SoFi

It’s not your imagination: America is pet-crazy. Two out of three households have a pet, and as the holidays roll in, these furbabies are increasingly part of the planning.

Perhaps they occupy the center of the holiday card (wearing a cute Xmas sweater… or an ugly one), travel with their pet parent to Grandma’s house, or receive a pile of presents.

Consider these pet spending statistics: Last year, consumers spent almost $137 billion year-round on their animals, an increase of 11% year over year. Could this spending soar still higher as the winter holidays unfold?

To learn more about this trend, SoFi surveyed 1,200 pet-owning adults from coast to coast in October 2023. Here, you’ll learn more about how animals are making the season more magical and memorable… and how they are being gifted with holiday goodies.

For starters, did you know the following pet spending statistics?

•   70% of people typically buy their pets gifts. Of those, more than a quarter (27%) spend more than $100 on gifts.

•   89% plan to dip into their wallet in some way to maximize their pets’ holiday joy.

Read on to learn the full story on pet owners’ habits and their holiday spending statistics. You may be surprised!

Holiday Joy: Pets Play a Major Role

The holidays are all about togetherness, whether that means watching a game, baking holiday treats, or watching “A Charlie Brown Christmas” on heavy repeat. But SoFi’s survey revealed that people love sharing the season with their pets.

In fact, more than one in four respondents (27%) say they can’t stand the idea of spending the holiday season without their pet by their side. If they can’t take their four-legged friend with them, over the river and through the woods, they might even wish they could just stay home!

So, how do pet owners celebrate the holidays with their pets? Besides getting them gifts, including pets in holiday photos is a popular choice for many (58%), as is putting up decorations, such as stockings, personalized for their pet (47%).

“Why include pets in holiday traditions? It’s simple — these traditions create bonding moments,” says Chris Allen, founder of Oodle Life, a pet blog . “One year, Max actually unwrapped his own gift, a squeaky toy, and the joy on his face was priceless. It not only made our day but also made us feel more connected as a family, furbaby included.”

Here’s are respondents’ favorite ways to include pets in their holiday celebrations:

•   70% get holiday pet gifts.

•   58% include pets in their holiday photos.

•   47% have personalized holiday decor for their pet (such as a stocking or ornament).

•   45% make a special holiday meal for their pet.

•   40% dress up their pets in holiday attire (such as sweaters and hats).

•   40% let their pet be a taste-tester when cooking or baking holiday meals.

•   30% take their pets to holiday events.

•   28% bake holiday treats for their pets.

It just may be that the pet owners who forgo gifts for their critters are taking the extra time to bake holiday biscuits for them.

Including pets can help bond a family. “Our furry friends are integral family members, and holidays just aren’t complete without their spirited participation,” says Dr. Mollie Newton, DVM, founder of pet care resource site, PetMeTwice, “My own whiskered sidekick has his own stocking, which hangs proudly beside the family’s every December.”

Pets Dress the Part for the Holidays

Is there anything cuter than a grumpy cat in a Santa hat? Or a pooch dressed up to look like Max from “How the Grinch Stole Christmas?” Not really! And when pet people party, you can bet most will deck their pet out in special garb: 68% dress up their pet for holiday celebrations.

So let’s take a closer look at exactly how pet people like to deck out their dogs, felines, and other beloved pets for the holidays.

Of the pet owners who dress up their pets, here are the most popular ‘fits:

•   71% bought their pet a holiday sweater.

•   61% put a holiday-themed collar/harness on their pet during the holidays.

•   59% made their pet wear a holiday hat (think Santa hats, antlers, and elf ears).

•   47% bought their pet snow and cold-weather gear (such as snow jackets or boots).

•   35% bought themselves and their pet matching pajamas.

“Every Christmas, we put a little reindeer antler headband or Santa hat on our Labradoodle, Max,” says Oodle Life’s Allen, “He struts around, and it’s like he knows he’s the center of attention!”

What better way, after all, to prepare for a pet family’s holiday photo than donning matching hats or pajamas!

Pet Owners Go Big for Holiday Gifts

The vast majority of pet owners will likely go holiday gift shopping for their furry companion, and we wouldn’t be surprised if they wrapped the present and put it under the tree. After all, owners want pets’ holidays to be jolly and joyful, too.

About those presents: Many of these aren’t just random impulse purchases. Nearly half of pet owners (46%) say their pet has a holiday wish list. And almost one in five (18%) say their pet’s list is longer than their own!

The SoFi survey revealed that 70% of people typically buy their pets gifts. Wondering how much people spend on their pets? Consider this: Of those who dip into their wallets, more than a quarter (27%) spend more than $100. Talk about pampered pets! This year, 75% of pet owners plan to buy their pets gifts, so the numbers appear to be growing.

Overall, two key factors are likely to impact how much people spend on pets: their earning power and whether or not they have kids.

Household Income Plays a Bigger Role in Pet Gifting

According to SoFi’s research, the more financial means a person has, the more likely they are to go big on gifts for their pets. Perhaps if they are used to buying themselves more luxurious items, they may be more inclined to do the same for their animal. There are designer dog clothes, for instance, costing hundreds of dollars per garment.

In short, as income rises, so too does spending on gifts for our furry friends:

•   42% of respondents with a household income of $100,000 and up spend more than $100 on pet gifts.

•   Only 12% of respondents with a household income under $100,000 spend more than $100 on pet gifts.

39% of Dual-Income Families With Kids Plunk Down $100+ on Pet Presents

Among pet owners, you might think that dual income families who don’t have kids would spend the most, overall, on holiday gifts for their pets. Think again. The SoFi survey uncovered surprising stats on pet gifting:

Dual-income families with kids actually spend more on pet gifts than those families with no kids.

•   39% of dual-income families with kids spend more than $100 on pet gifts.

•   21% of dual-income families with no kids (DINKs) spend more than $100 on pet gifts.

Perhaps seeing how much joy pets bring kids has an impact: It might encourage parents to dip into their wallets more deeply.

