How Much Does Culinary School Cost?

How Much Does Culinary School Cost?

If you’re passionate about food, a career in culinary arts may be right for you. Going to culinary school can help students acquire the knowledge, skills, and hands-on experience required to work in the field.

But how much does it cost to go to culinary school compared to trade school or traditional college? Simply put, it depends. Culinary school cost varies based on institutional reputation, program type, and the duration of study.

This guide will examine culinary school cost factors and payment options to help prospective students decide if it’s the right move for their future.

Tuition Rates for Culinary Schools

In 2019, the median public in-state tuition for culinary school was $3,635, while median out-of-state and private tuition was $19,504.

When evaluating a program’s sticker price, keep in mind that the curriculum structure and schedule for culinary school can differ from four-year or community college.

Some culinary programs may condense more coursework and in-person instruction into a semester or year, while others offer a more extensive course of study.

Tuition pricing may reflect the entire program cost rather than a standalone semester, too. For instance, the Institute of Culinary Education offers a range of six- to 13-month diploma programs, while a technical certificate from Florida State College at Jacksonville takes 14 months to complete.

Why is Culinary School So Expensive?

Culinary school costs can be steep. For example, tuition and fees amount to $77,310 for the two year associate’s degree program at the Culinary Institute of America’s California Campus.

Culinary schools can have an intensive structure. Condensed schedules can translate to more time spent in both the classroom and kitchen than typical college students.

Whereas a lecture hall can accommodate hundreds of students for an Intro to Economics course, culinary students typically receive more one-on-one instructions in smaller class sizes. Also, culinary coursework that involves cooking and baking has the added cost of buying ingredients and materials.

Culinary school costs might also include purchasing cooking equipment, such as knives, cutting boards, and a kitchen uniform. Depending on the program, these may be automatically factored into the tuition price or tacked on as an additional fee.

Types of Culinary Degrees Available

Prospective students have a variety of options to choose from for a culinary degree. The types of institutions offering culinary degrees include technical schools, community colleges, four-year colleges, and independent culinary institutes.

Students can choose from certificate programs, an associate’s degree, or a bachelor’s degree in culinary arts.

Certificate programs are usually the shortest to complete with one to two semesters of coursework and training. Associate’s programs can vary from one to two years and may incorporate a mix of hands-on training, internships, and coursework. Bachelor’s degrees require more time―generally four years―to complete but can help further develop culinary skills and knowledge in related subjects like business and nutrition.

Culinary degrees can also focus on a specific discipline, such as baking and pastry arts or hospitality and restaurant management. Interested students can explore this list of accredited culinary schools to find a program that suits their needs and career goals.

How Can You Pay for Culinary School?

A combination of funding sources may be required to cover tuition, equipment, and related expenses. Prospective students and parents can consider the following options to pay for culinary school.

Grants and Scholarships

Figuring out how much culinary school is going to set you back starts with filling out the Free Application for Federal Student Aid (FAFSA®) to determine eligibility for federal financial aid. Students may qualify for assistance in the form of grants if they have significant financial need.

There are also numerous culinary-specific scholarships that students can apply for. The National Restaurant Association awards merit-based scholarships between $2,500 to $10,000 for students pursuing undergraduate degrees in culinary arts and related fields.

Some additional grant and scholarship opportunities include:

• The James Beard Foundation: This nonprofit organization awards scholarships, tuition waivers, and work-study grants to students attending accredited culinary schools.

• The American Institute of Wine and Food (AIWF): Full-time students attending accredited culinary schools can apply for an AIWF scholarship from local chapters in California and Kansas.

• Rachel Ray, Yum-o!:The famous Food Network chef’s nonprofit funds culinary scholarships in partnership with the National Restaurant Association Education Foundation.

Students can also explore grants for college from state government and private organizations for additional funding.

Federal Student Loans

Students may need to use student loans when scholarships and grants aren’t sufficient, and they cannot afford to pay out of pocket.

Through the Federal Direct Loan Program, students can access both subsidized and unsubsidized loans to pay for school. Subsidized loans are awarded based on a student’s financial need. The Department of Education pays the interest on subsidized loans while borrowers are studying at least half-time, and during the six-month grace period after leaving school. Students may be eligible to defer loan payments further if they attend graduate school, join the military, or experience financial hardship.

