Apr
06
2022
Can Refinancing Your Student Loans Lower Your Interest Rate?

Can Refinancing Your Student Loans Lower Your Interest Rate?

By | Budgeting & Goals, Financial Independence, Fresh Out of School, Student Loans, student_loan | No Comments

Yes. The main point of a refinance is to get a lower rate, and graduates who qualify can save serious money.

Interest Rate, Explained

An interest rate is the rate charged to borrow money. Interest is calculated as a percentage of the unpaid principal amount. Federal student loans have a fixed rate, while many private student loans have a fixed or variable rate.

Student loans generate interest daily. Lenders typically add the accrued interest to the balance each month when the bill is generated.

The interest rate paid on any loan may make a big difference. If you have $75,000 in student loan debt and 20-year repayment term, the difference in interest paid with a 6.5% rate and a 4% rate is over $25,000.

To refinance student loans, people with excellent credit and a healthy income — or a solid cosigner — will generally qualify for the lowest rates.

Lowering Your Interest Rate With Consolidation vs Refinancing: How They Differ

For Federal Student Loans

Consolidation is a term reserved for federal student loans and is different from refinancing. Student loans are combined into one loan with a longer term (up to 30 years), reducing the monthly payments. The rate is the average of the existing loans’ rates, rounded up to the nearest one-eighth of one percentage point.

Opting for a Direct Consolidation Loan allows borrowers to retain access to federal programs like deferment, forbearance, and income-driven repayment plans.

But because the new interest rate is the average of the existing rates, rounded up a hair, consolidating loans and drawing out the term usually results in more total interest paid.

Normally, if you had started paying toward Public Service Loan Forgiveness and then consolidated your loans, you’d have to start your qualifying payments over. But a waiver through October 31, 2022, will count repayment on loans before consolidation.

For Private Student Loans

Refinancing means paying off your private or federal student loans with one new loan with a new rate and, sometimes, term.

Refinancing with a private lender may lead to substantial savings.

Then again, it might not be the right move for every borrower. For those with federal student loans, refinancing means losing access to federal student loan forgiveness and income-driven repayment plans.

But borrowers with higher-interest student loans may find the allure of a lower rate — fixed or variable — tempting. If you qualify, you could reduce your payments or save a lot on total interest paid.

Recommended: Can Refinanced Student Loans Still Be Forgiven?

Understanding Your Options to Lower Interest Rate

Federal student loan consolidation is meant to make your monthly payment more manageable by lengthening your repayment term, but it will not lower your rate.

Only by refinancing with a private lender can you try to lower your current private or federal student loan rates. This student loan refinancing calculator can give you an idea of how much you could save by refinancing.

Before you start browsing interest rates, take a look at your current loans. How much do you owe? What are the rates? Are you enrolled in any federal benefits, eligible for any, or hoping to be?

Having this information at the ready can provide valuable insights as you start comparing the rates and terms you might qualify for from different lenders. A rate quote is usually quick and entails only a soft credit pull.

After you’ve determined how much you could potentially save by refinancing, consider looking at other benefits offered by the lender.

Refinancing With SoFi

Refinancing student loans to a lower interest rate makes sense for borrowers who are able to do so and who don’t qualify for or need income-driven plans or other federal programs.

SoFi offers student loan refinancing with low fixed or variable rates, as well as access to member benefits at no cost.

There are no fees when you refinance with SoFi, and the application process can be completed online. If you’re ready to take the next step in paying off student debt, get a rate quote in two minutes.

FAQ

What is federal student loan refinancing?

If you refinance federal student loans, a private lender pays them off with one new private student loan that ideally has a lower rate. Federal student loan consolidation is different.

Do low interest rates apply to student loans?

Federal Direct Subsidized and Unsubsidized Loans for undergraduates have a fairly low fixed rate for all borrowers. The rate for Direct Unsubsidized Loans for graduate and professional students is higher. The rate for Direct PLUS loans, for graduate students and parents of dependent undergrads, is yet higher. Most federal student loans also have loan fees that are a percentage of the total loan amount. The fee for PLUS loans has run over 4% in recent years.

