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Paying for College: A Parent’s Guide

Parents can and do find ways to pay for their child’s college, but it often involves sacrifice and planning. Two keys: Save early and consistently.

Starting as soon as possible and making regular deposits into whatever vehicle you choose can help smooth out the ups and downs of the stock market.

Consistently making equal payments also makes the task of saving easier.

How Much Will I Need to Save?

The answer to this question is subjective. Do you plan to try to cover 100% of your child’s college costs, or will student loans, if needed, be palatable? Will your child likely qualify for need-based or merit aid? Might your high achiever be eligible for a college on the list of schools from Amherst to Yale that meet all demonstrated need?

Have you carved out your own retirement savings plan and an emergency fund and focused on paying down your own debt? It’s smart financial planning to get your house in order first, so you can save for your offspring’s college.

The cost of attendance, or “sticker price,” on every college website that estimates the total cost of a year of school can cause, well, sticker shock. But most students do not pay sticker price. They pay the net price, that number less scholarships, grants, and financial aid.

The College Board reports that the average published tuition and fees for full-time students for 2020-21 are:

•  Public four-year college, in-state student: $10,560

•  Public four-year college, out-of-state student: $27,020

•  Private nonprofit four-year college, any student: $37,650

The estimated average net tuition and fee price paid by first-time full-time in-state students enrolled in public four-year institutions was $3,230 in 2020-21; and at private nonprofit colleges, $16,000, according to the College Board.

Remember that the above numbers cite tuition and fees, not the total cost of attendance, which also includes the estimated annual cost of room and board, books, supplies, transportation, loan fees, miscellaneous expenses (including for a personal computer), and eligible study-abroad programs.

The upshot: Anticipating the cost of attendance of various colleges, your family’s eligibility for merit and need-based aid, and borrowing tolerance can help you prepare.

If you put a number on a savings target, another key question is: How can I start saving for college?

What Are Some Strategies for Saving?

Here are a few options to consider:

Automating savings. You could set up automatic transfers to a designated college savings account, so you won’t even have to think about it. You can transfer from your checking account or, if it’s an option, opt to direct deposit a portion of your paycheck directly to your savings account.

Putting windfalls to work. Another way to boost savings comes from the planned and unplanned windfalls in life. Getting a tax refund or receiving an inheritance? Keeping an eye out for unexpected money can help you achieve your savings goals.

Pruning expenses. If you haven’t already trimmed your expenses, you can use the natural course of time to turn expenses into savings. For example, once your child no longer needs diapers, you can put that cost toward college savings. When they no longer need day care, you could funnel what you were paying into your account. If piano lessons end, it’s yet another chance to increase how much you can save.

Finding scholarship matches. Once children get closer to high school graduation, you can help them find scholarships. FastWeb and Scholarships.com are two popular sites among many that will help you search for opportunities. Many allow you to set up a profile for your child that may include interests, intended majors, and even preferred schools—data points that will be used to help match your child with scholarships.

It’s usually more cost-effective to save than borrow, of course. Every dollar you borrow can cost you more than that dollar, when you add interest.

Many parents use a mix of sources to fund their children’s education. For example, you could save a third of your target, pay a third during your child’s time in college, and borrow the last third.

Which Savings Plan Is Right for Me?

If you have your target goal and a plan to make regular contributions, you’re ready to weigh which investment vehicles will fit your needs. Here are some common savings tools.

529 Plans

The 529 college savings plan is a tax-advantaged account to save for higher education costs, and it has become popular with parents saving for college. Anyone, even non-family members, can set one up and make contributions on behalf of a beneficiary.

Contributions to 529s are made with after-tax dollars, but they grow tax-free, and capital gains are tax-free as long as withdrawals are used to pay for qualified education expenses. Any withdrawals that are not used for higher education expenses may be subject to penalties and taxes.

Another caveat: If your child doesn’t go to college, the funds still need to be spent on education to avoid taxes and penalties. But you have the ability to change the beneficiary of a 529 account to another family member.

This means that if your oldest child does not use the funds for college, you can change the beneficiary on the 529 to a sibling or even a family member in the next generation. Even better news, if your child receives a scholarship for college, you can withdraw the amount of the scholarship from the 529 plan penalty-free. If you decide to withdraw it for another purpose, you’ll pay a 10% penalty , plus regular income taxes.