Unsubsidized loans don’t require students to have financial needs to be eligible. Schools determine how much students can borrow based on the cost of attendance and a student’s total financial aid package. Borrowers are responsible for paying interest on unsubsidized loans once disbursed.

Dependent students can get up to $31,000 in federal student loans for four years of full-time study. Only $23,000 of this can be subsidized loans. Independent students, however, can take out up to $57,500 in federal loans, with subsidized loans also capped at $23,000.

Recommended: Types of Federal Student Loans

Employment

If financial aid isn’t enough to cover culinary school costs in full, working while studying could help pay the remainder.

Students with financial need may qualify for part-time employment through the Federal-Work Study program. Work-study jobs are typically geared towards a student’s area of study or community service. Awards can vary according to the student’s need, the timing of application, and how much total funding is available at a given participating school.

Finding part-time work at a restaurant or food-related enterprise is another funding option that also supports professional development.

Private Student Loans

If financial aid and other sources aren’t enough to pay for culinary school in full, students can consider a private student loan.

Students may obtain private student loans from banks, credit unions, private organizations, or colleges. Some students may need a cosigner to qualify for private student loans due to a lack of credit history and income.

Private student loan interest rates and loan terms vary by lender, which gives borrowers more choice in term length. However, private student loans do not carry the same borrower protections as federal student loans, such as income-driven repayment plans, deferment or forbearance, or the Public Service Loan Forgiveness program. Students may want to consider private student loans as an option only after they have exhausted all other sources of aid, including federal student loans.

The Takeaway

While many food-service and restaurant jobs don’t require education beyond a high school diploma, completing culinary school could lead to a higher-paying career. According to the Bureau of Labor Statistics, the average salary in 2020 for chefs and head cooks was $58,740, compared to just $26,000 to $27,000 for line cooks and food preparation workers.

If you need to borrow to cover culinary school costs, SoFi can help. SoFi offers private student loans with competitive rates, flexible payment options, and no fees.

Finding your interest rate can be done in a few minutes online, and there’s no pressure to sign up.

Learn more about private student loans with SoFi.

Photo credit: iStock/visualspace


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

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. SoFi Lending Corp. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

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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How Many Grad Schools Should You Apply To?

How Many Grad Schools Should You Apply To?

Applying to grad school can sometimes feel reminiscent of applying for undergrad. After all, you’re familiar with the process of gathering application materials, and some things, like asking professors for references and taking standardized tests, may not be as intimidating as they were when applying for undergrad.

But there still may be other unknowns. Not only may you be unsure about how to effectively create a list of which schools to apply to, but you also may be wondering about how you might pay for your graduate degree.

Thinking about these two questions—where you’ll apply and how you’ll pay—in tandem can help you make smart choices for your future career and your future bank account. Here, how to decide how many grad schools to apply to.

Follow the Money and Consider Cost

Just like undergrad debt, grad school debt can impact your future career path. And if you finished undergrad without debt, you may be unsure what you’re taking on. Grad students currently shoulder a significant portion of student debt—while they make up only 15% of all borrowers, they account for nearly 40% of federal loans issued each year. Federal loans can reach the six figures, and many graduates of grad programs may not have earning power to pay back these loans comfortably until years or even decades after their degree is conferred.

If you’re in the early stages of considering going to grad school, here are a few questions and actions that may help you navigate the choices available to you:

• Talk with people who have gotten a similar master’s degree. What did they wish they had known?

• Talk with the department or departments at the schools you’re considering and ask about graduate scholarships, fellowships, and other programs that may lower program cost.

• Consider your career path. Look on various salary sites for median salaries for your proposed field of study.

In the early stages of heading to grad school, you may also want to determine how you’ll pay for graduate school, as this may impact the school you choose to attend. Here are a few suggestions for crafting a plan to pay for your graduate education.

Recommended: The Return on Education (ROEd): Salary Trajectory by Degree

Talk with your family

Some students have found that their family may support some or all of their grad school journey. Contributions such as free housing or the use of a family car add up as well, so it can be important to factor those in. For example, some students may look at programs where they can live at home, so they don’t need to pay for housing and travel expenses. If this is the case, make sure everyone is very clear about expectations so there are no surprises later on.

