes when you actually have the means to.

Can You Go to Jail for Not Paying Student Loans?

No, you can’t be arrested or put in prison for not making payments on student loan debt. That’s because failing to pay back debt is a civil offense — not a criminal one.

Under civil law, a lender or creditor can sue borrowers to collect the money owed to them. A civil suit may require a court summons, which if ignored, could lead to jail time for failing to appear in court.

Dealing with debt collectors and a potential lawsuit can be overwhelming. If you’re in this situation, note that the Fair Debt Collection Practices Act ensures certain protections from abusive and illegal debt collection practices.

Statute of Limitations on Debt

In terms of debt collection, the statute of limitations refers to the amount of time that creditors have to sue borrowers for debt that’s past due.

Federal student loans don’t have a statute of limitations. This means that federal loan servicers can collect your remaining student loan balance when you stop making payments. Keep in mind that the federal government doesn’t have to sue you to start garnishing wages, tax refund, and Social Security checks.

The statute of limitations on private student loans ranges from 3 to 10 years based on where you live currently or at the time you borrowed, though this may vary.

But when does the statute of limitations on debt start? Depending on the state, the clock starts ticking as soon as you miss a payment or on the date of your most recent payment. Making a partial debt payment could also reset the timer on the statute of limitations.

What Are the Consequences of Not Paying Off Student Loan Debt?

Depending on the type of loan and lender, you may have to start making monthly payments as soon as it’s disbursed. Meanwhile, certain types of federal loans (Direct Subsidized, Direct Unsubsidized, or Federal Family Education Loan) and some private student loan options offer a six-month grace period before payment is due.

If you miss a payment, the loan becomes delinquent, even if missed by one day. However, covering payments on private student loans within 90 days before they enter default can prevent lenders from reporting your non-payment to credit bureaus and a subsequent hit to your credit score. For federal loans, you have 270 days before loans are considered in default.

When loans enter default, borrowers become vulnerable to the consequences of not paying debt. In addition to a lower credit score, borrowers could be sued by collection agencies to have their wages and government benefits garnished. Defaulting on federal loans could rule out any future student loan assistance from the government.

Borrowers in severe financial distress may consider filing for bankruptcy. It is extremely rare to have student loan debt discharged in bankruptcy. It’s worth noting that student loans will only be discharged in Chapter 7 or 13 bankruptcy if the borrower can prove that repayment would cause undue hardship.

This is ultimately decided in an adversary proceeding in bankruptcy court, and may be challenged by creditors. The legal costs of doing so are prohibitive for many borrowers declaring bankruptcy.

Review your options for tackling debt early to avoid ending up with debtors’ prison student loans.

Recommended: Types of Federal Student Loans

Tips for Getting Out of Student Loan Debt

Falling behind on your student loans can be stressful. Fortunately, there are options for getting back on track.

Here are 10 ways to get out from under your student loan debt:

1. Budget

It’s hard to manage your finances without a plan. Creating a personal budget is a helpful way to keep your spending in check and determine how much you can afford to allocate to paying off debt.

Sticking to a budget can take discipline. Setting up automated savings can help ensure you set aside enough money for your student loan payment and essential expenses each month.

Knowing how a student loan works, including the interest rate, minimum payment, and the loan term, is foundational to a sound budget.

2. Increase Cash Flow

Reining in your spending with a budget is a good place to start, but it may not be enough for getting out of debt. Having some extra cash on hand can help manage debt payments and offer some breathing room within your monthly budget.

Taking on a part-time job, freelance work, or selling nonessential personal belongings are a few ways to increase cash flow.

3. Create a Debt Reduction Plan

After taking inventory of all your debts, creating a debt reduction plan is a strategic way to map out how you’ll approach repayment.

A popular system is the avalanche method, which calls for putting any extra cash towards the debt with the highest interest rate while making minimum payments on other balances.

Another option is the snowball method, which focuses on ticking off the smallest debt balances in succession while still taking care of minimum payments on other debt.

Comparing how your current and projected debt compares to the average debt by age can help inform how you approach debt reduction.

Recommended: How Exceeding Your Minimum Loan Payments Can Pay Off

4. Debt Consolidation

If you have multiple debts, it can be difficult to prioritize repayment. They’ll likely all have different interest rates, minimum payment amounts, and dates when payment is due.

Consolidating debt under one loan can streamline the repayment process and potentially lock in better terms for a portion or all of your existing debt.

5. Ask for Help

Asking your lender for a lower monthly payment that you can afford is a possibility worth trying. Reaching out early on can potentially increase your chances of success, as it saves the lender time and money spent on debt collection.

Getting support from friends or family can help too, whether it’s putting money towards debt payments or co-signing on a loan to consolidate debt.

Recommended: Family Loans: Borrowing From & Lending to Family

6. Check State Loan Programs

The federal government offers student loan forgiveness to borrowers who meet certain eligibility criteria, such as working in a certain profession or having a permanent disability.

Similar programs are available at the state-level across the country, and generally base eligibility on specific professions or financial hardship.