Annual contributions to a 529 plan are not limited, but any amount you give the beneficiary will be part of your annual $15,000 gift tax exclusion. The IRS will let you (and your spouse, if you elect to split gifts) make five years of contributions at once without paying gift taxes.

Many states offer these plans, so you’ll want to start by finding out if your state offers any tax incentives to participate in your own state’s sponsored plan. If you discover that your state does not offer additional tax benefits for contributions, you can shop around for the lowest fees.

Then there are 529 prepaid tuition plans , offered by a dwindling number of states, that allow parents, grandparents, and others to prepay tuition and mandatory fees at today’s rates at eligible colleges and universities.

Most state prepaid tuition plans require you or your child to be a resident of the state offering the plan when you apply. Most allow the funding to be transferred to a sibling.

Qualified distributions from prepaid 529 plans are exempt from federal income taxes and might also be exempt from state and local taxes.

The Private College 529 , not run by a state, offers guaranteed prepaid tuition at many participating colleges and universities, with no residency requirements.

Coverdell Education Savings Account

A Coverdell education savings account can also be used to pay for qualified education expenses.

The annual contribution limit is just $2,000. Contributions are made with after-tax dollars, but they grow tax-free, and withdrawals for qualified expenses are tax-free.

The account is limited to certain incomes. You can use a variety of investments to grow the account.

UTMA and UGMA Accounts

A Uniform Transfers to Minors Act or Uniform Gift to Minors Act custodial account can be set up to pay any expense that benefits a minor.

When your child reaches the age of majority, 18 or 21, depending on the state, they will be able to use the money for whatever they want, so many parents are wary of using these to plan for college.

The flip side is your child won’t be limited to just paying for education expenses and can use the money for living arrangements, a car, or other necessary purchases.

There are no contribution limits for UTMA and UGMA accounts, and they can be funded with any combination of cash and investments. Annual gift tax exclusions apply.

Because contributions are made with after-tax dollars, there are no taxes on withdrawals, but there may be taxes on capital gains.

What About Student Loans?

While your student may have to take out federal student loans to make it to graduation day, you can also shoulder some of the load.

Parent PLUS loans can be one way to help your child afford college. They are student loans offered by the U.S. Department of Education, and parents become the borrower. You can borrow up to the amount of education expenses not covered by other financial aid. It’s easier to qualify if you don’t have an “adverse credit history.”

Parent PLUS loans have a fixed interest rate, currently 6.28% , with a typical term of 10 years that may be extended to 25 years. However, unlike federal student loans, Parent PLUS Loans come with a fairly high origination fee—it’s currently 4.228%.

Even with savings, federal student loans, grants, and scholarships, your child may still have unmet needs. Private student loans, offered by private lenders, are often used to fill those gaps.

SoFi offers private parent student loans, when you, the parent, take responsibility for the loan. SoFi also offers undergrad private student loans that allow a cosigner. If you cosign, you and the student are responsible for the loan.

It’s important to know that federal student loans come with benefits, including income-driven repayment options and student loan forgiveness, that private lenders do not offer.

The Takeaway

Paying for a child’s college education involves two key things: saving early and consistently. Most students will still end up borrowing in order to pay for the many expenses of higher education.

When it comes time to fund the college journey, keep SoFi Private Student Loans in mind. They come with a fixed or variable rate and no origination or late fees. Private student loans may not have the same protections and benefits that come with Federal student loans and usually are not considered until all other financial aid options have been exhausted.

See your interest rate in just a few minutes. No strings attached.


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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.
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.
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.

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.
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Is Going Back to School Worth the Cost?

Returning to school can help someone pivot in their career or lead to even more employment opportunities. But that potential opportunity doesn’t come without costs. Weighing the benefits of whether going back to school will be worth the costs is an important step before enrolling in a new degree program.

When thinking of going back to school it’s important to consider your career goals, past career experiences and what you hope to gain out of more education. Think of how the degree or certificate may improve career mobility or increase your earning potential. Then factor in how much the program will cost and how you’ll pay for the costs.

There’s no one simple formula to determine whether or not going back to school is worth the cost, but these questions may help you make your own judgement.