Overall, Families With Kids Spend More on Their Pets

Nearly everyone aims to celebrate the holidays affordably, but a much-loved pet may encourage people to spend more freely during the festive season.

More than eight out of 10 (82%) pet owners spend at least $25 more than usual on their pets during the holidays. Some spend still more freely, with 34% of SoFi survey respondents doling out at least $100 more than their norm.

Just as kids inspire families to splurge on pet gifts, they also appear to inspire holiday pet spending overall.

Pet owners with kids tend to spend more on their pets during the holidays:

•   46% of dual-income families with kids spend at least $100 more.

•   35% of single-income families with kids spend at least $100 more.

•   30% of dual-income, no kids households (DINKS) spend at least $100 more.

•   23% of single-income, no kids households spend at least $100 more.

While 43% of pet owners say: “My pet is spoiled so I splurge on them during the holidays,” it probably comes as no surprise that those with kids say this most often:

•   78% of families with kids agree with this statement.

•   22% of families with no kids relate to this statement.

Nearly Half Budget Ahead of Time for Holiday Pet Spending

When the holidays approach, many pet parents assess how much they have to spend for the holidays. Whatever type of budget they use, there’s a good chance it includes funds to make the season special for their animals.

Interestingly, nearly half know how much they will spend on their pets for the holidays and sock that money away in advance — that’s good financial planning in action. Here are the details:

•   49% say “Yes, I know how much I’ll spend on my pets and put that money aside for holiday spending.”

•   51% say “No, I don’t plan for how much I’ll spend on my pet during the holidays.”

Note: No word on how much pets are planning to spend on their parents….

Generally, pet parents take a number of different pet-related costs into consideration during the holidays. It’s not just about squeaky toys and catnip, after all. It’s about photos with, say, Molly, the beloved guinea pig, front and center. Yes, nearly half of our respondents budget for holiday photos with their pet. And more than one out of three pet owners account for the cost of getting their pet groomed for the season. Got to look sleek for those pictures, right?

Take a closer look at where the dollars go. Aside from holiday gifts, pet owners told SoFi that they plan for the following costs:

•   45% budget for taking holiday photos.

•   38% budget for getting their pet groomed for the holidays.

•   38% budget for seasonal veterinary needs.

•   35% budget for bringing their pets along when they travel for the holidays.

•   33% budget for buying holiday attire for their pet(s).

•   26% budget for boarding or care for pets because they’re booking holiday travel without their animal.

How to Spoil Your Pet… Without the Debt

Just because many SoFi survey respondents may spend lavishly on their pets over the holidays (as many Americans do), that doesn’t mean they abandon their financial savvy and become bad with money. They apply the same money-smart tactics for their pet purchases as they do for their own gear. Coupon clipping? Check. Signing up for emails that might bring rewards? You bet.

Here’s how they make the most of their cash during the holidays:

•   62% say they use coupons to help save money on holiday spending for their pets.

•   48% say they subscribe to pet company marketing emails to scan for deals.

•   40% get money-saving tips from friends and family.

•   24% say they follow influencer recommendations (yes, petfluencers can really have pull).

Recommended: How to Make a Budget: A Beginner’s Guide

Sometimes Naughty, Always Loved

Much as people adore their kitties, rabbits, and dogs, let’s face it: The answer to “Who’s a good boy?” is not always “You are!” Pets can be rascals — chewing shoes, shredding upholstery to ribbons, and leaving muddy pawprints.

Indeed, while many pet parents will be rewarding their good boys (and girls) this season, not all critters may deserve their gifts.

In fact, 22% of pet owners surveyed by SoFi say they’d put their pet on the naughty list.

What’s more, the holiday season gives animals ample occasion to run wild. You know the drill: cats deciding to climb the Christmas tree, or a dog dragging lovingly prepared food off the table (Remember how “A Christmas Story” ended?).

Here’s what the SoFi survey respondents had to say on this aspect of the holidays with pets.

What do pet owners dread most during the holidays?

•   37% of respondents say it’s their pet knocking over the Christmas tree or knocking ornaments off the tree.

•   27% say it’s their pet tearing open gifts early.

•   26% say it’s their pet stealing food from the table or counter.

•   24% say it’s their pet misbehaving around family and friends at gatherings.

•   17% say it’s untangling their pet from holiday lights.

Holiday Pet Safety Also a Concern

Amid all the revelry, pet parents are also focused on keeping their animals safe. After all, most people know facts like poinsettia being mildly toxic to dogs. Here’s how SoFi survey respondents feel about protecting their critters, because happy holiday pets are healthy holiday pets.

Almost one in four (23%) worry about needing to use pet-safe holiday decorations. The same percentage fear their pooch might get sick because friends and family overfeed them or slip them slices of forbidden foods just because, hey, it’s the holidays.

Here’s another source of anxiety for pet parents: being separated from their animal companion during the season. Nearly one-third of them worry about having to travel without their pet. They want to make sure wherever they are over the holidays, they have their furbaby right by their side… or in their lap.

“Involving our pets in our holiday celebrations helps us all feel a little more connected during the holiday seasons,” says Devin Stagg, Marketing Manager at dog-training provider, Pupford. “While I think they enjoy the treats and toys, I believe the greatest benefit is to the pup parent!”

Recommended: Tips to Cut Costs When Traveling With Pets

Pets Inspire the Spirit of Giving

If anyone needs further proof that pets are really and truly part of the family, take note. Pets have a way of inspiring gift giving across the generations. Few can resist giving them a little treat, whether that’s a fancy organic dog biscuit or a cat teaser.

According to SoFi’s survey, among families with children, 61% say their kids give gifts to the pet. And grandparents love their grand-furbabies, with almost one in three putting a pet present under the tree.

Pets themselves are often a favorite gift, too: 39% of pet owners say they’ve given someone else a pet as a holiday gift. Of those, 36% say they spent more than $100 on the pet, and 5% say they spent more than $1,000.

Takeaway

It’s no secret that Americans love their pets, and so when the holidays roll around, those animals get lavished with love, gifts, and special treatment. SoFi’s survey of 1,200 pet owners in October 2023 uncovered just how much people splurge on their furbabies, what they buy, why, and how pets can leave their imprint (or pawprint) on the holiday season.