For instance, the Rural Iowa Primary Care Loan Repayment Program can provide up to $200,000 towards repaying eligible student loans for doctors who commit to working five years in designated locations.

Meanwhile, the NYS Get on Your Feet Loan Forgiveness Program offers up to 24 months of debt relief to recent graduates in New York who are participating in a federal income-driven repayment plan.

7. Ask Employer About Tuition Reimbursement Programs

Besides health insurance and a 401(k), your employer may provide other benefits, including tuition reimbursement programs, to support and retain their employees.

Often, these programs are focused on annual tuition expenses that employees incur while studying and working concurrently. Still, employers may offer to contribute to student loan payments as well.

8. Refinance Your Student Loans

Many borrowers choose to refinance their student loans to qualify for a lower interest rate, thus paying less over the life of the loan.

Your income and credit history will impact your ability to refinance, so this strategy may be less fruitful if your student loans are in default. Additionally, refinancing federal student loans will eliminate them from federal borrower protections and payments, such as income-driven repayment plans or federal forgiveness programs. If you are taking advantage of these programs, refinancing may not be the right choice for you.

9. Set Up Income-Based Plan

If you have federal student loans, there are four income-driven repayment plans you can apply for to make your monthly payments more manageable. These include:

•  Revised Pay As You Earn Repayment Plan

•  Pay As You Earn Repayment Plan

•  Income-Based Repayment Plan

•  Income-Contingent Repayment Plan

The monthly rate is based on family size and discretionary income — usually between 10% to 20%. What’s more, all four plans forgive any remaining balance at the end of the 20- or 25-year repayment period. Note that in some situations, you may be required to pay taxes on the forgiven amount, according to IRS rules.

10. Find New Repayment Plan

Besides income-based repayment, borrowers can explore a variety of other federal repayment plans to help pay off debt.

For example, the graduated repayment plan helps recent college grads find their financial footing by setting smaller monthly payments at first before increasing every two years.

The Takeaway

Although you won’t go to jail for failing to pay your student loans, there are financial consequences, like wage garnishments, subpar credit, and civil lawsuits from debt collectors.

Finding a student loan with a competitive interest rate and flexible repayment terms can help avoid the stress and repercussions of not paying student loans.

If you’re exploring lenders, check out SoFi. Private student loans from SoFi come with no fees and a six-month grace period. And with multiple repayment plans, you can choose the option that best aligns with your budget.

Find out what you qualify for with just a few clicks.

FAQ

Do student loans go away after 7 years?

No, student loans won’t disappear after 7 years. However, late payments or defaulting on a loan will be removed from your credit report after 7 years.

How long before student loans are forgiven?

The Public Service Forgiveness Program requires 10 years of service for student loan forgiveness, while income-based repayment plans take 20 to 25 years of repayment to have the remaining balance forgiven. State programs may offer more rapid repayment assistance and forgiveness.

Can student loans seize bank accounts?

Yes, but not right away. Lenders must first sue and get a court judgment to garnish your bank account.


Photo credit: iStock/shadrin_andrey

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.

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.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s
website
.

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

Title IV Financial Aid: What It Is and How It Works

Federal financial aid funds are generally referred to as Title IV under the Higher Education Act of 1965 (HEA) and are administered by the U.S. Department of Education. Title IV funds may come from grants, work-study, or student loans. It’s important that students understand all of their options when it comes to paying for college.

Here are some more details about Title IV financial aid, how it works and how these funds can help pay for school-related expenses.

What Is Title IV?

Under the HEA, Title IV refers to federal financial aid funds. Title IV of the HEA authorizes student financial aid programs of the federal government, which are the primary source of direct federal support to students attending certain institutions of higher education (IHEs). These institutions include public, private nonprofit, and proprietary institutions, which must meet a variety of criteria to participate in Title IV programs.

Federal aid awarded to students can be used to pay for tuition and fees, room and board, books and supplies, and transportation. Federal financial aid is mainly distributed to students through federal student loans, grants, and work-study.

In 2021, Federal Student Aid (FSA) processed more than 17.6 million FAFSA® forms — otherwise known as the Free Application for Federal Student Aid. In 2021, $112 billion was delivered via Title IV financial aid to more than 10.1 million postsecondary students and their families. These students attended 5,600 active institutions of postsecondary education that participate in federal student aid programs.

Different Types of Title IV Funds

Title IV doesn’t include all forms of financial aid that can be used to help pay for college. Here is what Title IV does cover.

•   Direct Subsidized Loans are a type of federal student loan available to undergraduates where a borrower isn’t generally responsible for paying interest while in school. Direct Subsidized Loans are only available to students who demonstrate financial need.

•   Direct Unsubsidized Loans are loans available to undergraduates and graduates where a borrower is fully responsible for paying the interest regardless of the loan status. Interest accrues from the date of disbursement and continues throughout the life of the loan.

•   Direct PLUS Loans are federal loans available to graduates or professional students and parents of dependent undergraduate students to help pay for college or career school.