Private student loan rates generally are higher than federal student loan rates, but refinancing rates may be quite low for those who qualify. There’s never any cost to refinance, and you can do so as many times as you want.

Can you refinance a student loan for a lower interest rate?

Yes, if you qualify to do so.

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.

SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.


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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Apr
05
2022
Tips for When to Consider Refinancing Your Student Loans

Tips for When to Consider Refinancing Your Student Loans

By | Student Loans, student_loan | No Comments
Editor's Note: For the latest developments regarding federal student loan debt repayment, check out our student debt guide.

If you’re like most borrowers, particularly those with six figures’ worth of student loans from graduate or professional school, you might find that looking at your student debt square in the face is a downer, but repayment can be managed.

Is refinancing a good idea? It can be. When? When you can snag a lower interest rate and in a few other situations.

Student Loan Repayment Plans

Chances are you set up a student loan repayment plan after graduation and figured you’d revisit it later — when you’re making more money, when your career is more secure, when you have more time. The standard repayment plan for federal student loans is 10 years. Direct Consolidation Loans have a repayment period of 10 to 30 years.

Putting off the repayment thought is understandable. After receiving your undergraduate or graduate degree, your focus is on other things (like building a career).

But if you let that nebulous “later” turn into “never,” the repercussions can be costly. At some point, refinancing your student loans could potentially save you a significant amount of money. You just need to figure out if it is the right move for you.

When to Finance Your Student Loans

1. Your Current Student Loans Have High Interest Rates

Look at the interest rates you’re paying on your student loans, particularly federal Direct Unsubsidized Loans (graduate or professional), federal grad PLUS loans, and/or private student loans.

Depending on how high your loan balance is and how much you could reduce the interest rates by refinancing one or more loans, your cost savings may be significant.

2. Your Financial Situation Has Improved Since You Took Out the Loans

Maybe you were a starving student when you took out federal or private student loans, but ideally your financial situation has improved with time. This is great news for your bottom line, because a higher credit score and income help a borrower qualify for lower interest rates.

If you expect to stay on an upward financial trajectory, you might even consider refinancing to a variable-rate student loan, which will have a lower starting interest rate than a fixed-rate loan. Variable rates are tied to market fluctuations, though, which means rates that are very low today are likely to go up at some point.

The upshot is that a variable-rate loan could be a good option for a qualified borrower who intends to pay off the loan at a relatively fast pace.

3. You Don’t Plan to Use Certain Federal Student Loan Benefits

Borrowers who go to work in the public sector may qualify for the Public Service Loan Forgiveness program. Some federal programs also offer relief for borrowers who experience financial hardships (such as student loan deferment and forbearance, income-driven repayment plans, and the graduated repayment plan).

If you expect your income to be unpredictable or you’re looking into qualifying public service employment, it probably wouldn’t behoove you to refinance federal student loans. But refinancing could make sense if you don’t plan to tap into any of the federal programs listed above and you can gain a lower rate.

Recommended: Looking for more guidance on your student loans? Explore SoFi’s Student Loan Help Center for tips, resources, guides, and more!

4. You’re Going to Take Out a Large Loan

For loans like mortgage loans, lenders will look at your debt-to-income ratio, among other things. DTI is your monthly debt payments per month, including your future mortgage payments, divided by your gross monthly income. A low DTI generally signals better odds of loan approval and better interest rates.

Decreasing your monthly student loan payment by refinancing, with, say, a long loan term, could lower your DTI.

It might make sense to refinance your student loans at least six months before buying a home or making any other large purchase. That will give you time to recoup the points lost after a hard credit inquiry.

Once the mortgage or other big loan has been secured, you could refinance again, this time picking the lender offering the lowest rate, not just the lowest payment. You can refinance student loans as many times as you wish.

If you think student loan refinancing may be a good option for you, the next step is to check out several refinancing providers to compare interest rates and other features.

Refinance Student Loans With SoFi

You can refinance both federal and private student loans into one new loan with SoFi in an easy, all-online process. You can get your rate in two minutes.

SoFi also offers access to an extensive member network through complementary member experiences like happy hours and dinners.