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Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

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Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

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A higher resale value of your home is one of the many rewards for carrying out home improvements and renovations. But remodeling projects cost money, and financing them can be expensive, depending on the amount you borrow and the type of loan you use.

Options for home improvement financing include home equity loans (HELOCs), home equity lines of credit, and cash-out refinancing. These types of financing allow homeowners to borrow against the equity they have built up in their home. Other financing options are personal loans, credit card financing, and government programs. Any of these could be the best option depending on the circumstances.

Here’s what homeowners need to know about the different types of home improvement loans and what factors they should consider before settling on a lender.

1. Home Equity Loans

If you have built up equity in your home, which means you have paid off a portion of your mortgage, a home equity loan could be the right choice to finance home improvements. To find out how much equity you have, subtract the balance due on your mortgage from the assessed value of your home. For example, if your home is worth $400,000 and you owe $200,000 on your mortgage, you have $200,000 in equity. A bank will let you borrow up to a certain percentage of that amount — up to 100% in some cases.

A home equity loan acts like an additional mortgage, where the homeowner pays back the loan in monthly payments. The payments are in addition to the original mortgage payments. Home equity loans often have low fixed interest rates because the home is used as collateral for the loan. However, there are closing costs to consider that could be between 2% to 5% of the loan amount.

On the plus side, home equity loans usually qualify for the mortgage interest tax deduction as long as the funds are used to substantially improve the home.

If you have plenty of equity and need a sizable amount to finance a big project, a home equity loan could make sense. You will receive a lump sum payment, and the improvements you make may increase the value of your home.

Advantages of a Home Equity Loan	Disadvantages of a Home Equity Loan
Low interest and terms from five to 30 years	There are origination fees and closing costs
You can borrow up to 100% of your home’s equity	Funds are disbursed as one lump sum, so borrowers need to budget carefully
The interest is tax deductible	The monthly payments add to existing mortgage payments

💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. One question can save you many dollars.

2. Home Equity Line of Credit (HELOC)

A home equity line of credit also borrows against the equity you have built up in your home. But the funding works more like a credit card and is not distributed as a lump sum payment. A bank will allow a qualified homeowner to borrow up to a preapproved limit and then pay it back. HELOC loan terms are typically between five and 20 years.

Interest rates differ for HELOCs because they are adjustable and rise and fall over the life of the loan. However, interest is only due on the outstanding balance — the amount borrowed — not the full credit limit.

The amount you can borrow through a HELOC depends on your credit score, income, and the value of your home. Your lender can change the loan terms, too. For example, if your credit score drops during the loan term, your lender may reduce the amount you can borrow.

One advantage of a HELOC is that you can use funds from the line of credit, make payments, and then borrow again. A HELOC is a better option if you have smaller projects to do over a longer term. You can borrow as you go, only pay interest on how much you use, and avoid paying closing costs.

Advantages of a HELOC	Disadvantages of a HELOC
No closing costs	Interest rates may go up and down
Interest payments are tax deductible	Interest rates are typically higher than those for a home equity loan
You only pay interest on the amount you use	Your lender can change the amount you can borrow and the repayment terms

3. Cash-Out Refinancing

Another option to fund home improvements is cash-out refinancing. In the case of cash-out refinancing, a homeowner takes out a new mortgage that is higher than their original mortgage. The borrower then pays off the original mortgage and uses the leftover cash to fund home improvements. The amount of cash they can access depends on the equity they have in the home.

For example, let’s say the homeowner currently owes $100,000 on a $300,000 mortgage. They take out a new mortgage for $350,000, pay off the old mortgage ($300,000), and now have $50,000 left to spend on home improvements. The catch is that their new monthly mortgage payments will be higher because they have increased the size of the loan, and they will have to pay origination fees and closing costs.

Money from refinancing does not have to be used to improve a home; it can be used to consolidate debt, pay for school, or anything else the borrower wants to use it for. Also, the cash is not considered income from the IRS and is not taxable.

Cash-out refinancing may be a good option if interest rates have dropped since you took out your original mortgage. You can take out cash and pay a lower interest rate on the new loan. You might also be able to reduce the term length of your original mortgage and pay off your home loan sooner. This will be the case if the total cost of your new loan including closing costs is less than the total cost of your original mortgage.

Advantages of Cash-Out Refinancing	Disadvantages of Cash-Out Refinancing
You will still have one monthly mortgage payment	Your new mortgage will have a higher balance
You might be able to lower your interest rate and loan term	Your loan term will start from the beginning, so you will be paying off your mortgage for longer
You can use the cash for anything	If interest rates have gone up, your monthly payments may be higher

4. FHA 203(k) Rehab Loan

An FHA 203(k) rehab loan is a loan taken out at the time of the home’s purchase. These loans are typically used for a fixer-upper, when the owners need funding right away for improvements. This could be the best type of loan for home improvements for big projects. The advantages of this type of loan for the borrower are that they have funds available for improvements from the outset, and they only have to pay back one loan with one set of closing costs.

These loans are also backed by the government and come with benefits. Borrowers can qualify with a less-than-stellar credit score (typically, a minimum of 620), and the down payment expected is lower than it would be for a traditional mortgage loan (as low as 3.5%).

Two things to remember are that the renovation costs must exceed $5,000 for the borrower to qualify for this type of loan, and the closing process can take a long time. Lastly, work covered under an FHA 203(k) loan must start within 30 days of closing, and projects must be completed within six months.

This type of loan may be worth considering if you are buying a fixer-upper that requires significant work, and your credit score qualifies you for this type of loan.

Advantages of a FHA 203(k) Rehab Loan	Disadvantages of a FHA 203(k) Rehab Loan
One loan and one set of closing costs	Only old homes or homes in bad repair may qualify
Federally-backed with low interest rates and low closing costs	You are likely to be charged costly monthly mortgage insurance
You can qualify with a lower credit score	Cash must be used for specific home improvements

5. Personal Loans

If you don’t have sufficient equity in your home to take out a home equity loan or a HELOC, a personal loan is an option. A personal loan will come with a higher interest rate, adjustable or fixed, because this type of personal loan is unsecured. Your home is not used as collateral. These loans are processed much quicker than home equity loans or HELOCs, sometimes the same day.