•   Direct Consolidation Loans are federal loans that allow the borrower to combine multiple federal student loans into a single new loan.

•   Federal Grant Programs offer eligible students financial assistance by the U.S. government out of the general federal revenue. Title IV covers several federal grant programs, including Federal Pell Grants, the Federal Supplemental Educational Opportunity Grant Program, the Teacher Education Assistance for College and Higher Education (TEACH) Grant Program and the Iraq and Afghanistan Service Grant Program.

•   Federal Work-Study Program is a federally-funded program that offers part-time employment to students in financial need, allowing them to earn money to help pay for school-related expenses.

Who Is Eligible for Title IV?

To be eligible for federal student aid, you must meet basic eligibility requirements . Students must:

•   Demonstrate financial need for most programs.

•   Be a U.S. citizen or an eligible non-citizen.

•   Have a valid Social Security number.

•   Be enrolled or accepted for enrollment as a regular student in an eligible degree or certification program.

•   Enrolled at least half-time for Direct Loan Program funds.

•   Maintain satisfactory academic progress.

•   Sign the certification statement on the FAFSA stating that you are not in default on a federal student loan, you do not owe money on a federal student grant, and you will only use federal student aid for educational purposes.

•   Show you’re qualified to obtain a college or career school education by having a high school diploma or its equivalent or enrolling in an eligible career pathway program and meeting one of the “ability-to-benefit” alternatives.

Some Title IV programs have additional eligibility criteria specific to the program. Check with your school’s financial aid office for more information or questions on a particular program.

Recommended: FAFSA Guide

What Can Title IV Loans Be Used For?

Title IV loans can be used for tuition and fees, room and board, books and classroom supplies, transportation and even some eligible living expenses. Tuition is typically the largest expense. According to the College
Board
, the average college tuition including fees for a private four-year nonprofit institution in 2021-2022 is $38,070 while the average for a public, out-of-state four-year institution is $27,560 and $10,740 for a public four-year institution with in-state tuition.

Beyond tuition, Title IV loans can also be used to purchase books and school supplies, like a backpack, laptop, and notebooks. To help reduce costs, you can purchase used textbooks or rent them through your school or other services. Title IV loans can also help cover housing expenses and food costs, even if you live off-campus, and pay for the maintenance of your car, fuel, or bus and taxi fares.

If Title IV loans are used inappropriately, the school can report it to the Department of Education via a hotline and you may be held liable for those funds.

Recommended: Using Student Loans for Living Expenses and Housing

Title IV Payments

As mentioned, grants, scholarships, and work-study attained through Title IV generally don’t need to be repaid. However, as mentioned, student loans do need to be repaid.

Once you graduate, drop below half-time enrollment, or leave school, your federal student loan goes into repayment and you must make Title IV payments. However, if you have a Direct Subsidized Loan or a Direct Unsubsidized Loan, there is a six-month grace period before you are required to start making regular payments. Graduate and professional student PLUS borrowers will be placed on an automatic deferment while in school and for six months after graduating, leaving school, or dropping below half-time enrollment.

When your loan enters repayment, your loan servicer will automatically enroll you on the Standard Repayment Plan, which spreads monthly payments over a 10-year period. This can be changed at any time for free. You can also make prepayments on your loan while you are in school or during your grace period.

Your loan servicer will provide you with a repayment schedule with the due date of your first payment, the number and frequency of payments and the amount of each payment. Your monthly payment depends on your chosen repayment plan. Most Title IV loan services will send out an email when your billing statement is ready to be viewed online.

What to Do if Your Title IV Loans Aren’t Enough

If your Title IV loans aren’t enough to cover all costs, there are other options.

You can apply for scholarships or grants, which are a form of gift aid that typically do not need to be repaid. Scholarships are awarded based upon various criteria, such as academic or athletic achievement, community involvement, job experience, field of study, financial need and more. Most grants for college are need-based.

Another option is a part-time job. Your school may have job boards that list on-campus jobs for students or you could check external job sites for part-time opportunities.

Once you’ve exhausted every other option, private student loans are another possibility to consider. Private student loans can be used to cover college costs, but they are issued by banks, credit unions, and online lenders rather than the federal government. Private student loans are also credit-based and the lender will have their own eligibility criteria. The lender will typically review factors including your credit history, income, debt, and whether you’re enrolled in a qualified educational program. If you don’t have enough credit history or enough proof of income, you may choose to apply with a cosigner. Adding a cosigner with an established credit history can help improve your application and potentially allow you to qualify for a more competitive loan.

If you take out student loans, you can refinance them after you graduate to save money when it’s time to repay. Refinancing involves taking out a new loan and using it to repay all your existing loans, which can include federal loans and private loans. Refinancing student loans with a private lender also means forfeiting federal loan benefits like deferment, forbearance or income-driven repayment plans.

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

The Takeaway

Title IV financial aid has given millions of students the means to afford and attend college, university and trade school. And if you don’t receive enough Title IV aid, it doesn’t mean you’re out of luck when it comes to funding your college education. By applying for scholarships, taking on part-time jobs, applying for private student loans or refinancing, you can make your dreams a reality.