Determining Whether Going Back to School is Worth It

Once you’re clear about what program you’d like to pursue and have a list of schools to consider, you may want to ask yourself the following:

•  Will my investment in this degree be worth the cost?

•  Will the degree help me in my career path?

•  Is this degree necessary to continue on my career path?

•  Will this degree increase my job satisfaction (and my satisfaction in life, overall)?

There are ways to answer those questions, including strategies about how to calculate your financial return on education (ROEd), providing a way to look at how your degree combination can affect your income after you graduate.

Will This Degree Help Me in My Career Path?

When going back to school as an adult, it’s important to position yourself for continued growth based upon the career progress you’ve made to date. Sometimes, your continuing education of choice will take you further on the same career path you’ve already established. Other times, you will be broadening your education to branch out into complementary fields.

Talk to Trusted Colleagues

To make sure that the program you’re choosing will help you to accomplish your career goals, consider talking to people whose judgment you trust, including those who have pursued the path you’re considering.

Review Linkedin

Another resource that might be worth checking out is LinkedIn. You can search the profiles of people who work for companies you admire or who are in a job position you’d like for yourself. What educational credentials have they listed? If they have a graduate degree, which one? Does this mesh with what you have in mind?

Evaluate Career Opportunities

If you’re considering a pivot to a new field altogether, investigate carefully to determine potential opportunities as well as the amount of time and money you’ll need to invest to obtain your career goals. Consider taking a single class or participating in an internship in that field before diving into full-time pursuit of a degree.

Instead of immediately pursuing education, career expert Ashley Stahl recommends looking at your current career and seeing if you already have a skill that you can use to pivot.

Is This Degree Necessary to Continue on My Career Path?

Sometimes, of course, obtaining additional education is necessary in order to fulfill your career goals. This is true if you want to become a doctor or a dentist, a nurse or a lawyer. And, in other cases, you may not necessarily need additional education to get a job in a particular field, but you might aspire to work for a company that requires further education from its professionals.

Obtaining an MBA, for instance, can provide you with skills that will suit you well in various fields. And companies are very interested in hiring MBA graduates: After a hiring slump due to the Covid-19 pandemic, companies planning to hire MBAs in 2021 has rebounded to the same level as pre-pandemic, according to The Graduate Management Admission Council . In other words, not only can getting an MBA increase your skill set, it also may set you up for greater career and financial success down the line.

Will This Degree Increase My Job and Life Satisfaction?

Any time you invest significant resources into a decision, such as going back to school, you probably have desired outcomes in mind. With college or university, you’ll likely want to receive a promotion, a boost in salary, and the like, which is reasonable. But, it’s also important to consider whether those accomplishments will really make you happier.

A lot of the things in work that make us happy are intangible: a work culture and community that aligns with your values, work-life balance, or a boss you work well with. Having said that, you might need an advanced degree to get into companies and positions that provide these essentials.

Keep this in mind when deciding if going back to school is the right decision to make.

Will My Investment in This Degree Be Worth the Cost?

To help you determine the answer, perhaps consider your financial return on education (ROEd). As an initial step, you might look to see the typical lifetime earning potential for graduates in your field. But if you’re pursuing a graduate degree, it’s really important to look at the value of your degree combination.

Why? Well, your undergraduate degree has almost certainly boosted your earning potential, although to what degree varies by your major. So, when you add a graduate degree to your undergraduate one, your earning potential naturally shifts.

Data from the U.S. Census Bureau shows that education pays off, median weekly earnings increase as education level increases. However, consider the average salaries for someone with a master’s degree in your specific field against the cost, and importantly, how much debt you stand to take on if you choose to go back to school. Because there is a wide range of graduate programs, not all of them offer the same earning potential or employment opportunities.

How to Finance Going Back to School as an Adult

If you decide going back to school is worth the cost, the next step is to figure out how to pay for the program of your choice.

Explore Private Scholarships

First, you can conduct a scholarship search and explore foundations and organizations that may provide funding to you based upon your professional credentials, your community, religious affiliation and/or ethnicity, etc. Also, you could check to see if your employer offers any scholarship or grant programs that can benefit you.

Recommended: How Does Tuition Reimbursement Work?