Personal loan terms are shorter, from two to five years, which will mean higher monthly payments, and you’ll have to pay closing costs.

These loans may work if you lack equity or if you have an emergency, such as a broken water heater or HVAC system. That said, they are probably one of the most expensive borrowing options.

Advantages of a Personal Loan	Disadvantages of a Personal Loan
Fast financing	Higher interest rate than mortgage loans
You can qualify for a good interest rate even with an average credit score	Shorter terms, which increases monthly payments
Your home is not used as collateral and is not at risk	Fees and possible prepayment penalties

6. Credit Cards

A credit card can be used for financing, and it’s a fast, simple way to access funds. The amount you can spend on improvements will depend on your credit limit (although you could use multiple cards), and the interest charges are likely to be much higher than other financing options.

A credit card can be a good option if you think you can finish your renovations quickly and pay off the balance on the card. Look for cards with an introductory 0% annual percentage rate (APR). Some cards allow you up to 18 months to pay back the balance at that introductory rate. If you can pay off the balance by the deadline, that’s interest-free financing. However, check for fees and other hidden costs.

The danger here is that if you don’t pay off the balance by the end of the interest-free rate, the interest charges can skyrocket. That’s why credit cards should not be used for long-term financing.

A credit card can be a great option for home improvement financing if you can find one with a low introductory rate, low fees, and you are confident you can pay off the balance within the introductory rate period.

Advantages of Credit Card Financing	Disadvantages of Credit Card Financing
Fast financing	High interest rates, particularly after a low introductory interest rate period has expired
Some cards offer 0% introductory rates	Possibly low credit limits
Less paperwork	High fees

7. Government Assistance Programs

The federal government has grants and programs that can help homeowners pay for renovations. Two home renovation loan options are Title I loans and Energy Efficient Mortgages. Lenders for Title I property improvement loans for your state are listed on the U.S. Department of Housing and Urban Development’s website.

Title I Loans

An FHA Title 1 loan is a fixed-rate loan used for home improvements and rehabilitation. Loans under $7,500 are usually unsecured, but bigger loans may use your home as collateral. These loans may be used in conjunction with a 203(k) rehabilitation mortgage.

The maximum loan terms are between 12 and 20 years, and loan amounts are $7,500 to $60,000, depending on the home’s size and type.

The loan must be used for property improvements, and an FHA mortgage insurance premium of 1% of the loan amount will be added to your interest rate. There is no minimum credit score required, but your debt-to-income ratio may factor into your loan terms.

Energy Efficient Mortgage

FHA’s Energy Efficient Mortgage program (EEM) finances energy-efficient improvements with their FHA-insured mortgage. The borrower must qualify for the loan amount used to purchase or refinance a home. However, they’re not required to be qualified on the total loan amount that includes the amount used to finance energy-efficient improvements. The FHA insures the loan to protect the lender against loss in the event of payment default.

Starting in 2023, homeowners can also get tax credits for some energy-efficient updates, including windows, insulation, new doors, heat pumps, and air conditioners.

These types of programs will reduce the cost of financing for home improvements and are great options if you meet the criteria.

Advantages of Government-Assisted Financing	Disadvantages of Government-Assisted Financing
Low interest rates	Financing must be used for property improvements.
Broad range of loan terms	Strict qualification standards
Tax credits	Larger loans may require your home as collateral.

How to Decide the Best Type of Home Improvement Loan for You

If you’re trying to decide what home improvement loan is best for you, consider the following factors:

Are You Purchasing a Fixer-Upper?

If you are buying a fixer-upper, check if you qualify for either an FHA 203(k) rehab loan or a government-assisted program. You may get cheaper financing this way.

Do You Need Funds Right Away?

If you need funds quickly — for example, you have a broken heat pump or HVAC system — a personal loan or credit card financing are options to explore.

Do You Have Equity Available?

If you have built up equity, a home equity loan or line of credit will provide cheaper financing than a personal loan and over a longer term, so that your monthly payments will be lower. A cash-out refinancing loan might also mean that you could lower your payments and reduce your term if interest rates have dropped significantly since you took out your original mortgage.

How to Get a Home Equity Loan

The first step in getting a home equity loan is to decide which loan is best for your situation. Next, find a lender with the best terms and fill out an application to see if you qualify.

1. Check Your Financial Health

The better your credit score, the better the loan terms will be. If you can boost your credit score before you apply for financing, you’ll boost your chances of getting a better deal. Lenders will also look at your debt-to-income ratio when setting the interest rate and term, so lowering your debt before you apply for a home improvement loan can help lower the cost of your financing.

2. Compare Lenders

You should contact a few different lenders to compare their rates and loan terms. Look for benefits, such as rate discounts for enrolling in autopay, and watchouts, such as late payment fees and minimum loan amounts.

3. Gather Documentation

You will need to submit a few basic pieces of information when you apply for a loan. As a general guide, you will need:

•  Proof of income, such as W-2s or 1099s, bank statements, pay stubs, or tax returns.

•  Proof of residence, such as your Social Security number and utility bills.

Your current debts, housing payment, and total income will also play a role. Be sure to have all the information your lender may need on hand when you apply to speed up the application process.

💡 Quick Tip: With home renovations, surprises are inevitable. Look for a home improvement loan with no fees required — and no surprises.

4. Apply for Prequalification

Some lenders will prequalify you, which will tell you your interest rate and how much your monthly payments will be. Prequalification should not affect your credit score, whereas a formal loan application could. Applying for too many loans in a short space of time could lower your credit score.

5. Complete the Loan Application Process

Your loan application might be fully online, via phone and email, or in person at a local branch. In cases where you are borrowing against equity, your lender may require a home appraisal. Provided your finances are in good shape, the lender should approve your application, and you’ll receive funding.