If refinancing seems like an option for you, consider SoFi. It only takes minutes to apply, even with a cosigner, and there are no fees, period.

Check out student loan refinancing with SoFi and find what works for you.

FAQ

What is the purpose of Title IV?

Federal Student Aid is responsible for managing the student financial assistance programs under Title IV of the HEA. The FSA’s mission is to ensure that all eligible students benefit from federal financial assistance throughout postsecondary education.

What is included in Title IV?

Title IV provides grant, work-study, and loan funds to students attending college or career school.

Is Title IV a loan?

Title IV does include federal student loans such as Direct Unsubsidized and Subsidized loans. However, Title IV funds are also distributed to students through federal grants and work-study programs.


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 Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL SEPTEMBER 1, 2022 DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

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.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s
website
.

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.

Photo credit: iStock/martin-dm
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What Kinds of Scholarships Are There?

What Types of Scholarships Are There?

There are many types of scholarships, from academic to athletic and need-based to identity-specific scholarship programs. Recipients typically don’t need to repay the funds the receive in the form of scholarships, which makes this type of funding particularly appealing.

In a 2021 Sallie Mae survey, How America Pays for College, it found that 56% of U.S. families used scholarship funds to partly pay for college. The average scholarship award amount across school, state, and company or nonprofit sources was $4,955.

Despite this available aid, 44% of students who didn’t use scholarship funding said they didn’t apply because winning didn’t seem plausible. However, with so many different types of scholarships available, you might find one that can help you pay for school.

1. Academic Scholarships

Academic scholarships, also referred to as merit scholarships, are awarded to students who’ve demonstrated academic excellence or exceptional skill in an area. For example, a merit-based scholarship might be based on an applicant’s cumulative GPA.

This kind of scholarship is provided by numerous sources, including:

Schools

Some high schools provide academic scholarships to their top graduating seniors. Additionally, the college you’re attending might have scholarships available.

Federal

Nationally recognized organizations offer federal academic scholarships based on different criteria and specifications.

Local

Students might also find scholarships sponsored by their state, county, city, or local associations.

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

2. Athletic Scholarships

Athletic scholarships are offered to student-athletes by their college. These full- and partial-scholarship programs are offered to a select few students who have shown exceptional skill in their sport.

Typically, when participating in an athletic scholarship you’re expected to maintain satisfactory academic performance to continue receiving funding.

Recommended: Balancing Being a Student Athlete & Academics in College

3. Scholarships for Extracurriculars

Students who participate in extracurricular activities might be able to find scholarship opportunities for their unique interests. For example, scholarships for student who dance, act, draw, or participate in Boy Scouts, Key Club, and more exist.

4. Student Specific Scholarships

There are many types of scholarships that are based on the student’s personal situation or affiliation. Some of these kinds of scholarships include:

Religious Scholarships

For example, your specific religious denomination.These scholarships are generally available to students who are actively involved in a faith-based community, or who are pursuing religion-based college courses.

First-Generation Scholarships

Students who are the first in their family to attend college may qualify for specific scholarships.

Legacy Scholarships

These scholarships are exclusively for students whose parents or close family members are alumni of the same institution.

Identity-Based Scholarships

In addition to the student-specific scholarships discussed above, scholarship programs are also available based on a student’s personal identity. Some identity-based categories include BIPOC, Women, and LGBTQIA+.

Hispanic Heritage

Scholarships are available based on heritage. Students of Hispanic or Latinx heritage may be able to qualify for specific heritage-based scholarships like those offered by the Hispanic Scholarship Fund.

African American

Specific scholarships are available for African American students as well.

Women

Scholarships for women are another subset of options.

LGBTQIA+

LGBTQIA+ identifying students may be eligible for scholarships as well.

Learning Disabilities

These scholarships are available to select students who have diagnosed learning and attention issues. For example, the National Center for Learning Disabilities offers scholarships.

5. Need-Based Scholarships

One of the most popular types of scholarships for college are need-based. These scholarships are accessible to applicants who have a demonstrated financial need, and a program might ask for proof, such as income documentation or FAFSA® information.

You can find need-based scholarships from national organizations, as well as within your state, local community, and even through your own school.

Recommended: What is Need-Based Financial Aid?

6. Employer Scholarships

Employer scholarships are offered to employees of a company or an employee’s college bound student. Aside from having an affiliation with the employer, students might need to meet other eligibility criteria to be selected for an award.

7. Military Scholarships

Private and public entities sponsor military scholarships for students who currently serve or have served in the U.S. armed forces. If you’re a first-time freshmen and participated in Reserve Officer Training Corps, consider reaching out to your school’s ROTC officer to learn about your options.

8. STEM Scholarships

STEM scholarships are accessible to students who are pursuing a college education in a science, technology, engineering, or math discipline. Some scholarships programs are offered specifically to students who identify with a particular group; for example, STEM scholarships for minority students.