Apply for Federal Student Aid

Fill out the FAFSA®. Unlike undergrad education, direct subsidized loans are not available to graduate students. Your loans will also be considered in conjunction with any federal loans you took out as an undergrad when it comes to determining the number of federal loans you’re eligible for as a grad student. Talking to the financial aid office at the schools you’re considering attending can also help you understand what loans, scholarships, and other programs may be available to you.

Recommended: What is the Maximum Amount of Student Loans for Graduate School?

Consider Private Loans

Private lenders generally won’t lend more than what it costs to go to school, and rates and terms will vary. Some students may find they need more money than they are offered in federal loans. Note that because private student loans lack the borrower protections that federal loans offer (like Public Service Loan Forgiveness or deferment options) it’s generally recommended that borrowers rely on these after exhausting all federal aid options.

Consider Relevance And Practicality

In addition to prestige, it’s also important to consider degree relevance and how it may be practical for your future career path. Looking at salaries from people who graduated from that program or with that degree can help you assess what the future after graduation will look like. Sometimes, students can become so focused on getting into a grad program and affording the program that they may forget that the first year out of grad school may require a few months to find a job and find footing in a new career.

Asking yourself some questions can help you further drill down into the best programs to apply for:

How Much Will Expenses Cost?

Room, board, and travel all add up. Considering those costs can help assess overall expense. It can also be helpful to consider the cost of living, too, which can vary based on where the program is based.

Can I Work and Study Simultaneously?

Some programs may be structured for grad students to do both; others might be created primarily for students who can devote all their time to their studies. If you’re self-funding your grad school experience and are currently employed, it may be worth speaking with your HR office to see if there are any options for your company to fund your studies if you are planning to study and go to school at the same time.

How Long Is The Program?

Different grad programs have different time frames. While some, such as law schools, may have relatively standard coursework for traditional students, other programs may offer different structures depending on the school. And it may make sense to see how long or how short the degree can take depending on life circumstances. It can also be helpful to know if an internship or other hands-on experience is essential for the degree, as that may influence feasibility with fitting the degree in with other work.

Consider All Information

When applying to grad programs, getting as much data as possible can be helpful in determining the next steps. Talking with professors, people currently working in the industry, current students, and faculty at several schools you’re considering can all be helpful in assessing how well you may fit in a program—and why a program may be the best fit for you. Because graduate departments tend to be smaller than undergrad departments, you may find it easier to have these sorts of conversations.

It can also be helpful to speak to graduates of a program and to talk with mentors and employers about how a grad degree may enhance your career can be helpful. While some career paths demand a grad degree, such as an attorney, social worker, or doctor, there are other career paths where a grad degree may not be necessary—or may be subsidized by an employer when they consider it essential. So having a range of opinions can be helpful when it comes to homing in on the best grad school programs for your needs.

Recommended: Applying to Graduate School: Smart Tips & Strategies

The Takeaway

Preparing for grad school requires a lot of legwork, but the more prepared you are now in narrowing down your application list, the less overwhelmed you might be when acceptances start rolling in. While not a substitute for federal loans, scholarships, and work-study programs, private student loans can give some flexibility in how you’ll fund your grad school career.

Private student loans do not have the same borrower protections as federal loans—such as income-driven repayment plans—so they are generally borrowed after all other aid options, including federal student loans. Imagining several scenarios and planning for what-ifs can help mitigate “how to pay” stress so you can focus on the next step in your academic career.

Learn more about using a private student loan from SoFi to pay for graduate school.

Photo credit: iStock/MicroStockHub


SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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

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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Computer Science vs. Computer Engineering: What's the Difference?

Computer Science vs. Computer Engineering: What’s the Difference?

Many colleges and universities use the terms “computer science” and “computer engineering” to describe computing programs interchangeably. But, there are several differences that make these two fields unique.

Here’s what future students need to know about each of these popular college majors, and what may make one more desirable over the other for their future goals.

What Is Computer Science?