How Your Credit Affects Your Home Improvement Loans

Your credit score will affect the total cost of a home improvement loan. The higher your score, the less of a risk you pose to a lender, so the better the loan terms will likely be for a mortgage or long-term loan. The same goes for credit cards and personal loans. Also, if you have good credit, you’ll probably have an easier time securing a home improvement loan.

Can You Use Home Equity Loans for Non-Home Expenses?

Home equity loans and HELOCs are flexible and can be used for anything, not just home expenses or renovations. However, these loans are best suited for long-term, ongoing expenses like home renovations, medical bills, or college tuition.

The Takeaway

The types of loans for home improvements include loans based on the equity you have built up in your home, such as a home equity loan, a HELOC, or cash-out refinancing. You can also use personal loans, credit card financing, and government programs. Loans based on equity tend to cost less over the loan’s lifetime, but they also tend to have longer loan terms. Equity-based loans also tend to be best when you need to borrow a larger amount, because you can spread out the cost over a longer period.

A personal loan will have a higher interest rate and a shorter term, but the higher your credit rating, the better the interest rate tends to be. Alternatively, credit card financing is favorable if you need funds quickly, the amount you need is not too high, and you can take advantage of a 0% introductory rate and pay off the balance before the rate expires.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.

SoFi’s Personal Loan was named NerdWallet’s 2024 winner for Best Personal Loan overall.

FAQ

What type of loan is best for home improvements?

The type of loan that is best for home improvements depends on your finances and how much you need to spend. If you hold a fair amount of equity and need a sizable amount of cash, a home equity loan, HELOC, or cash-out refinancing may be good options. Cash-out refinancing might be particularly appealing if interest rates have dropped, and you can refinance with better loan terms.

If, on the other hand, you have a smaller project that you expect to complete in a short timeframe, using a credit card that gives a 0% interest rate for a period could be the way to go.

What is the best renovation loan?

If you’re taking on a big project, buying a fixer-upper or planning to renovate an older home, you may want to consider the FHA 203(k) mortgage. The 203(k) rehab loan lets you consolidate the home and renovation costs into a single remodel home loan and avoid paying double closing costs and interest rates.

If your home is newer or higher-value and you have equity, cash-out refinancing can be a good option, particularly if interest rates have dropped.

Should I use a personal loan for home improvements?

Personal loans are a more expensive option for home improvements, especially if your credit score is average. However, using a personal loan for home improvements might be the best option if you don’t have a lot of equity to borrow from.

Are home improvements tax deductible?

Home improvement loans are generally not tax deductible. However, if you use a refinance or home equity loan, some of the costs might be tax deductible. Check with a CPA or tax specialist.

What credit score is needed to get a home improvement loan?

Credit score requirements for a home equity loan depend on the lender. A credit score in the mid-600s might be enough to be approved by some lenders, while others might not approve you with a score above 700. Lenders consider many factors, including your debt-to-income ratio and equity in the home, when considering you for a home equity loan.

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Photo credit: iStock/Hero Images

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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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How America shops is shifting in a fundamental way.

Shoppers are turning to discount stores such as Dollar Tree, ALDI, and Big Lots more often, driven largely by spiking inflation, which peaked at 9.1% in June 2022. These days, shoppers are increasingly asking themselves, Why pay more? as they place a higher premium on value.

According to SoFi’s Discount Shopping Survey of 1,500 consumers fielded in August 2023, 81% of respondents are currently shopping at discount stores at least monthly, regardless of their income level.

Surely, the impetus may vary:

•   For many, discount stores are a vital tool when sticking to a tight budget.

•   For others, it might be a way to find splurges, both large and small, at the right price.

Still, though circumstances may vary, a whopping 78% of respondents are laser-focused on snagging the lowest possible prices for items on their list.

While shoppers may have been swayed by ambience and amenities at stores in the past, now it’s all about getting top value for every hard-earned dollar. Sticking to — and stretching — one’s budget is the new black. Also worth noting: Among the ranks of discount shoppers are high-earners pulling in six figures.

SoFi’s proprietary research found intriguing and unexpected facts about just who’s hitting the discount stores, what they are hunting for at these retailers, and why the face of shopping may never be the same again.

Where the Buyers Are: 74% of Respondents Dropped Into Dollar Tree

Curious about which discount retailers are topping shoppers’ lists? According to SoFi’s Discount Shopping Survey, almost three-quarters (74%) of discount shoppers have dropped into a Dollar Tree, where the motto is “Extreme Value Every Day,” over the past year.

It isn’t just those living paycheck to paycheck who are shopping at Dollar Tree:

•   64% of the survey’s highest earners (households bringing in $150,000+) say they’ve bought items at Dollar Tree in the last 12 months.

Discount shoppers are also looking elsewhere to find where the best buys are. Over the past year:

•   65% have shopped at Dollar General

•   42% at Five Below

•   41% at ALDI

•   38% at Big Lots

•   37% at T.J. Maxx

•   35% at Ross Dress for Less

•   35% at Marshalls

Where else are moneywise shoppers queuing up? It turns out that 22% have shopped at HomeGoods, while one in five (20%) has rung up items at brand-name outlets (Nordstrom Rack, for instance).

Discount Stores: The New Social Media Darlings

Reflecting their new status as many shoppers’ go-to destination, discount stores are accumulating hefty followings. As of September 2023, the stats are:

•   ALDI USA has 955K Instagram followers; 184K on TikTok

•   Dollar Tree has 675K Instagram followers; 76.6K on TikTok

•   Five Below has 706K Instagram followers; 214.3K on TikTok

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81% Discount-Shop at Least Once a Month

People aren’t just hitting the discount shops for an occasional find. Rather, SoFi’s discount shopping research uncovered that these retailers are quickly gaining traction as routine destinations for shoppers.

•   81% of respondents shop at discount stores at least once a month.

•   38% — practically four out of ten people — shop at discount stores weekly.

•   14% of respondents say you’ll find them shopping at discount stores several times a week. (These may be people who are saving money daily with their shopping habits.)

Compelling find: Close to half of high-income earners (those making $100,000+ a year) say they shop at discount stores at least weekly.