Federal Financial Aid

Fill out the Free Application for Federal Student Aid (FAFSA®) and take advantage of federal funding, and check out the information provided by StudentAid.ed.gov to find opportunities for federal loans and grants for professional and graduate students. You can also find state-funded possibilities , including both loans and grants.

Private Student Loans

Is combining funding from these sources, as well as any funds that you can personally contribute, enough to pay tuition and other expenses associated with going back to school? If not, you could also explore private student loans.

Private student loans, offered by private lenders, can be helpful tools to help students pay for their education when scholarships, federal aid, and savings aren’t enough to fill the gap. Some private student loans lack the borrower protections, like income-driven repayment plans or forbearance options for borrowers who run into financial difficulties, afforded to federal student loans.

SoFi offers competitive interest rates to qualifying borrowers on their private student loans. And, similarly to the forbearance options offered on federal loans, with SoFi’s unemployment protection program, borrowers who lose their job through no fault of their own may qualify to temporarily pause their loan payments.

Refinancing Existing Student Loans

If you’re heading back to school and have existing student loans from your undergraduate degree, refinancing could be an option that allows you to reduce the monthly payment amounts or secure a lower interest rate.

Getting a lower monthly payment could be helpful if you’re saving up to head back to school. Some private lenders, including SoFi, offer borrowers the option to put their loans into forbearance while they go back to school—similar to the forbearance options available to federal student loan borrowers.

Keep in mind that refinancing with a private lender means you’ll forfeit the benefits afforded to federal student loans, like income-driven repayment plans or Public Service Loan Forgiveness.

The Takeaway

When evaluating whether or not going back to school is worth the cost factor in things like your career goals, the anticipated job market after graduation, typical program costs, and average salaries for the career you are pursuing with the degree. Going back to school is a personal choice, for some it can mean opening the door to new employment opportunities. For others, it may not be worth the cost.

If you’re going back to school, keep SoFi in mind as one option for private student loans or student loan refinancing. With competitive interest rates, an entirely online application, and absolutely no fees, it’s easy to find out what a student loan with SoFi could look like for you.

Find out in a few minutes if you pre-qualify and at what rates.


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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 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.

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.

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. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
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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What is Need-Based Financial Aid?

What Is Need-Based Financial Aid?

Paying for college can be expensive, but there are several types of financial aid available to students. Some aid awards are determined based on your family’s financial situation. Known as need-based financial aid, amounts are awarded based on several factors, and in some cases, it may not need to be repaid.

If you’re unsure whether you’ll qualify for need-based aid, how much you’ll receive, or whether you need to pay it back, we’ve outlined helpful information to help you navigate these questions below.

Defining Need-Based Financial Aid

To put it simply, need-based financial aid is money to help students pay for the costs associated with attending college, which is awarded based on their financial situation.

Depending on your situation, you may qualify for federal or state aid or aid from the institution you attend. Typically, need-based aid is determined based on the information provided on the Free Application for Federal Student Aid, or FAFSA®.

Most college students take advantage of what’s offered in their federal financial aid package, which may include the following types of need-based federal financial aid:

Recommended: When Is FAFSA Due for the 2021-22 Deadline?

Direct Subsidized Student Loans

The federal government will subsidize (or cover) any interest that accrues on Direct Subsidized Loans for undergraduate students while they are enrolled in school at least half-time and during the six-month grace period after graduation.

After the grace period, interest will start to accrue. This type of loan is awarded based on financial need, unlike Direct Unsubsidized Loans, which begin accruing interest as soon as they are disbursed.

There is a limit to how much a student can borrow in federal loans and the amount they borrow cannot exceed their financial need. The maximum amount first-year undergraduate students can borrow cannot exceed $5,500 (or $9,500 for independent students), $3,500 of which is in subsidized loans. The maximum amount you can borrow increases each year you’re enrolled.

Pell Grants

Pell Grants are for undergraduate students who have demonstrated exceptional financial need and depend on factors such as your expected family contribution, your enrollment status, and how much your schooling will cost.

The maximum amount may vary—it’s $6,495 for the 2021-2022 academic year. It may also be possible for students to receive up to 150% of their scheduled award, though qualification requirements will vary.

To be eligible for the Pell Grant, students will need to fill out the FAFSA each year that they are enrolled in undergraduate studies.