Those working in computer science focus mainly on computing theory, programming, algorithms, and models to develop software or computer systems that people utilize around the globe. A computer science degree can cover topics like design and analysis of algorithms, data analysis, an introduction to operating systems and different programming languages. Computer scientists generally focus on software and are typically the ones to create algorithms that make programs like artificial intelligence, machine learning, cloud computing, and even video games work.

Recommended: Is a Computer Science (CS) Degree Worth It?

What Is Computer Engineering?

Computer engineers generally focus on creating, testing, and evaluating the technology for hardware and software interfaces. A computer engineering degree can cover topics like computer architecture, computer networks, and physics. It is a computer engineer’s job to develop new processors, microchips, and other components that physically go into computers and smartphones to make them work each and every time someone clicks the “on” button. This field may often require a combination of electrical engineering skills and computer science knowledge.

Similarities and Differences Between Computer Science and Computer Engineering

Again, computer science and computer engineering are two distinct areas of study and work, however, there are similarities between the two. The obvious ones first: Both professions use and work with computers, both work with data and math, and both work to advance the field of computing. Because of these similarities, both areas of study could share prerequisites and coursework at your chosen college or university (link prerequisite math and research classes).

Both degrees are also to thank for your ability to read this very story on your laptop, tablet, or phone, so if you’re the type of person who wants to further improve the internet and computer experience, either field could be a good option for you.

Computer Science vs. Computer Engineering Job Outlook

Individuals with a computer science or computer engineering degree may be qualified for a variety of job specialties. Here’s some information on common jobs that these areas of study may prepare you for.

Computer Science Job Outlook

There’s some good news for those looking at becoming computer scientists in the near future. According to the Bureau of Labor Statistics, the employment of computer and information research scientists is projected to grow 15% from 2019 to 2029. The bureau added, that rate is “much faster” than the average rate for all occupations. Perhaps most encouraging of all, the bureau noted, for this field “job prospects are expected to be excellent.”

As the Bureau of Labor Statistics further explained, in May 2020 the median annual wage for computer and information research scientists was $126,830. However, the typical entry-level education is a master’s degree, according to the government agency, meaning you may need to consider going for a few more years of education than you have originally anticipated.

The demand for software developers is expected to grow by 22% from 2019 -2029, with a median salary of $110,140.

It’s also important to note that those working in computer science may see different job titles pop up on their job search. These titles can include (but are not limited to), software developer, database administrator, web developer, or project manager. It can even include job titles like full-stack developer, engineering manager, user interface designer, information security analyst, information technology specialist, mobile application designer or developer, and more.

Computer Engineering Job Outlook

On the flip side, the Bureau of Labor Statistics explained that computer hardware engineers’ employment rate is projected to grow much more slowly over the same timeframe. It is estimated from 2019-2029 the job market for computer hardware engineers would grow just 2%, marking a slower growth rate than the average occupation.

The positive? The average salary for computer hardware engineers is still comparatively high, sitting at a comfortable $119,560 in May 2020. And, its typical entry-level education is a bachelor’s degree, meaning students could forgo the extra education, save on college tuition, and enter the job market even sooner than their computer science counterparts.

As computer scientists, those with a computer engineering degree could qualify for roles under a variety of job titles. Those titles include (but again are not limited to) telecommunications engineer, computer architect, communication engineer, network systems engineer, systems architect, and simply, computer engineer.

Recommended: Return on Education for Bachelor’s Degrees

Computer Science vs. Computer Engineering–Which One Is Better?

The question of “which is better, computer science or computer engineering?” really comes down to personal choice. To make this decision for yourself, it may be a good idea to consider what your dream computing job looks like.

Computer scientists can typically specialize in the following areas:

• Artificial Intelligence

• Human-Computer Interaction

• Software Engineering

• Mobile and Web Computing

• Game Design

• Computer Graphics

• Data Science

• Programming languages

Computer engineers can typically specialize in the following areas:

• Hardware systems

• Robotics and Cybernetics

• Computer and Network Security

• Distributed Computing

• Embedded Systems

As you can see, while the specialties can be considered related under the computing field, both computer science and computer engineering come with unique and exciting specialty areas. All that matters is you pick the one that is the most interesting to you, and that’s how you can answer the age-old (or at least since the dawn of the computer age) question, “Which one is better?”