Inflation Surge Drives Shoppers to Discount Stores

If you’re wondering why discount shopping is surging, consider the economic state of our union. After inflation rates fell month after month for a solid year, July 2023 saw an uptick in prices that surely set some people on edge. (Inflation in July 2023 increased 3.2% from July 2022.)

What’s more, the cost of living is soaring. Social Security recipients enjoyed a cost of living adjustment (COLA) to the tune of 8.7% in 2023, one indicator of how steeply the price of, well, everything has been rising.

Indeed, consider this:

•   Nearly two-thirds of discount shoppers (63%) say inflation and rising costs have prompted them to shop at discount stores over the last 12 months.

•   In addition, nearly half of discount shoppers have ramped things up, with 49% saying they are hitting discount stores more frequently than they did before the inflation surge.

When it comes to defending one’s paycheck against price hikes, bargain-hunting is a smart maneuver. ”Inflation is real for just about all of us,” says David Bakke, a consumer finance expert and writer at personal finance blog Dollar Sanity. “My discount shopping has definitely increased. I find myself spending a lot more time at ALDI, Dollar General, and the like.”

Indeed, inflation is making over the way Americans shop. SoFi’s discount shopping data shows this significant stat:

•   40% of respondents say they “always” search for ways to save on their purchases when shopping.

•   Only 2% said they never search for ways to save.

Here are some of the leading tactics discount shoppers have used to cut costs:

•   41% have used couponing websites.

•   40% have subscribed to company emails.

•   31% have followed a company or brand on social media.

•   21% have joined a Facebook group or other online community.

•   18% have followed an influencer on social media who talks about discount shopping.

More Than Half Discount-Shop to Benefit Their Budget

In these challenging economic times, many consumers are embracing budgeting as a way to manage their finances. Almost six out of 10 discount shoppers (58%) say one of the biggest benefits of shopping at discount stores is the ability to stick to a budget.

This holds true for 62% of those with household incomes under $75K, as well as 46% of those pulling in $100K or more.

Other reasons to love these retailers? SoFi’s discount shopper respondents said:

•   Regular availability of discounted products (47%)

•   The convenience and accessibility of discount stores (46%)

•   The ability to find trendy or seasonal items at lower prices (45%)

Another shopping pattern that SoFi’s discount shopping survey uncovered: A significant number of discount shoppers are making most of their purchases from these lower-priced retailers:

•   36% make more than 50% of their purchases at discount stores.

•   Almost one in 10 (9%) of those with household incomes of $150,000 or more do more than 75% of their shopping at discount stores.

First on the Discount Shopping List: Groceries

It’s no secret that food prices can trigger sticker-shock, and that’s not just for luxuries like a pumpkin spice latte. Overall, food prices are ratcheting up 5.9% this year, per the USDA’s numbers, which may explain why consumers are hitting the low-cost stores for items they might otherwise buy at a standard supermarket.

According to the SoFi discount shopping research, groceries are the most common purchase made by discount shoppers: 78% buy groceries at discount stores.

And no wonder: These stores often have an array of staples and snacks, from coffee to cookies, and some are putting a health spin on things, as with Dollar General’s “Better for You” selections. Shopping at discount stores can be a solid way to save money on food.

“I shop at discount grocer ALDI,” says Melissa Cid, consumer savings expert with MySavings.com. “Chips, peanuts, cookies, yogurt, and ice cream are 25% to 50% cheaper than at traditional grocery stores.”

After food, the next most popular items:

•   Fashion and apparel: 58%

•   Beauty and skin care: 49%

•   Home decor: 40%

11% Splash Out When Discount Shopping

Think shoppers are only grabbing cereal, socks, and a bottle of shampoo? Not necessarily.

Yes, many people are hunting for lower-priced essentials at the discount stores, but super-low prices are also leading to big-ticket purchases, for some. According to SoFi’s survey:

•   11% of discount shoppers say the most expensive item they’ve purchased at a discount store in the past 12 months cost $250 or more.

Here is what shoppers say are some of the priciest items they purchased at a discount store:

•   18% say it was a fashion/apparel item.

•   16% say it was an electronic item.

•   13% say it was a home decor item.

“Tech gadgets and home essentials top the list of items that I purchase from discount stores,” explains Thomas Paddock, an Amazon FBA Six-Figure Seller and the founder of Learn Retail Arbitrage, an online selling resource. “These categories often carry substantial markups in conventional retail outlets. Discount stores can offer high-quality items at a more
reasonable cost.”

There is, however, a bit of a gender gap when it comes to shopping for certain items at discount stores:

•   36% of men have purchased electronics vs. 27% of women.

•   67% percent of women have made clothing purchases vs. 44% of men.

•   Nearly 3x as many men (22%) have made sports/outdoor purchases vs. women (8%).

Finding Fashion at Discount Shops? Yes, Says Gen Z

The SoFi discount shopping stats reveal that 67% of young people (aged 16-24) have purchased fashion and apparel items at a discount store within the last year.

Given that Gen Z is broadly recognized as the first digitally native generation, it’s probably no surprise that social media may have led many of them to these style purchases:

•   30% of respondents aged 16-24 have followed an influencer on social media who talks about discount shopping, vs. 18% of total respondents.

And the presence these retailers have on social media channels is significant. On Instagram, as of September 2023, T.J. Maxx has 2+ million followers, Nordstrom Rack has 1+ million followers, and Ross Dress for Less has 537K followers. All three have tens of thousands of followers on TikTok.

Almost 50% of Shoppers Seek Seasonal Wares

Seasonal and holiday shopping is (very) big business in the U.S., with Halloween spending, for instance, totalling $10.6 billion in 2022.

“Here today, gone tomorrow” items are part of the allure of discount stores, where goods can be found at a rock-bottom price. Consider these numbers from the SoFi survey:

•   45% of discount shoppers say one of the biggest benefits of discount stores is the availability of lower-priced trendy or seasonal items.

•   65% of discount shoppers are hunting for clearance or end-of-season items.

•   70% of women look for clearance and end-of-season deals at discount stores vs. 56% of men.