Which means you could gain more than cost savings when you refinance student loans.

Want to learn more about refinancing your student loans? See your rates in just two minutes.

FAQ

When should I refinance my student loans?

It might make sense to refinance as soon as you have a stable income and good credit that can usher in a lower rate.

Can I refinance student loans after buying a house?

Buying a home creates new debt, and that can make refinancing student loans more difficult. But by waiting several months or even a year to refinance, the dust can settle on the mortgage decision.

Is refinancing my student loans a good idea?

If you’re struggling to repay federal student loans, you might consider an income-driven repayment plan or federal student loan consolidation.

But if you can qualify, your income is stable, and you would save money by refinancing federal or private student loans, that might be a smart move.

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.

SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.


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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Mar
15
2022
What Is Historical Volatility & How Do You Use It?

A Guide to Historical Volatility

By | Growing Wealth, invest, Investing, Terminology | Comments Off on A Guide to Historical Volatility

Historical volatility (HV) measures the range of returns on a market index or security over a given time period. When an asset’s historical volatility is going up, that means its price is moving further away from its average (in either direction) more quickly than usual.

A stock’s historical volatility is typically one standard deviation using daily returns, and it’s one factor that investors often look at to gauge the risk of a potential investment. An asset’s historical volatility is different from its implied volatility. Read on to learn what historical volatility is, how historical volatility works, and how to calculate historical volatility.

What Is Historical Volatility?

Historical volatility is a statistical measurement of the price dispersion of a financial security or index over a period. Investors calculate this by determining the average deviation from an average price. Historical volatility typically looks at daily returns, but some investors use it to look at intraday price changes.

Analysts can use any number of trading days when calculating historical volatility, but typically options traders focus on a time period between 10 and 180 days. Options traders use historical volatility and implied volatility when analyzing trading ideas.

Investors typically express historical volatility as a percentage reflecting the standard deviation from the average price, based on past price behavior, but there are also other methods they can use to determine an asset’s historical volatility. Unstable daily price changes often result in high historical volatility readings.

How Historical Volatility Works

Historical volatility takes past price data to calculate an annualized standard deviation value that measures how much past prices deviate from an average price over a given period. When a stock sees large daily price swings compared to its history, it will typically have a historical volatility reading. Historical volatility does not measure direction; it simply indicates the deviation from an average.

When a stock’s historical volatility is rising or above average, it means daily price changes are larger than normal. When it is lower than average, a stock or index has been relatively calm.

How Historical Volatility is Calculated

The historical volatility formula is typically a standard deviation measurement. It takes a stock’s daily price changes and averages them over a period. There are several steps to calculating historical volatility:

1.    Collect historical prices

2.    Calculate the average historical price over a period

3.    Find the difference between each day’s price change versus the average

4.    Square those differences

5.    Find the sum of those squared differences

6.    Divide those differences by the total number of prices (this finds the variance)

7.    Calculate the square root of the variance

The historical volatility formula is a tedious step-by-step process, but most brokerage platforms automatically calculate it. Many brokers even offer historical volatility charts. With a historical volatility chart, you can easily compare changes through time. For example, if a stock reacted sharply to an earnings release, the historical volatility charts will show a jump immediately after the earnings date while implied volatility might drop sharply after the earnings report.

How to Use Historical Volatility

Traders sometimes use historical volatility to help set stop-loss levels. For example, a day trader might take three times a stock’s daily average range – a measure of historical volatility – to set a stop price. This is known as volatility ratio trading.

Traders also use historical volatility when analyzing a stock, fund, or index to get a sense of its riskiness. High or low historical volatility stocks are not inherently bullish or bearish. Day traders might seek high historical volatility stocks as candidates for high-profit trading opportunities (but they also come with high loss potential).

You can also use historical volatility to help determine whether a stock’s options are expensive to help determine an options trading strategy. If implied volatility is extremely high when compared to a stock’s historical volatility, traders may decide that options are undervalued.

Historical vs Implied Volatility

Like historical volatility, it measures fluctuations in an underlying stock or index over a period, but there are key differences between the two indicators. Implied volatility is a forward-looking indicator of a stock’s future volatility.