The First Step to Becoming A Computer Scientist or Computer Engineer

While one career path does have a slight advantage due to a better job growth outlook, both come with strong possibilities for a varied, lengthy, and well-paid career. Both also come with the prerequisite of college, or potentially even a Master’s program. After choosing a school and a program that’s right for you, it’s time to get your financial ducks in a row to pay for the education that could lead to your dream job.

On your journey of college financial planning, would-be students can and should look into all their options including scholarships, financial aid, and private student loans. If the last one sounds like a good option for you, consider adding SoFi’s private student loans to your consideration list.

In the interest of full transparency, private student loans should be looked at as an option only after applying for federal student aid. Federal student loans, grants, scholarships, or work-study should be pursued first. That’s because private student loans may lack the borrower benefits and protections available to federal students, such as deferment or forbearance during periods of financial difficulty.

Students, and potentially a cosigner, are able to apply for a private student loan with SoFi in just minutes. Options include loans for both undergraduate and graduate school.

The Takeaway

Many colleges use the terms “computer science” and “computer engineering” to describe computing programs interchangeably. While there is some overlap, these are two distinct fields of study with their own specialties and their own merits. Both computer science and computer engineering have high median salaries, topping six figures each. However, the job outlook for those with computer science degrees is a bit better, with a projected 15% growth between 2019 to 2029. To find out which path is right for you, see the specialties under each field of study and figure out what peaks your interest most.

Looking for options to pay for your studies? Review options available with a SoFi private student loan.

Photo credit: iStock/SeventyFour


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

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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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Are Scholarships Taxable?

Are Scholarships Taxable?

Scholarships may count as income depending on how funds are received and spent, meaning that they could be taxable.

Usually, scholarships don’t have to be repaid like student loans, though they may carry requirements for continued funding, such as a minimum GPA or competing on a collegiate sports team.

According to Sallie Mae’s How America Pays For College 2020 report, scholarships and grants covered 25% of education costs on average.

But does this free money for college come with any other caveats? It depends.

If you or your student received scholarship funding, it can be helpful to know ahead if it will contribute to your tax liability. Here’s what you need to know about identifying taxable scholarships and handling filing requirements.

Scholarships That Are Tax-Free

For many students, the scholarships they receive are tax-free. But in some cases, all or a portion of a student’s funding may be taxable.

Students can be exempt from paying taxes on their scholarships if they satisfy certain criteria. For one, they must be enrolled at an accredited college, university, or educational institution that maintains regular attendance.

Additionally, scholarship funds must be used to pay for qualified education expenses—a determination made by the IRS. Under this definition, qualified education expenses include the following:

• Tuition

• Mandatory fees (e.g., athletic and tech fees)

• Textbooks

• Equipment and supplies (e.g., lab equipment)

When it comes to textbooks, equipment, and supplies, anything that is required by your school to complete coursework would be free from taxes. If you use the funding towards an extra-curricular activity, such as a club or intramural sport, they are taxable.

If the scholarship is used for a certificate or non-degree program, the entire amount is taxable whether or not funds are used for qualified education expenses.

It’s important to note that any scholarship funds leftover after paying for qualified education expenses would not be tax-exempt.

Recommended: How to Pay for College Textbooks 

Scholarships Considered Taxable Income

How are scholarships taxable? According to the IRS, scholarships used for expenses outside the scope of qualified education expenses must be reported in gross income—making them taxable.

Scholarship funds used for the following costs are considered taxable by the IRS:

• Room and board

• Travel

• Medical expenses

• Optional equipment (e.g., new computer)

But are scholarships taxable income in any other situations?

Scholarships that are awarded in exchange for services like teaching or research, often known as fellowships, are classified as taxable compensation in most cases. Students would have to pay taxes even if their fellowship money is used to pay for tuition and other qualified education expenses.

However, there are a few exceptions when education-related payments could be tax-exempt. Specifically, students do not have to pay taxes on funds received for required services through the following scholarship programs:

• National Health Service Corps Scholarship Program

• Armed Forces Health Professions Scholarship and Financial Assistance Program

• Student work-learning-service programs operated by a work college

Other forms of financial aid could be considered taxable income as well.