Work-Study Programs

The federal work-study program offers part-time jobs for undergraduate or graduate students based on their financial needs. The goal is to provide the opportunity for students to earn money towards education-related expenses and one that’s related to their field of study. There may be jobs both on- and off-campus and the program is administered by participating schools.

The type of job you get and how much you earn will be influenced by factors like when you apply and how much funding your school has. At a minimum, program participants will be paid at least the current federal minimum wage.

If you are awarded work-study as a part of your federal aid package, you can’t earn an amount that’s more than what was awarded.

Recommended: Am I Eligible for Work-Study?

What’s the Difference Between Need-Based Financial Aid and Ones Based on Merit?

Whereas need-based financial aid is based on the student and their family’s financial circumstances, merit-based aid doesn’t consider finances. Instead, this type of financial aid looks at things like standardized test scores or grade point average, or GPA. In some cases, financial aid is based on other merits such as your class rank.

Some scholarships are based on your class rank. Usually, scholarships are awarded based on merit, though there are plenty based on financial need. Before applying to any financial aid, it’s important to look at the eligibility requirements so you know whether you’ll qualify.

Related: How to Get Merit Aid for College

Do I Need to Pay Back Need-Based Financial Aid?

Even though the point of aid based on financial need is to help you cover college expenses you otherwise wouldn’t be able to afford, you may have to pay some of it back. For instance, the Pell Grant or other types of grants don’t need to be repaid. Scholarships are another type of aid that recipients are not required to repay. If you participate in the work-study program, the money you’ve earned is also yours.

However, Direct Subsidized Loans will need to be repaid. You won’t, however, need to pay any interest while you’re enrolled at least half-time since the government will cover that. Direct Unsubsidized loans (which aren’t awarded based on need) will also need to be repaid and borrowers will be responsible for the full amount of accrued interest.

In some cases, you may not need to pay the entire amount back if you qualify for student loan forgiveness. There are several types of forgiveness with varying eligibility requirements that depend on factors such as your career path.

For instance, the Public Service Loan Forgiveness, or PSLF program, will forgive the outstanding balance on a Direct Loan if you made 120 monthly qualifying payments. These payments need to be paid while you’re working full-time for a qualifying employer and under a qualifying repayment plan.

To see whether you qualify for a forgiveness program, it may be helpful to speak with a loan officer.

Should I Apply for Need-Based Financial Aid?

There’s nothing wrong with seeing what you may qualify for. Besides, filling out the FAFSA is free. Filling out the FAFSA will allow you to determine how much federal aid you qualify for. Some schools will also use the FAFSA to determine additional aid awards.

The FAFSA will require information about you and your family’s financial situation to help determine how much aid you’ll receive. There is also the CSS Profile , which some colleges may use to determine financial aid awards. To fill out the CSS Profile there is a small fee.

Related: FAFSA 101: How To Complete The FAFSA

That being said, you may not receive enough financial aid even if you qualify. For instance, Pell Grants are typically given on a first-come, first-served basis. It may help to submit the FAFSA as soon as possible. That way, you may be able to find out sooner what you may qualify for. You can submit your FAFSA as soon as October 1 for the following school year.

The Takeaway

Even if you’re not sure if you qualify for need-based aid from the federal government, you may be able to qualify for ones at the state, local or college level. There is also merit-based aid in the form of scholarships and some grants.

Many organizations also award grants and scholarships for specific demographics and those pursuing certain fields. It’s far better to accept free money through grants and scholarships before taking out any loans.

If you do end up borrowing money to pay for college, you can consider refinancing your student loans. Doing so can help qualifying borrowers reduce their interest rate, which could lower the amount paid over the life of the loan. Note that refinancing federal loans eliminates them from borrower protections and benefits like PSLF and income-driven repayment plans.

Interested in refinancing student loans? Learn more about what SoFi offers.

Photo credit: iStock/MicroStockHub


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.

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.

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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Top 10 Most Popular Scholarships for Women

10 Popular Scholarships for Women

As you’re pursuing an undergraduate or graduate degree, don’t forget to look at free money (in the form of scholarships) as one of your potential funding sources. There are plenty of scholarships for women, whether its purpose is to encourage more females to pursue careers where they’re considered underrepresented or to help them attend college in the first place.