More Than Half of Discount Shoppers Spend Serious Time Bargain-Hunting

The new wave of smart shoppers are dedicated bargain-hunters. They will invest hours to get a great deal. In fact, more than half (51%) will spend between one and three hours extra to find savings or specific items at discount stores. A dedicated 4% are willing to spend five hours or more. (Of these, 63% have a household income of less than $50,000.)

Discount Shoppers Also Prioritize Availability

Low prices are the leading reason for the popularity of discount shopping, but availability of desired products is another big incentive:

•   52% head to these retailers for the specific items they know they can find there.

Whether it’s a favorite energy bar or shower gel, items that are part of a person’s usual shopping list are a big draw for discount shoppers.

This is especially true of the deep-pocketed respondents to the SoFi survey. Why spend top-dollar on your favorite matcha beverages or other small luxuries when you can buy them for much less?

•   60% of the highest earners (household income of $150,000 or more) say one of the reasons they shop at discount stores is for specific items they know they can find there.

There are a good number of impulse buyers among the aisles though:

•   Almost one in five (19%) discount shoppers say they don’t go to the stores looking for any particular item. Rather, they “go in without a plan and buy things that speak to them.”

As for the rest of the respondents to SoFi’s survey:

•   More than half of discount shoppers (51%) say they know what they need when they go to a discount store, but are open to buying items not on their list.

•   More than a quarter (26%) say they buy what they need and exit ASAP.

•   Only 3% say they just browse and rarely actually purchase anything.

And the Biggest Frustration With Discount Shopping Is…

Obviously, there is much to love about discount shopping, as detailed above. But, yes, there are a couple of pain points. Here, the two biggest downsides:

•   38% of discount shoppers say the items they want aren’t always available. That suggests that consumers would buy even more at these retailers if they could find everything they are hunting for.

•   22% say that the biggest downside is that the items are of a lower quality.

It seems that getting what you want, when you want it, may matter even more than an item’s quality.

That said, Thomas Paddock of Learn Retail Arbitrage contends that you can find good quality if you shop smart. “Contrary to general assumptions, not every item in a discount store is of inferior quality. Many times, these are overstock products or emerging brands,” he says. “Discount stores can be an avenue to discover value.”

The Takeaway

As inflation increases, shoppers of all income levels are finding that discount stores can serve their needs. Of the 1,500 consumers surveyed for SoFi’s Discount Shopping Survey in August 2023, 81% say they are visiting discount stores (think Dollar Tree, ALDI, and Five Below) at least once a month. Popular purchases are food, fashion, personal care, and home decor items.

What frustrates discount shoppers when seeking their budget buys? Lack of availability first and foremost, followed by lower quality of some goods.

For anyone looking to make the most of their money, finding the right banking partner can also make a big difference. One that charges low or no fees and offers a competitive interest rate can help you make the most of your finances.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 3.60% APY on SoFi Checking and Savings.

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SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC. The SoFi® Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

Annual percentage yield (APY) is variable and subject to change at any time. Rates are current as of 11/12/25. There is no minimum balance requirement. Fees may reduce earnings. Additional rates and information can be found at https://www.sofi.com/legal/banking-rate-sheet

Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network every 31 calendar days.

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, Wise, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi Bank shall, in its sole discretion, assess each account holder's Eligible Direct Deposit activity to determine the applicability of rates and may request additional documentation for verification of eligibility.

See additional details at https://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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If you are employed by a government or a nonprofit, you might be able to get forgiveness for the remaining balance on your federal student loan through the Public Service Loan Forgiveness Program (PSLF).

Created by the Department of Education (DOE) in 2007, PSLF is intended to help public-service professionals who may not earn large salaries and must struggle to repay their federal student loans. In this context, many teachers, firefighters, and social workers qualify.

The program has drawn frequent criticism for being hard to navigate and difficult to qualify for, charges that the DOE says it is addressing to make sure as many people as possible can access PSLF. To that end, the DOE conducted a payment count adjustment that updated borrowers’ progress toward PSLF. To become eligible for the adjustment, borrowers with privately held Perkins or FFEL Program loans had to submit a Direct Consolidation Loan application. The deadline for submission was June 30, 2024.

Below is the latest information on PSLF eligibility and student debt forgiveness.

What Is Public Service Loan Forgiveness?

The PSLF program provides professionals a way out of their federal student loan debt by working full-time in public service. The remaining balance on your Direct Loans will be forgiven—meaning you will not have to pay it back–after you’ve made the equivalent of 120 qualifying monthly payments under an accepted repayment plan and while working full-time for an eligible employer.

What Are Public Service Loan Forgiveness Jobs?

The question for many people is who qualifies for PSLF? The jobs include teachers, firefighters, first-responders, nurses, military members, and doctors. But with this program, it is not only the type of job you have that determines if you can get forgiveness but also the type of employer. That is crucial. Qualifying employers include federal, state, local, tribal government and non-profit organizations.

To find out if your employer qualifies for PSLF, you can search through the Federal Student Aid search tool.


💡 Quick Tip: Enjoy no hidden fees and special member benefits when you refinance student loans with SoFi.

Who Is Eligible for the Public Service Loan Forgiveness Program?

How does PSLF work? To qualify, borrowers must meet certain eligibility criteria. They include:

Work for a Qualified Employer

Part of PSLF eligibility requires working for a qualified government organization (municipal, state, federal, military, or tribal) or a qualified 501(c)(3) non-profit organization. Full-time AmeriCorps or Peace Corps volunteers are also eligible for PSLF. (Learn more about military student loan forgiveness.)

Some other types of non-profits also qualify, but not labor unions, political organizations, and most other non-profits that don’t qualify for 501(c)(3) status. Working for a government contractor doesn’t count; you have to work directly for the qualifying organization.

Only full-time workers are eligible — that is, workers who meet their employer’s definition of full-time or work a minimum of 30 hours per week. People employed at multiple qualifying organizations in a part-time capacity can be considered full-time as long as they’re working a combined 30 hours per week.