The higher the historical volatility, the riskier the security has been. Implied volatility, on the other hand, uses option pricing to arrive at a calculation and estimate of future volatility. If implied volatility is significantly less than a stock’s historical volatility, traders expect a relatively calm period of trading, and vice versa.

Typically, when implied volatility is low, options pricing is low. Low options prices can benefit premium buyers. Sometimes investors will use a graph to determine how an option’s implied volatility changes relative to its strike price, using a volatility smile.

Historical Volatility

Implied Volatility

Measures past price data to gauge volatility on a security Uses forward-looking option-pricing data to gauge expected future volatility on a security
Higher historical volatility often leads to higher options pricing and higher implied volatility Imminent news, like a company earnings report or a key economic data point, can drive implied volatility higher on a stock or index
Traders can use historical volatility to help set exit prices Traders can use implied volatility to find stocks expected to exhibit the biggest price swings

The Takeaway

Historical volatility is a useful indicator for both institutional and retail investors looking to get a feel for the level of recent fluctuations in a stock or index has been in the recent past. It measures a security’s dispersion of returns over a defined period. Implied volatility is a similar tool, but it is forward-looking and uses option pricing to arrive at its output.

Options trading and the use of historical volatility is helpful for some advanced traders. If that sounds like you, an options trading platform like SoFi could be worth considering. Its intuitive and approachable design offers investors the ability to place traders from the mobile app or desktop platform. Plus, there are educational resources about options available in case you want to answer a question or learn more about a certain topic.

Trade options with low fees through SoFi.

FAQ

What is considered a good number for historical volatility?

It depends. While one stock might have a high historical volatility reading, perhaps above 100%, another steady stock might have a low figure around 20%. The key is to understand the securities you trade. Historical volatility can be an indicator of a stock’s volatility, but unforeseen risks can turn future volatility drastically different than the historical trend.

What is a historical volatility ratio?

The historical volatility ratio is the percentage of short-to-long average historical volatility on a financial asset. You can interpret the historical volatility ratio by looking at short versus long historical volatility. If short volatility on a stock drops below a threshold percentage of its long volatility, a trader might think there will be a jump in future volatility soon.

This is similar to analyzing volatility skew in options. It is important to remember that the interpretation and technical rules of historical volatility can be subjective by traders.

How is historical volatility calculated?

Historical volatility calculations require finding the average deviation from the average price of an asset over a particular time. An asset’s standard deviation is often used. Historical volatility is usually stated as one standard deviation of historical daily returns.

Many trading platforms automatically calculate historical volatility, so you don’t have to do the calculations manually.

Photo credit: iStock/Eva-Katalin

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INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
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Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

Options involve risks, including substantial risk of loss and the possibility an investor may lose the entire amount invested in a short period of time. Before an investor begins trading options they should familiarize themselves with the Characteristics and Risks of Standardized Options . Tax considerations with options transactions are unique, investors should consult with their tax advisor to understand the impact to their taxes.
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Mar
15
2022
Is the Average College Tuition Rising?

Is the Average College Tuition Rising? 2023 Price of College

By | Going to College, Student Loans, student_loan | Comments Off on Is the Average College Tuition Rising? 2023 Price of College

Between 1991 and 2022, the average published tuition and fees increased from the following amounts, after adjusting for inflation, according to the College Board’s Trends in College Pricing and Student Aid in 2021:

•   $2,310 to $3,800 at public two-year schools

•   $4,160 to $10,740 at public four-year schools

•   $19,360 to $38,070 at private nonprofit four-year institutions

This piece will cover the average cost of college tuition and fees in 2021-2022, the increase in college tuition costs, the reasons for the rise of average college tuition, and college tuition options you may want to consider for yourself.