Spending some time finding (and then applying to) scholarships you may be eligible to receive could be incredibly helpful when it comes to paying for college tuition.

What Types of Scholarships Are There for Women?

There are plenty of scholarships available for females pursuing both undergraduate and graduate degree studies. Scholarships may be either need- or merit-based awards, though each one will have its own qualifying and application requirements.

For instance, need-based scholarships generally require applicants to exhibit financial need. Merit-based scholarships may be determined based on skills, abilities, or other talents such as a student’s GPA, test scores, or the type of field they are looking to pursue.

Some scholarships may even be location-based, such as residents of certain states or for specific schools.

Recommended: Types of Federal Student Loans

Are There Scholarships for Women in STEM?

There are many scholarships for women who are pursuing careers in science, technology, engineering, and math (STEM). According to the US Census, in 2019, 27% of all STEM workers are women, with engineering and computer-related jobs being the least represented.

Government organizations, industry associations, and even technology companies offer industry-specific scholarships (we’ll talk more about some of them below). For instance, companies like Google or associations such as the Society for Women Engineers (SWE) offer scholarships for women.

Popular Scholarships For Women

Below are 10 scholarships available exclusively to women:

Associated Women for Pepperdine (AWP) Scholarship

Scholarship amount: $5,000
Application Deadline: February 15

The AWP is one of the largest women’s groups awarding scholarships for female Christian students. There are several awards up for grabs, and scholarships can be renewed. To qualify, applicants need to be students at Pepperdine University, current and active members of the Church of Christ, submit a letter of recommendation from a leader of the Church of Christ, and fill out the Free Application for Federal Student Aid (FAFSA®) application.

Gertrude M. Cox Scholarship

Scholarship amount: $1,000
Application Deadline: February 23

The Cox Scholarship aims to encourage women to pursue professions related to the statistics field. There are two scholarships, one for a female early on in their graduate career, and the other for a woman at a more advanced level. Applicants need to be permanent residents or citizens in the US or Canada and be admitted to a full-time graduate statistics program of the year the scholarship is awarded.

Jeannette Rankin Women’s Scholarship Fund

Scholarship amount: Varies
Application Deadline: February 26 (Note that the 2020-2021 application cycle for this scholarship is closed)

This scholarship is for women age 35 or older who are considered low-income and enrolling into a not-for-profit accredited educational institution. Women can pursue an associate’s or bachelor’s degree, or vocational education. To apply, applicants need to meet the household income guidelines from the Department of Labor’s Lower Living Standard and answer questions based on their academic and career goals.

American Association of University Women (AAUW) Selected Professions Fellowships

Scholarship amount: $5,000–$18,000
Application Deadline: December 1

The AAUW awards multiple scholarships, one of which the Selected Professions Fellowships is one of them.

Women may apply if they intend on pursuing full-time studies at an accredited US institution in a field where women have had historically low enrollment. For instance, scholarships are awarded for women pursuing degrees in STEM and law.

Eligibility criteria include women who can prove they have shown promise of high academic excellence and distinction.

American Indian Services (AIS) Scholarship

Scholarship amount: $2,000
Application Deadline: February 1 to November 1 (Depending on when the applicant’s classes start)

The AIS scholarship aims to help Native American students enrolling in an accredited institution pursue higher education. Awards are given on a quarterly basis, though you’ll only need to apply once per year.

Eligibility requirements include being at least one-quarter of an enrolled member, or descendant of an enrolled member of a U.S. Federally Recognized Native American Tribe, enrolled at least half-time, and completed the FAFSA. This award is currently only available to undergraduate students.

Educational Foundation for Women in Accounting Scholarships

Scholarship amount: Varies
Application Deadline: Varies (most end April 30)

The Educational Foundation for Women in Accounting offers multiple scholarship opportunities for women pursuing undergraduate, graduate, or postgraduate degrees in accounting. Applicants may apply to more than one scholarship excluding the Women in Transition and Women in Need awards, of which students can only apply to one.

Eligibility criteria varies, though most will require applicants to provide transcripts, demonstrate financial need, and prove they’re committed to working in the accounting field.