9. Scholarships Based on Major

Regardless of what you’ve chosen as your college major, there’s likely a scholarship suited for you. These scholarships are provided by some college departments, the school itself, or private organizations who want to encourage students to pursue a particular area of study.

10. No Essay Scholarships

This kind of scholarship explicitly doesn’t include a written essay or personal statement component. You might prefer this type of scholarship if writing isn’t your forte, but there might be another required competent in its place such as a video or other creative submission.

Applying for Scholarships

There are various types of scholarships for college which means there are just as many different requirements and deadlines to stay on top of. When applying to a scholarship, double-check that you meet the basic eligibility criteria as a student.

Depending on the type of scholarship, it might require a minimum GPA or it might ask for proof that you have financial needs, for example. After confirming that you meet the applicant requirements, review the steps needed to apply.

Some scholarship programs might ask for a personal statement or other academic or creative submissions. Similarly, some might request additional paperwork as part of your application, like a copy of your school transcripts.

Finally, make sure you note each scholarship’s deadline and submit your application on time. The last thing you want is to have done all of the work only to be denied because of a missed deadline.

Alternatives to Scholarships

If you’d like to diversify your financial aid sources, there are alternative aid options, like loans for undergraduates and graduate students, as well as grants. To apply for federal financial aid, fill out the Free Application for Federal Student Aid (FAFSA) each year. Schools may also use the information provided on the FAFSA to awards school-specific scholarships. Here are a few other options for paying for college.

Grants

Grants are provided by federal, state, school and private sources. Like scholarships, they typically don’t need to be repaid.

Federal Student Loans

Federal student loans are available to undergraduate and graduate students, as well as parents of dependent undergrads. They’re funded by the U.S. government and most federal loans don’t require a credit check. In addition to offering fixed rates, they provide access to income-driven repayment plans and loan forgiveness programs.

Private Student Loans

When scholarships, grants, and federal student loans aren’t enough to cover the total cost of college, a private student loan could help. These loans are funded by private lenders, and offer fixed- or variable-rate loans at different terms. These loans typically require a credit check or the addition of a creditworthy cosigner. Keep in mind that private student loans aren’t required to offer the same benefits, like income-driven repayment plans, as federal student loans.

The Takeaway

If you’re short on aid for your upcoming academic year, consider searching for unclaimed scholarships. There are a variety of scholarship types to peruse so you’ll likely come across at least a handful that you’re eligible for.

Sometimes even after exhausting all types of scholarships — including grants that don’t need to be repaid — you might still have a gap between your aid and college costs. If you need additional nonfederal aid, a SoFi private student loan could be one option to help you get financing. SoFi offers competitive rates for qualifying borrowers. You can check your rate in just a few minutes online.*

Find out if you pre-qualify.

FAQ

What are the three most common types of scholarships?

Common types of scholarships for college are merit-based scholarships, need-based scholarships, and athletic scholarships. However, within these categories are sub-categories of scholarships based on specific eligibility factors.

How many different scholarships are there?

There are millions of scholarships being offered each year. According to Educationdata.org, more than 1.7 million scholarship programs are available to eligible students annually.

What are competitive scholarships?

Competitive scholarships are prestigious national scholarship programs. They are often merit-based and are awarded to exceptional students who’ve demonstrated academic excellence, leadership, and who are considered the nation’s top students.


*Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
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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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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15 Creative Ways to Save Money

Whether you’re building your emergency fund or putting a portion of your paycheck away for you and your family, chances are you’re saving money. It’s possible this all-important financial habit can feel tedious and boring, but with a little creativity and determination, saving can be interesting, dynamic, and exciting.

15 Creative Ideas to Save Money

1. Identifying Your Saving Goals

Not sure how to make saving money fun? You could start by identifying your goals. Are you saving up for a big purchase, like a down payment on a house? Are you saving for your child’s future education?

Once you’ve figured out what you want to accomplish, you could determine a target amount of money you’d like to save. While this number might change over the course of your savings journey, you can always readjust your plan.

If you have an idea of how much money you’d like to work toward saving, you can consider diving deeper into your finances to pinpoint realistic objectives. Enter SoFi Relay.

SoFi Relay can give you a big-picture snapshot of your money: It has tools that can help you track and categorize your spending and cashflow. You could review these numbers to figure out if you have room in your budget to save. The best part is that SoFi Relay comes at no cost to SoFi members!

Of course, that’s just one such tool you can use. Once you’ve reviewed your individual financial circumstances and have a better idea of your savings goal(s), you could try these fun ways to save money.

2. Finding a Saving Buddy

With the right company, even the most mundane tasks can be enjoyable. You could talk about your savings goals with your friends and family members to potentially identify a saving buddy with similar objectives.

An ideal saving buddy will be supportive of your financial goals, flexible about changing plans in order to accommodate your specific savings needs, and have a positive money mindset.

Checking in with your buddy regularly could help keep you both stay on track and you can celebrate each other’s accomplishments. If you’re stressed about how to make saving money fun, you could brainstorm creative tactics with your saving buddy and implement them together.