Average Cost of College in 2021/2022

In 2021-2022, the average published price for tuition and fees for full-time undergraduate students were as follows, according to the College Board’s Trends in College Pricing and Student Aid:

•   $10,740 for public four-year in-state institutions, $170 higher than in 2020-2021

•   $27,560 for public four-year out-of-state institutions, $410 higher than in 2020-2021

•   $3,800 for public two-year in-district institutions (including average community college tuition), $50 higher than in 2020-2021

•   $38,070 for private nonprofit four-year institutions, $800 higher than in 2020-2021

Increase in College Tuition Cost Over the Last 10 Years

Generally speaking, tuition has increased in the past decade. According to data from The College Board, the average published tuition price at a four-year nonprofit university during the 2011-2012 school year was $28,500 , while in 2021-2022 that number jumped to $38,070 .

However, tuition increases have remained at historically low rates for both the 2020-2021 and 2021-2022 school years. This can likely be attributed to decreased enrollment and tuition freezes as a result of the Covid-19 pandemic.

Reasons for the Rise of Average College Tuition

What are the reasons for the rise of the average college tuition? There are many reasons, including the following.

Less State Funding

After the 2008 recession, state and local funding for public higher education was cut dramatically. While there have been incremental increases in the amount of funding these institutions receive in the past 10 years, in most states funding for these institutions has not been restored to previous levels.

Now, there is concern that the Covid-19 pandemic may cause additional cuts in the future.

Campus Improvements

As many colleges increase their offerings, they must hire more faculty, make accommodations to house more students in residence halls, and implement capital and technological improvements. These costs may require students to pay more.

Non-instructional expenditures may include recreation centers, computer systems, housing, and food — all of this plays a role in tuition rate increases.

Recommended: How to Pay for College

Marketplace Lacks Transparency or Competition

The higher education marketplace lacks competitiveness and transparency, according to a report by the Manhattan Institute , which contributes to an increase in costs:

•   Families may not know discounts right away: Students often do not know how much it will cost them to attend college because they only see the sticker price until after they’ve applied and been accepted, when the financial aid award shows the discounts and grant aid available. Transparency allows us to comparison-shop and colleges and universities can compete with one another for students’ business.

•   A small number of colleges in an area: When small numbers of colleges exist in an area, costs often increase because no competitiveness occurs, particularly with students who commute to campuses.

•   Perception of the financial value of education: As long as students believe improved earnings opportunities and the demand curve goes up, prospective students’ expectations determine how much they will pay for school.

•   Regulations affect the marketplace: New business models haven’t appeared that offer higher education at a lower cost. Regulations due to federal intervention control financial aid dollars and accreditation requirements limit new entrants.

Personnel Costs Increase

The Higher Education Price Index measures the price change of the amount of money that institutions must spend to keep things going, including salaries for service and clerical individuals, administrators, professors, janitors, and even landscape professionals.

For example, in 2021, faculty salaries increased by 1%, as compared with 2.7% in 2020. Clerical costs increased 2.8%, and fringe benefits rose 4.1%.

Lack of Regulation or Caps on Tuition

No central mechanism controls college costs in the United States at the federal level. An unregulated fee structure means that colleges and universities can charge as much as they want in tuition and fees. Other countries, such as the United Kingdom, cap tuition.

In 2009, Missouri enacted one of the nation’s most stringent caps on tuition by limiting in-state tuition and required fee increases to align with the Consumer Price Index. Institutions would face fines if they exceeded that cap. However, Missouri’s governor lifted the price cap, and colleges can begin increasing without limits in July 2022.

College Financing Options

Numerous college financing options exist for students. Students can tap into various options to pay for costs. Undergraduate students received an average of $14,800 of financial aid 2020-2021, according to the College Board’s Trends in College Pricing and Student Aid, which includes the following:

•   $10,050 in grants

•   $3,780 in federal loans

•   $880 in education tax credits

•   $90 in federal work-study (jobs for college students)

Students may rely on scholarships, grants, work-study, and student loans, in addition to personal savings to pay for their education.

Scholarships

Scholarships refer to money received from colleges or another organization that students. Students don’t have to pay back scholarships. A total of 58% of students receive scholarships. Students receive an average award of $7,923 each, according to the Education Data Initiative .