Jane M. Klausman Women in Business Scholarship

Scholarship amount: $2,000 or $,8000
Application Deadline: April to June

Women who are pursuing a business program in qualifying fields and living or studying in an area where Zonta International is active can apply for this scholarship. Locate a Zonta Club near you here . There are 32 awards for $2,000 and six awards for $8,00. Applicants also need to be enrolled in the final year of a Master’s program or at least the second year of their undergraduate degree.

American Nephrology Nurses Association Career Mobility Scholarships

Scholarship amount: $1,000 to $2,500
Application Deadline: October 15

The American Nephrology Nurses Association, or ANNA, offers a few scholarships ranging from $1,000 to $2,500 designed to support qualifying members who are pursuing an advanced or BSN degree in nursing. Qualifying criteria includes being a current full ANNA member for at least two years, enrolled or accepted into a qualifying nursing program, and a 250-word essay outlining the potential impact of the scholarship.

Chicana Latina Foundation Scholarships

Scholarship amount: $1,500
Application Deadline: March 31

Self-identifying Chicana or Latina college students living in qualifying California counties can apply for a $1,500 scholarship. They need to be students attending an accredited community college, college, or university full-time and meet certain academic requirements. Plus, they’ll need to attend the Chicana Latina Foundation (CLF) Leadership Institute and CLF Annual Awards Dinner if selected for a scholarship.

To apply for this scholarship, applicants will be required to submit two letters of recommendation, one of which needs to be from a counselor or professor.

Undergraduate students need to submit unofficial or official transcripts from their current degrees. Graduate students will need to submit a resume or CV in addition to providing a transcript.

The Women In Aerospace Foundation Scholarship

Scholarship amount: $2,000
Application Deadline: June 22

The Women In Aerospace Foundation aims to promote careers in the aerospace field—this scholarship program is one of the ways it does so. Each year, the organization will award at least one scholarship to a woman who is interested in pursuing a career in this field.

To qualify, applicants need to be currently enrolled in an accredited US college or university, plan to enroll the next academic year and complete a minimum of 2.5 academic years of full-time college. Applicants also need to have a minimum of a 3.0 GPA

The Takeaway

Applying for one of the many scholarships for women can be a smart tactic if you’re trying to figure out how you will pay for your college education. In addition to the scholarships listed here, there are many other opportunities—many scholarships go unclaimed because they don’t receive enough applications. It doesn’t hurt to submit an application since the worst they’ll say is “no”, and the benefits are well worth it.

Student loans are another option to help pay for college tuition costs. If you’ve already taken out student loans, it may be possible to save money over the life of the loan by refinancing the student loan(s) to a lower interest rate. Refinancing federal student loans means they’ll no longer qualify for borrower protections like income-driven repayment plans, so it won’t be the right choice for all borrowers.

Interested in learning more about refinancing student loans with SoFi? Find out if you prequalify, and at what rate, in a few minutes.

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Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

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How to Calculate Cap Rate

HED: How to Calculate Cap Rate

What is Cap Rate?

Capitalization rate, also called cap rate, is the rate of return that an investor can expect to earn on a real estate investment property. Commercial real estate investors use it to determine how long it will take to recoup their investment in a given property. Many investor will roughly calculate this number mentally, before doing further diligence on a potential investment.

In its simplest form, investors determine the cap rate of a property by dividing the property’s annual net operating income by the value of the asset. The resulting number is a percentage, and it’s how investors understand the potential return on a given property. Simply put, the cap rate represents the financial returns of a property over a single year.

What Does a Cap Rate Indicate?

The ranges of what constitutes a good or bad cap rate varies widely, depending on the property, and its market. Investors use the cap rate as a quick guide to an investment’s value compared to other similar real estate investments.

But as an indicator it leaves out important aspects of a real estate investment such as the leverage undertaken to purchase and develop a property, and the time it will take to realize cash flows from improvements.

The Formula for Calculating Cap Rates

The most popular formula for calculating cap rates is this:

•  Capitalization Rate = Net Operating Income / Current Market Value

Here’s a breakdown of each of those components in this context:

Net Operating Income

Net operating income consists of the property’s gross annual income – all the rent and other revenues the property produces – minus all of the common home repair costs, taxes, insurance, and other expenses related to the property, excluding mortgage payments. Once those costs have been subtracted from the income, you have the net operating income.