3. Seeking Out Free Activities

Saving money does not have to be synonymous with missing out on exciting opportunities around you. You could enjoy free activities offered in your area.

Perhaps your local park offers free theater performances or concerts in the summer, or your area bookstore hosts interesting literary panels and author discussions with no attendance fee. Think about the resources provided by your local library, such as book clubs, language exchange programs, craft nights, and movie screenings.

4. Getting Creative and DIY

A potential hands-on and fun way to save money is adopting a DIY (do-it-yourself) attitude. You could create things using materials you already own instead of buying new products. When meal-prepping for the week ahead, think about recipes that incorporate ingredients you already have in your pantry.

You could make your own household cleaners out of vinegar, lemon rinds, and herbs or face masks and toners using fresh ingredients like avocado, tea, honey, and oatmeal. There are ways to reuse materials that might otherwise be thrown out or recycled: Newspapers and coupon booklets could make great wrapping paper, and old cereal boxes might be repurposed into desk organizers.

5. Gamifying Savings

If you’re looking to break up the monotony of saving, you could consider incorporating games and challenges into your overall savings plan. A friendly competition with your saving buddy could be seeing who can save the most money every week, month, and/or year.

Creating small rewards for reaching your goals might be an incentive, too. (Bonus points if these rewards are free!) No-spend weeks, where you refrain from spending any money for seven days, also might help with saving. You could make it fun by taking out a $20 bill from the ATM at the beginning of each month, for example, and not spending it.

6. Swapping Goods and Trading Skills

Getting serious about saving money doesn’t mean you need to give up “luxuries” such as exercising, new clothes and accessories, or home goods. Trading skills and swapping goods are two potential examples of how to make saving money fun while not depriving yourself of the things you want.

You could go to your favorite yoga studio and ask if they have a work-trade program where you can clean or complete administrative duties in exchange for classes. A clothing swap with your friends could refresh your closet at no cost. You might also consider an informal exchange with skilled friends.

For example, if you’ve been eyeing an original painting from your artist pal but don’t have the funds to pay her, you could offer your website design services (or some other helpful skills) for the painting.

7. Increasing Income

Sometimes, cutting down on expenses might not be the most effective way to reach a savings goal. It might be easier, in some cases, to make a bit more money than to reduce costs, especially if you are spending more than 50% of your income on non-discretionary expenses like groceries and debt payments.

A SoFi credentialed financial advisor can help you determine if increasing your income is an appropriate action based on your individual financial profile.

If so, you could reflect on your particular skills and/or hobbies to see if there is a way to translate one of them into an income stream.

For example, if you love to knit, you could start an online store for your yarn creations. If you have a knack for stringing words together, you could offer your writing or editing services in a freelance capacity. A successful side hustle could help bring additional money into your bank account and add more fun and enjoyment in your life.

8. Split Your Direct Deposit into Checking and Savings

If you have regular paychecks, one of the easiest ways to start saving a bit more money is to guarantee some automatically ends up in a separate savings account, making it that much harder to spend. If you have a checking account, odds are you have a savings account too, or at least access to one.

Maybe you find it hard to remember to put some money away into savings, or harder still, to force yourself to part with it. So, splitting your direct deposit into two accounts helps make sure your savings grows every paycheck, without you needing to worry about transferring the money. Check with your HR department or your online pay system to see if you can add a bank account and designate a certain amount of each paycheck to go into your savings account as part of your direct deposit.

Most banks also have the option to set up recurring transfers yourself between your accounts, so if you don’t have the option to split up your paycheck, or would prefer not to, look to see if your bank is able to do an internal automatic transfer on the day after you get paid. Then, when your paycheck hits your account, your designated amount will get transferred into savings without you having to think twice.

9. Change Your Due Dates for Bills

Having extra money in your savings account doesn’t help if you are constantly pulling from it to pay bills. When you don’t have enough money in your checking account to pay for something, you can incur an overdraft fee.

If you are overdrafting frequently, especially at certain times of the month when big payments are due, consider changing the due dates of some of your bills. Sometimes spreading out your larger payments—like credit card bills or student loans—throughout the month can help when those more inflexible dates, like rent, roll around.

By changing the date of some of your bills, hopefully you will be able to overdraft less frequently. This will encourage you to not touch your savings account, as opposed to pulling from it every time your checking account balance gets precariously low.

10. Switch Your Bank

If your bank seems to be charging you endless fees and offers little interest on your savings account, switch! You might consider a credit union instead of a big name bank—credit unions are run as financial co-ops, meaning each member has a stake in business as a de facto owner.

Banking with a credit union will usually allow more flexibility and lower fees. Credit unions are typically smaller than most big banks, while offering the same services. As nonprofits, they are designed to serve their members, paying higher interest rates on deposits as well.

Switching to a reputable online lender, like SoFi, could be right for you. We recently launched SoFi Checking and Savings®, a checking and savings account, which allows you to spend, save, and earn all in one product.

It doesn’t have any account fees (subject to change), is mobile-friendly, and you can access your money from any ATM that accepts Mastercard, even internationally (subject to change).