Earnings through the Federal Work-Study program are subject to federal and state payroll taxes. If you stay below 20 hours a week while enrolled full-time, you won’t have to pay FICA (taxes for Medicare and Social Security) taxes.

Even Pell Grants—a federal aid program for students with significant financial need—are taxable if they’re not used for qualified education expenses.

Making it Legal: Reporting Taxable Awards

If a college scholarship is considered taxable, the student would need to report the scholarship (or portion of the scholarship) on their tax return.

Some students may receive a W-2 form from the scholarship provider outlining the taxable amount. Otherwise, they may need to calculate and enter the amount on their own tax return.

There are three IRS forms to report taxable scholarships. Choose the following form that best fits your personal situation.

• Individual Income Tax Return: Form 1040

• Tax Return for Seniors: Form 1040-SR

• U.S. Nonresident Alien Income Tax Return: Form 1040-NR

Students filing either Form 1040 or Form 1040-SR can add the taxable portion of their scholarship to the total amount on the “wages, salaries, tips” line. If this was not recorded on your W-2, IRS instructions say to enter “SCH” with the taxable amount in the space to the left of the “wages, salaries, tips” line.

International students using Form 1040-NR simply report the taxable amount on the scholarship and fellowship grants line.

While students may be enjoying their newfound freedom at school, when it comes to taxes, they may need some assistance. This is an opportune time for parents of college students to offer guidance and support as needed. If you have outstanding questions about if any portion of your scholarships are tax-deductible, consider consulting with a tax professional for personalized guidance.

How Education Tax Credits Fit in

Students and their family members may be eligible to claim the American Opportunity Tax Credit (AOTC) or the Lifetime Learning Credit (LLC) if they paid for college and related costs in the past year. Take note that you can’t use both tax credits for the same student in the same year.

To claim either tax credit, you’ll need Form 1098-T from your college. This form shows any reportable transaction for an enrolled student.

To qualify for the AOTC or LLC, you could have paid educational expenses out of pocket or with student loans. Expenses that were paid for by tax-free scholarships are not eligible for a tax credit.

The AOTC and LLC differ in scope and eligibility, so it’s helpful to compare both to see which may apply and provide a greater tax return.

American Opportunity Tax Credit (AOTC)

The AOTC can be used for qualified education expenses—tuition, fees, textbooks, and necessary supplies—for a student’s first four years of college.

The maximum credit currently stands at $2,500 a year for eligible students. This is calculated as 100% of the first $2,000 in qualified education expenses paid for an eligible student plus 25% of the next $2,000 in qualified education expenses.

If the AOTC reduces your taxes to zero, it’s possible to have 40% of the remaining credit (up to $1,000) refunded.

Eligibility for the AOTC is based on the tax filer’s modified adjusted gross income (MAGI). If you’re filing separately, your MAGI must be $80,000 or less to qualify for the full AOTC credit. The threshold is $160,000 for married filing jointly.

It’s possible to receive a reduced AOTC amount if filing separately with MAGI between $80,000 and $90,000 or $160,000 and $180,000 for married filing jointly.

The Lifetime Learning Credit (LLC)

The LLC can apply to a broader range of expenses than the AOTC. It can be used to claim up to $2,000 for tuition and related educational expenses for undergraduate, graduate, or professional degree courses. Costs of non-degree programs that improve job skills are also eligible for the LLC.

This credit does not have a limit on the number of years it can be claimed on your tax return. However, the LLC has stricter income requirements.

For Tax Year 2020, your MAGI must be below $69,000 (or $138,000 if filing jointly) to claim the LLC. Anyone with a MAGI between $59,000 and $69,000 (or $118,000 and $138,000 filing jointly) would only be eligible for a gradually reduced credit.

Don’t Forget Deductions

If you’re paying interest on a student loan, you may be eligible to deduct up to $2,500 with the student loan interest deduction. To be eligible, interest payments must be legally obligated and your filing status can’t be married filing separately.

There are also income requirements, which can vary annually, to factor in for the deduction calculation. For the tax year 2020, the filer’s MAGI must be less than $70,000 (or $140,000 if filing jointly) to be eligible for the full $2,500 deduction.