Recommended: Private Students Loans vs Federal Student Loans 

Student Loans

Students can take advantage of federal or private loans. Federal loans are provided by the U.S. Department of Education. To apply for a federal student loan, students need to fill out the Free Application for Federal Student Aid (FAFSA®) each year.

Private loans are provided by banks, credit unions, and other financial institutions. These are separate from any sort of federal aid, and as a result, lack the protections afforded to federal student loans — like income-driven repayment options or the ability to apply for Public Service Loan Forgiveness. For this reason, private student loans are generally considered by students only after they have reviewed and exhausted all other options for financing.

Students and parents borrowed $95.9 billion in 2020-2021, which decreased from $135.1 billion (in 2020 dollars) in 2010-2011.

Grants

Students can tap into federal or state grants or institutional grants. Grants can also come from employers or private sources. Institutional grant aid for undergraduate students increased by 62% between 2010-2011 and 2020-2021 ($22.0 billion in 2020 dollars).

Work-study

Students can get a work-study award, which is money they must earn when they attend college. They must file the FAFSA in order to qualify for work-study and must work a job on campus to receive the money.

Personal savings

Families report paying $26,373 for college in 2020-2021, a 12% decrease from 2019–2020. It’s not uncommon for students to get help from their parents — nearly half of college costs are covered by parent income and savings, according to Sallie Mae’s annual How America Pays for College 2021 report. Strategies for paying for college for parents include things like setting up an account designed to help them save for college or other educational expenses.

As students and their parents consider their college options, they may consider focusing on programs that offer affordable tuition, or where they received a strong financial aid package. Some schools may even offer free college tuition for some students. Other students may opt to enroll in their school’s tuition payment plan, so they can spread tuition payments over a period of time.

Explore Student Loan Options From SoFi

Let SoFi help you explore low-cost loan options with our no-fee private student loans. Apply in just a few minutes and easily add a cosigner to the application. Plus, SoFi offers four flexible repayment options so borrowers can select the one that fits best with their financial plan.

The Takeaway

The average college tuition continues to increase. In 1991, the college tuition at a private four-year institution was just $19,360 and in 2022 it was $38,070. There are a number of reasons for increasing tuition rates, including factors like a dramatic decrease in state funding, lack of regulation, and an increase in operating costs at colleges and universities.

Many students rely on financial aid to pay for college. In the case that financial aid, including federal student loans, isn’t enough — private student loans may be an option to consider. If you think a private student loan is a fit, consider SoFi.

Find out more about how a private student loan from SoFi could help you pay for college.

Photo credit: iStock/MicroStockHub

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.

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-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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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Mar
10
2022
Tips for Choosing a Medical School

Choosing the Right Medical School

By | Going to College, Student Loans, student_loan | Comments Off on Choosing the Right Medical School

Medical school is a big commitment. Not only will students spend four years of their life working towards a medical degree, but they’ll pay a big chunk of change for it (financing medical school is a major undertaking and can lead to debt). Which is why choosing the right medical school is so important. Keep reading for insight into how to pick the right medical school and how to finance it.

What Is Medical School?

Medical school is a necessary step towards becoming a doctor and generally, it takes four years to complete in order to receive an M.D., N.D., or D.O. degree. After medical school, graduates will need to pursue a medical residency in their specialty before they can become practicing doctors.

Recommended: How to Pay for Medical School

Different Types of Medical Courses

One of the first steps potential medical students can take to find the right medical school for them, is to better understand the different types of medical courses there are. Once they know what type of medical courses they want to take, they can narrow their search to just medical schools that offer those courses.

Traditional Courses

Some medical students may be attracted to more traditional courses that have students finish two years of pre-clinical work before they move on to the three years of clinical work they need to complete to get their degree. Typically, pre-clinical work occurs in a classroom setting. This is where medical students can learn the key principles of medical science. Once they move on to the clinical work portion of their studies, they will need to work in hospitals or clinics with direct supervision, while attending lectures.

This combination educates students on medical practices while making sure they get the hands-on experience they need to use their pre-clinical knowledge in real life situations.

Integrated Courses

Integrated courses are becoming more and more popular at medical schools, as this style, of course, combines pre-clinical and clinical education. In an integrated course, medical students can expect to learn practical clinical skills and work through problem-based learning.