11. Save Every $5 Bill

This is a classic adult remix of the piggy bank you had as a kid. Only this time, instead of squirreling away quarters from the tooth fairy, take every $5 you get and put it in a separate drawer at home. Keep all of these $5 in the back of a closet somewhere, tucked away and out of sight.

Once you get into the habit of identifying $5 as “no spend” bills, you’ll find it can really be a creative way to save money—depending on how much cash you usually carry, of course.

The benefit of this method is that $5 isn’t really enough to miss if you are just putting away a bill or two, but that at the end of the year, it can easily add up to enough cash to help with holiday shopping, a loan payment, or even a nice donation to your favorite charity, without having to touch your savings in the bank.

12. Take Advantage of Cash Back Credit Cards

Simply put, if you have a credit card that has a decent rewards program, you can likely get your rewards in cash. While getting cash back won’t boost your savings directly, it can allow you to spend rewards points instead of your savings.

However, if you tend to carry over a balance on your credit card, cash back cards may not be a good solution for you right now.

13. Round Up Your Purchases Automatically

Apps like Qapital and BoostUp will round up your purchase to the nearest dollar and then save the change for you. Digit analyzes your income and spending, and then takes out a small amount every few days and saves it in a rainy day fund in the app for you. These apps all connect to your bank accounts, making it an easy and fun way to save money automatically.

Without having to think about anything besides the initial setup, and without taking out big chunks of your income each month, apps that round up into savings can easily help boost your goals of saving more. Plus, the amount they save for you is small, so you aren’t likely noticing $1 or even a few cents when it transfers, which can add up to hundreds per year.

14. Consolidate Credit Card Debt with a Personal Loan

You can always spend more on a credit card. You can’t spend more on a loan. While there is conflicting advice about whether it’s important to pay off your debt before building up your savings, you shouldn’t let debt deter you from saving, if possible. That’s why paying off your credit card debt with a personal loan is a creative way to shake up your finances.

If you owe money on more than one credit card, or have an especially high balance relative to your credit limit, take a look and see if the rates on a personal loan would help lower your monthly payments. Often, taking out one personal loan to cover the cost of multiple credit cards can help you with savings in the long run; while you’ll still be paying off the personal loan, if your credit cards had higher interest rates, you’ll be done paying off the total sooner, leaving more cash free for savings.

15. Automate Your Savings into an Investment Account

It’s the age-old financial advice worth repeating here: if your company offers a match on your 401K savings, take advantage of it! If your company match is 6 percent, you should set your contribution at 6 percent to get the most out of your retirement funds.

Most company wealth management accounts can be set to automatically deduct contributions from your paycheck, but you can schedule other automatic investments too. You can make scheduled, recurring transfers between your bank account and your wealth management account.

You get to select the dollar amount, the date and the frequency you want. This is a great way to put your savings to good use — send it into an investment account. There are plenty of other technologies available to help make this easy, too.

The app Acorns invests in a basic investment portfolio by rounding up each purchase you make to the nearest dollar. SoFi offers online stock trading as well as automated investing, with access to a human financial advisor. By automating your savings to transfer over to an investment account, you are setting up your savings to work hard for your future when you might need the money more.

Optimizing Your Savings

Putting away money for your future does not need to be a boring task; there are countless fun ways to save money that could be customized to your specific financial needs and wants.

Starting to save today—even in small amounts—might help prepare you for even more fun in the future. Signing up for SoFi Checking and Savings® could be another way to save money.

Ready to elevate your plan? Sign up for a checking and savings account today.


External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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 Money® is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member
FINRA / SIPC .
SoFi Securities LLC is an affiliate of SoFi Bank, N.A. SoFi Money Debit Card issued by The Bancorp Bank.
SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.

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ATM Withdrawal Limits – What You Need to Know

Even though many financial transactions are digital these days, there are times when you still need some money in hand.

ATMs can be a quick, easy solution when you need a fast cash infusion. But banks typically impose a limit on how much money you can withdraw in one day. Some banks also charge fees in exchange for the convenience of getting money at the nearest ATM.

Read on to learn:

•   How much money you can typically withdraw from an ATM.

•   How you can get around these ATM maximum limits if needed.

•   How to sidestep ATM fees.

Why Do Banks Have ATM Withdrawal Limits?

While ATM withdrawal limits can be frustrating, they exist for two important reasons:

Cash Availability

Banks want to make sure there is enough money available for all ATM users. But ATMs can only hold so much cash, and banks only have so much cash on hand at any one given time.

Let’s say you go to an ATM on, say, the Friday before a long holiday weekend to get some spending money and find that there is no cash left. This doesn’t happen often, but it’s a possibility. Capping the amount of money that can be withdrawn at an ATM helps ensure that customers can’t clean out ATMs or drain the bank’s cash reserves.

Security

ATM withdrawal limits also protect consumers. If someone were to get hold of your debit card and PIN number, the ATM withdrawal max would prevent that fraudster from immediately draining your entire checking or savings account.

Withdraw limits help reduce the speed with which a criminal could steal from your account.