If your MAGI is between $70,000 and $85,000 (or $140,000 and $170,000 if filing jointly), you could qualify for a reduced deduction.

Recommended: Can You Deduct Your Child’s Tuition from Taxes?

The Takeaway

Saving for your child’s college tuition can be challenging.

Scholarships, grants, and fellowships are helpful ways to make college more affordable. But in many cases, students and families are still left with some education costs to cover.

Parents have some options at their disposal to help pay for their child’s education. If you haven’t saved enough, you may consider using retirement funds to pay for tuition and room and board, though this could result in penalties or fees.

Students can apply for federal student aid by filling out the Free Application for Federal Student Aid (FAFSA®), annually. This allows them to apply for scholarships, grants, work-study, and federal student loans.

If those funding sources aren’t enough, another avenue to consider may be private student loans. Private student loans don’t always offer the benefits that are afforded to federal student loans, such as deferment or forbearance.

Private lenders may not offer the same benefits as federal loans, including income-driven repayment and loan forbearance, so they are generally considered only after all other options have been reviewed. However, borrowers with strong credit may qualify for a competitive interest rate.

If you’re considering a private student loan, SoFi can help. With SoFi, borrowers can choose from four repayment plans and there are no hidden fees.

Find your rate with just a few clicks.

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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.

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What is the Average Medical School Debt?

While many med school students eventually may earn six figures or more, they also can expect to graduate with student debt that averages close to a quarter of a million dollars.

According to the Association of American Medical Colleges (AAMC), the median medical school debt for students who graduated in 2020 was $200,000. (Among the class of 2020, 27% graduated with no debt.)

That’s just what these graduates owe for their medical school education. Researchers at EducationData.org found that 43% of indebted medical school graduates also have premedical education debt to deal with (for an average of $241,600 in total debt).

Which makes it crucial that aspiring and current medical school students, and graduates, understand their debt repayment options.

Medical School Debt, by the Numbers

Here’s a snapshot of what student debt can look like for medical school graduates, based on a roundup of recent statistics:

•  Based on the most recent numbers from the National Center for Education Statistics , medical doctorate completers in the class of 2015-2016 had, on average, $246,000 in total education debt (premed and medical school). Compare that with the average for the class of 1999-2000: $124,700.

•  When the AAMC looked at members of the class of 2020 who took out educational loans, it found that:
5.4% borrowed $1 to $49,999 for premed studies and medical school
6.1% borrowed $50,000 to $99,999
8.2% borrowed $100,000 to $149,999
13.7% borrowed $150,000 to $199,999
25.1% borrowed $200,000 to $299,999
11.2% borrowed $300,000 to $399,999
2.9% borrowed $400,000 to $499,999

•  While the cost of medical school is rising by about 2.4% annually, the annual growth rate of medical school debt is 11%, as calculated by EducationData.

What Does This Mean for Borrowers?

It’s important to note that, when it comes to borrowing for medical school, loan interest rates offered by the federal government, along with the terms and conditions, might be different from borrowing as an undergrad.

Some med students may benefit from scholarships and loan forgiveness programs that could cut their costs substantially. But many will end up making loan payments for years—or even decades.

According to the number crunchers at EducationData, the average doctor will ultimately pay from $365,000 to $440,000 for his or her educational loans, with interest factored in.

Medical School Loan Options

Types of federal student loans available to medical students include Direct Unsubsidized Loans, with a limit of $20,500 each year.

Rates for this type of loan are currently lower than for the other type of federal student loan available to those going to medical school, Direct PLUS loans. The current rate for Direct Unsubsidized Loans is 5.28%, while Direct PLUS loans have an interest rate of 6.28% through July 1, 2022.

There isn’t a financial need requirement for either type of federal student loan, so many medical students qualify for both. With Direct Unsubsidized Loans, there is no credit check, but there is a credit check for PLUS loans.

Medical students also can apply for private student loans. Generally, borrowers need a solid credit history for private student loans, among other financial factors that will vary by lender. Private lenders offer different rates, terms, and overall loan programs.

Federal loans come with many student protections and benefits that private loans don’t, such as the Public Service Loan Forgiveness program and income-driven repayment.