Often in integrated courses, a lot of the students’ work is self-directed and early patient contact is encouraged.

Intercalated Courses

Intercalated courses are unique, as they allow students to take a year out of medical school to earn a BSc or MSc in a related subject. It’s not a guarantee that every medical school will allow students to do this, but in some schools students have the option or are mandated to do intercalated courses.

Recommended: Making Sense of the Rising Cost of Medical School

How to Choose Your Medical School

Every medical student had to ask themself at one point, which medical school is right for me? Here’s a few factors medical students can take into consideration to make answering that very important question easier.

1. Cost

Med school tuition is pricey and it’s not uncommon for students to take on debt for medical school. On top of tuition, students will also need to pay additional costs such as service fees and textbooks.

While medical schools do offer financial aid such as grants and medical school scholarships to their students, it’s important to prepare for the cost of medical school as not everyone receives financial assistance.

Attending an in-state school could help medical students find a lower tuition cost than at out-of-state or private options. For example, at the University of Utah, tuition for medical school if the student lives in-state is about $40,000 a year, whereas out-of-state students can expect to pay closer to $77,000 a year on tuition at the same school.

Each school charges different tuition rates, but generally, staying in-state can save medical students a lot of money.

Recommended: Average Cost of Medical School

2. Programs Offered

Apart from their general MD program, medical schools typically have multiple programs to choose from that lead to different careers paths. Before applying to medical school, students can take into consideration how many different programs are offered, how many students are accepted to each program, how long their ideal program takes to finish, and how that program aligns with their career goals.

3. Admissions Criteria

One of the easiest ways to start a search for the right medical school is by looking for schools where the applicant meets the admissions criteria. Students can do some research on the admissions criteria for each school to make sure their qualifications lineup, as well as what they need to do to apply to each specific school.

4. Location

Location matters. The location of a medical school can affect how much it costs a student to attend, what their housing situation looks like, and what their lifestyles outside of school is like. By choosing a local school, students may be able to save money on tuition or be able to cut costs by living with a family member. Not to mention, some locations simply have a higher cost of living than others. Students can crunch the numbers on what it would cost them to live at each medical school they want to apply to, so they can get a better idea of what attending medical school will cost them as a whole.

5. Career Path Opportunities

There are a wide variety of career opportunities that can arise after medical school and not all of them involve working as a practicing doctor. Medical school graduates can pursue teaching, research, and business opportunities amongst other exciting career paths. Students can check what career path opportunities a school’s curriculum and counseling center support before they apply to get a feel for if that medical school can help them meet their unique career goals.

SoFi’s Private Student Loans For Medical School

Students that need to take out medical school student loans, may find that SoFi’s private student loans can meet their needs. It only takes minutes to apply online and borrowers can apply with a cosigner. Keep in mind that because private student loans don’t have to offer the same benefits or protections as federal student loans (like the opportunity to apply for Public Service Loan Forgiveness), they are generally considered by students only after they have thoroughly reviewed all other financing options.

Borrowers can repay their SoFi student loans in a way that works for them by choosing a monthly student loan payment and rate that fits their budget. Borrowers never have to worry about fees and can enjoy a six-month grace period after graduation so that they have time to get settled in their post-grad life before they need to start making monthly loan payments.

Recommended: Smart Medical School Loan Repayment Strategies

The Takeaway

Choosing medical schools to apply to is a lot of work, but that research is a key step students need to take to find the best medical school for them.

For help covering the costs of medical school, learn more about SoFi private student loans.

FAQ

Is 30 too old for med school?

No, 30 is not too old to attend medical school. Applicants that apply for medical school will be in their mid-thirties four years later whether or not they pursue a degree. It’s up to them if those four years make a difference in the scheme of things.

What makes a good med school?

A good medical school is one that meets the needs of the student, when it comes to location, finances, and program opportunities.

How do you compare med schools?

Potential medical students can take factors like cost, location, and areas of study into account to compare and contrast their different medical school options.

Photo credit: iStock/Courtney Hale

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Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria 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.

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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