Current Market Value

Current market value isn’t necessarily the price that an investor paid for the property. Rather, it’s the price that the property would sell for today. In the case of a prospective real estate investment, it’s the price that the investor would pay to buy a property.

Cap Rate

When an investor divides the Net Operating Income by the Current Market Value, they take the number that’s left, and move the decimal point two digits to the right to arrive at the cap rate. That number represents the percentage return investors can expect from the property.

How to Calculate Cap Rate

Cap Rate Example

An investor who’s considering a real estate investment would start by finding out the annual rental income it produces. This is easier to do with an existing property that already has paying tenants, as it has a track record and leases in place.

Assuming that an investor is interested in a property already has tenants, an investor can ask for this information from the current owners. In this hypothetical investment, an investor finds out from the present owners that a property has investors who pay $90,000 a year in rent.

But the building costs $9,000 per year to manage. It also costs $4,500 to maintain the property. Then there’s another $7,100 that the owner of the building will have to pay in property taxes. Finally, insuring the building will cost $6,500 per year.

To arrive at the net income of the property, the investor will have to subtract all of those annual expenses from the property’s gross annual income. In this example, the net income of the property, after factoring all of those costs comes in at $62,900.

Once an investor knows the net income that the property produces, they divide that number by the current market value (if they already own the property), or the purchase price (if they’re thinking of buying it). To stay with our example, if the current market value/purchase price is $400,000 and the net income is $62,900, the formula gives a result of 0.15725. And when the investor moves the decimal point two digits to the right, the result is 15.72. That number – 15.72 – tells the investor that they can expect the property to delivers an annual return of 15.72%.

Using a Property’s Cap Rate

While a property’s past income can serve as a guide, cap rates are based on projected estimates of its future expenses and future income. As the business climate, and the condition of the property fluctuate from year to year, the property’s cap rate will also fluctuate.

But even though the cap rate changes over time, it is a valuable way to understand the real value of an investment, simply because it tells an investor how long it will take to recoup their investment in the property. For example, an investor purchasing a property with a cap rate of 10% will need roughly 10 years to earn back the initial investment.

After that ten-year investment, the investor will still own the property and be entitled to the net income. But before they reach that point, many unexpected risks related to property investing can rear up and derail the investor’s plans.

The Limitations of Cap Rate

The cap rate of a property is a projection, and nothing more. Investors purchasing a Treasury bond paying 3% have every reason to expect that if they hold it to maturity, they’ll receive 3% annually.

But property investing comes with a host of risks that can keep that rosy cap rate from ever becoming a reality. With commercial real estate, the most likely risk is that the tenants will move out.

To go back to our example, if a third of the tenants move out of the building, then its gross income will go down to $60,000. But building’s many expenses will most likely remain steady, making its net income $32,900. Assuming that the building’s value hasn’t changed, suddenly its cap rate is $60,000/$400,000, or 8.2%.

There are also factors having to do with the property itself. Even when well maintained, buildings break down and wear out over time. That adds to the operating costs and diminishes the net income of the property. It also affects the value of the underlying asset that the investor owns.

Some risk factors that investors should consider include the age, location, and condition of the property. At the same time, investors should think about what type of property they’re buying – whether it’s a single or multifamily home, industrial, office or retail property. Retail and hotel owners saw their cap rates fall significantly when the coronavirus pandemic reduced business for their industry.

There are also, unknowns, such as inflation, which could make some of the investor’s expenses higher but also potentially allow them to increase the rent. Digging deeper, investors buying an established property may want to do some homework on the current tenants’ financial status, as well as their history of paying rent on time.

Investors should also look at the terms of the current leases that they’ll be inheriting when they take over the property. At the same time, investors should take a larger view of the macroeconomic factors affecting the property, its location and its tenants and consider the potential opportunity costs associated with tying a portion of their portfolio in an investment property.

Recommended: The Pros and Cons of Owning a Rental Property

The Takeaway

The cap rate formula provides investors with a valuable measure when evaluating the opportunity presented by a property investment. Real estate investment can be one way to diversify a portfolio, since real estate returns typically do not correlate to the returns of stocks and bonds.

A great way to get started building the rest of your portfolio is by opening an account on the SoFi Invest® brokerage platform. SoFi Invest offers an active investing solution that allows you to choose your stocks and ETFs without paying SoFi management fees.

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