Medical students also may choose to defer federal student loans during their residency, which isn’t typically an option with private student loans.

How to Deal With Debt

There are several strategies that medical school graduates with education bills to pay may consider.

Deferment

If you’ve ever borrowed money—for school or otherwise—you know that two critical factors can influence how much the loan will cost overall.

•  The interest rate you’re paying

•  How long you take to repay the loan or loans.

The repayment timeline is often extended when medical residents make partial monthly loan payments, or no payments at all. Putting off payments may seem like a good idea during a stressful time, but delaying can be costly.

Most federal student loans, when deferred, continue to accrue interest. The problem those in medical fields can face, then, is debt accumulation during their residency, which can last anywhere from three to seven years.

Even while making a modest income—in 2021, the average resident earned $64,000, according to Medscape—the debt would grow considerably.

Part or all of your unpaid interest might be capitalized when you complete your residency. This means the accrued interest is added to the principal of the loan, and that new value is then used to calculate the amount of interest owed.

If you decide to put your loans in deferment or forbearance, making interest-only payments can reduce the amount of interest that could be added to the loan.

Income-Driven Repayment

An income-driven repayment plan is an option for medical residents who can’t afford full payments. The four plans limit payments to a percentage of borrowers’ income, extend the repayment period to 20 or 25 years, and promise forgiveness of any remaining balance.

In general, borrowers qualify for lower loan payments if their total student loan debt exceeds their annual income. Payments are based on discretionary income, family size, and state.

Refinancing Loans

Refinancing medical school loans is an option during residency, after residency, or both.

Refinancing with a private lender might help save you money if you can get a lower interest rate than the rates of f your current student loans.

Refinancing means paying off one or more of your existing federal and private student loans with one new loan, which has one monthly payment.

If you refinance your student loans and get a better rate, you could choose a term that allows you to pay off the loan more quickly, if you’re able to shoulder the payments, which should save you in interest.

Again, refinancing isn’t a good fit for those who wish to take advantage of federal programs.

Consolidating Loans

The federal government offers Direct Consolidation Loans, through which multiple eligible federal student loans are combined into one. The interest rate on the new loan is the average of the original loans’ interest rates, rounded up to the nearest one-eighth of a percentage point.

If your payment goes down, it’s likely because the term has been extended from the standard 10-year repayment to up to 30 years. Although you may pay less each month, you’ll also be paying more in interest over the life of your loan.

Schools With the Highest Student Debt

When it comes to student debt, all medical programs are not equal. According to U.S. News and World Report’s “Best Grad School” rankings, the range can be extensive. Out of 118 medical schools listed, the three that left grads with the most debt in 2020 were:

•  Midwestern University in Glendale, Arizona: $340,620

•  Midwestern University in Downers Grove, Illinois: $335,960

•  Nova Southeastern University Patel College of Osteopathic Medicine (Patel) in Fort Lauderdale, Florida: $308,321

On the other end of the spectrum, the schools that graduated students with the least amount of debt in 2020 were:

•  Stanford University in Stanford, California: $89,739

•  Columbia University in New York, New York: $97,891

•  University of North Texas Health Science Center in Fort Worth: $101,209

Public vs. Private Medical School

The cost of attending a private medical school is typically higher than a public school.

According to the AAMC, these were the median costs of tuition, fees, and health insurance for first-year medical students during the 2020-2021 school year.

•  Private school, in-state resident: $64,053

•  Private school, nonresident: $64,494

•  Public school, in-state resident: $39,150

•  Public school, nonresident: $63,546

According to EducationData, however, the average public medical school graduate leaves school owing a higher percentage of the cost of attendance (77.3%) than the average private school medical school graduate (65.3%).

The Takeaway

There’s no doubt that studying medicine can lead to a lucrative career, but the route can be daunting, in every way. When the average medical school debt tops $240,000, some aspiring and newly minted doctors look for a remedy, stat.

If you’re leaning toward refinancing, SoFi has a program specifically for medical residents. Potential borrowers might benefit from a low rate or low monthly payments during residency.

Check your rate in a few clicks.


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 THE END OF JANUARY 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.

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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