Note that time spent working in religious instruction or worship does not count toward meeting the full-time requirement.

Recommended: How to Get Out of Student Loan Debt

Having Eligible Loans

Eligible loans include Direct loans such as Stafford loans, PLUS loans (but not Parent PLUS loans), and Federal Direct Consolidation loans.

If you held Federal Family Education Loan (FFEL) or Perkins loans forgiven, you had to consolidate them into a Direct Consolidation Loan first. Any payments you made on the FFEL Program loans or Perkins Loans before you consolidated didn’t count toward the necessary payments.

Private student loans are not eligible for Federal forgiveness programs.

Recommended: Student Loan Forgiveness Guide

Applying for Public Service Loan Forgiveness

There are a few hoops to jump through in order to pursue PSLF. To apply for the program, you’ll need to take the following steps:

1. Consolidate FFEL Program and Perkins Loans

Borrowers with FFEL Program and Perkins Loans had to consolidate them with a Direct Consolidation Loan. Consolidation applications should have been submitted no later than June 30, 2024. This was necessary because if you consolidate your loans afterward, you won’t get credit for any qualifying payments you made on those loans.

2. Sign Up for an Income-Driven Repayment Plan

There are now two income-driven repayment plans to choose from. They are designed to make your student loan debt more manageable by giving you a monthly payment based on your income and family size.

The latest IDR program is called the Saving on a Valuable Education (SAVE) Plan. It lowers payments for almost all people compared to other IDR plans because your payments are based on a smaller portion of your adjusted gross income (AGI). Also, if you make your full monthly payment, but it is not enough to cover the accrued monthly interest, the government covers the rest of the interest that accrued that month.

Note: As a result of the CARES Act, months that you were in repayment while the requirement to make a payment was paused still count as qualifying payments if you also certify your employment for the same period of time.

3. Certify Your Employment

To do this, print out an Employment Certification form and get your employer to fill it out and send it in for approval. The Federal Student Aid website suggests filling this form out annually or at least every time you switch jobs.

You can also use the Public Service Loan Forgiveness Help Tool at StudentAid.gov/pslf/ to find qualifying employers and get the forms that you need.

4. Make 120 Qualifying Monthly Payments

You must make these payments while you’re employed by a qualified public service employer. Switching employers isn’t a problem, so long as you are still working for a qualifying organization.

5. Apply for Forgiveness

After you make the final payment, submit your application for forgiveness.

Current State of the Program

Because the program was created in 2007, the first borrowers to qualify for loan forgiveness applied in 2017. However, early estimates by the Government Accountability Office (GAO) reported the denial rate as more than 99%. At the same time, many borrowers weren’t even aware that the forgiveness program exists.

In 2022, the Biden Administration addressed these issues by introducing a “limited PSLF waiver,” which allowed student loan holders to receive credit for payments that previously didn’t qualify for PSLF. The waiver deadline expired on Oct. 31, 2022. The DOE extended elements of the waiver through the IDR account adjustment program. To be eligible for the adjustment, Perkins and FFEL Program loan holders had to submit a Direct Consolidation Loan application no later than June 30, 2024.

President Biden announced in October 2023 that during his administration the DOE had secured relief for “almost $51 billion for 715,000 public servants through Public Service Loan Forgiveness (PSLF) programs, including the limited PSLF waiver and Temporary Expanded PSLF (TEPSLF).”

Beware of false communications from scammers posing as the DOE or your loan servicer. Read up on the latest student loan forgiveness scams.

Pros and Cons of the Public Service Loan Forgiveness Program

The advantages of the program are pretty straightforward. The disadvantages have more to do with how the program is executed in the real world.

Pros of PSLF

1.    The balance of your student loans is forgiven after a set time. This works as a kind of bonus to make up for the low pay earned by people working in the public sector.

2.    The amount forgiven usually isn’t considered income, so you aren’t taxed on it (and you don’t have to save additional money to account for the IRS bill). With other loan forgiveness programs, you might see a big tax bill.

3.    Professionals in qualifying jobs are making a difference, and your government appreciates it enough to give you a break on your federal student loans.

4.    You may pay less monthly because you’re on an income-driven plan. This means paying out less of your hard-earned cash every month.

Cons of PSLF

1.    The program is only open to those with certain types of employers. And it’s contingent on staying with a qualifying public service employer for 10 years. With the SAVE program, qualifying loan holders may be able to pay off their federal student loans no matter who their employer is.

2.    Some borrowers aren’t aware of the program, partly due to a lack of education by employers, loan servicers, and schools.

3.    There are a lot of hoops to jump through to get your loans forgiven. Plus, if you don’t jump through a hoop properly, you can jeopardize your forgiveness.

4.    The extra money that can potentially be earned from working for a corporate employer may help you pay off your loans sooner than through PSLF.

5.    You might end up paying more in interest by making 120 payments than if you budgeted to aggressively repay your loans in less than 10 years.

Alternatives to the Public Service Loan Forgiveness Program

Another program available to some individuals is the Teacher Loan Forgiveness program. This program is available to full-time teachers who have completed five consecutive years of teaching in a low-income school. This program has strict eligibility requirements that must be met in order to receive forgiveness.

If you receive Teacher Loan Forgiveness, the five-year period of service that supported your eligibility will NOT count toward PSLF. However, the limited PSLF waiver discussed above temporarily waived this restriction for individuals who previously received Teacher Loan Forgiveness.

These federal forgiveness programs do not apply to private student loans. If you are looking for ways to reduce your interest rate or monthly payments on private student loans, refinancing with a private lender can be an option. (Note: You may pay more interest over the life of the loan if you refinance with an extended term.)

It is important to mention that refinancing your federal student loans with a private lender may make you ineligible for the Public Service Loan Forgiveness program, should you choose that route.

The Takeaway

The Public Service Loan Forgiveness program is one way for eligible borrowers to have their federal student loans forgiven. Recent changes to the program by the Biden Administration promises to make qualifying for PSLF easier. However, if you have student loans that aren’t eligible for PSLF, consider taking advantage of either refinancing or income-driven repayment.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

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SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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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