How Much Can I Withdraw From an ATM?

The answer depends on a specific bank’s rules around withdrawals, with some capping at $300 and others going as high as $5,000 a day. A limit of somewhere between $500 and $1,000 is common.

In some cases, a withdrawal limit depends on a specific customer’s banking history or account type. A new customer with a basic checking account may have a lower withdrawal limit than an established customer with a premium checking account. If you have a student or a second chance account, your max ATM withdrawal might be lower than if you had a standard checking account.

Whether you are withdrawing from checking vs. savings can also make a difference.

Savings Account Withdrawal Limits

The amount you can withdraw will depend upon your particular bank or credit union. In some cases, savings accounts have a higher cap on how much you can withdraw at any one time. In others, you will find that you can pull more cash from an ATM using your checking account. One thing to be aware of: You may be limited to how many withdrawal transactions you can make per month from your savings account. Check your financial institution’s policies for specifics.

Checking Account Withdrawal Limits

The maximum ATM withdrawal limits for checking accounts can vary a great deal. For example, consider these figures:

•   Chase: $500 to $3,000

•   Citibank: $1,500 to $2,000

•   PNC: $500

•   Vystar Credit Union: $560 to $5,000

ATM Withdrawal Limits vs Daily Purchase Limits

It can also be helpful to keep in mind that ATM cash withdrawal limits are typically separate from daily purchase limits.

You may, for instance, be able to make $4,000 in debit card purchases in one day, but be limited to taking out $500 at the ATM.

Some banks may set a third limit — the total amount of money you can take out of your account via withdrawals and debit card purchases each day. Just like credit limits on your credit cards, these numbers may vary with the financial institution.

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Open a SoFi Checking and Savings Account and start earning up to 1.25% APY on your cash!


How To Work Around ATM Withdrawal Limits

If you need more cash than an ATM will allow you to withdraw, there are a few workarounds that can help as you wrangle your cash management.

Asking For Cash Back While Shopping

In some stores (like grocery stores), it’s possible to ask for cash back at checkout when making a purchase. While cash back may count towards your debit card’s daily purchase limit, it typically doesn’t count towards a daily ATM withdrawal limit.

The store will likely also have a cash back limit that applies on a per purchase basis. That could mean you’ll need to make multiple purchases to withdraw the full amount of cash needed.

Withdrawing From Savings

If you have both a checking and savings account, here’s another possibility: You can withdraw money from a savings account when using an ATM. This can help avoid the daily checking account withdrawal limit. There may, however, still be some limitations on ATM savings withdrawals, and this may vary with the kind of savings account you have.

Withdrawing at the Window

If you bank at a bricks-and-mortar location and the branch is open when you need more money, head inside. You can withdraw the amount you need by seeing a teller.

Fees to Look Out for When Withdrawing Money From the ATM

Many banking institutions have free ATM networks, but you may incur ATM fees if you use a machine outside of your bank’s network. This may include a fee from your bank, as well as a fee from the ATM provider.

These fees can add up quickly. If you were to use an out-of-network ATM, your bank might charge you as much as $1.50, while the ATM provider might charge you $3. In total, you could pay $4.50 for withdrawing your money.

To avoid ATM fees every time you get cash, you may want to look for a bank that doesn’t charge out-of-network ATM fees and/or refunds fees charged by the machine provider. Some banks reimburse fees charged by an out-of-network provider up to a certain amount each month.

Another option is to choose a bank with in-network ATMs that are convenient to where you live and work. You can also reduce fees by withdrawing more money at one time and making less frequent trips to the ATM.

The Takeaway

ATM withdrawal limits are there for your protection as well as the bank’s, but that doesn’t mean they aren’t inconvenient at times.

If you regularly need cash, you may want to find out your bank’s daily ATM withdrawal limits and plan ahead. Or, you can work around the maximums in place and get cash from other sources. By using a bit of smart strategy, you can make sure you have the cash you need on hand.

Love the convenience of the ATM, but not a fan of fees? You might want to consider opening an online bank account with SoFi. Our Checking and Savings allows you to earn, save, and spend all in one account. When you sign up with direct deposit, you’ll earn an incredible 1.25% APY. And members can use more than 55,000+ Allpoint network ATMs worldwide without paying any fees.

Check out everything a SoFi Checking and Savings account has to offer today

FAQ

Why do ATMs have withdrawal limits?

ATMs have withdrawal limits to help make sure the terminals don’t run out of cash for customers. ATM withdrawal limits also help protect account holders if their card were stolen or hacked; it minimizes how much they could lose in a specific period of time.

What is the difference between checking and savings account withdrawal limits?

Each bank or credit union has its own policies about withdrawal limits. These may depend on the kind of account, how long and responsibly the account holder has been a client, and other factors. The limits from checking and savings might or might not be the same.

What is the maximum amount I can withdraw from an ATM?

The amount you can withdraw from an ATM may range from $300 to $5,000 a day, depending on the financial institution and your particular account. Somewhere between $500 and $1,000 is typical.


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.
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.
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