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Living with your parents is often frowned upon in the U.S., but it can be a way to help you find your financial footing.

At some point, however, you or your parents will decide that it’s time for you to move on. If you’re considering moving out soon, it can’t hurt to start planning now for your new expenses. You’ll probably also want to set aside some cash in case you have unexpected costs or your finances take a turn for the worse.

Expenses to Consider Before Moving Out

If you currently have few or no expenses, moving out can be a rude awakening. Fortunately, your current situation likely allows you to save a lot more than if you were already living on your own.

To help you get an idea of what your expenses will be, here’s a list of some common expenses and how much you might expect to pay:

Rent

Rent prices can vary wildly depending on where you live. You can start by doing some research in your area to get an idea of what you’ll spend. Also, you can factor in whether you’ll be on your own or sharing a place with roommates.

Utilities

Electricity, gas, water, and internet are all important utilities to have. Some of these costs can also vary depending on where you live and how many options from which you have to choose. It’ll also depend on whether you’re sharing their costs with roommates.

You may also be on your own for your phone bill. Some of the top wireless providers have unlimited plans starting at $50, but you can save if you’re able to stay on your parents’ family plan.

You’ll also want to consider what your costs will be for things like cable and streaming services. Cable costs continue to rise so one option for cutting back your expenses could be to become a cord cutter. Instead, you could opt-in to your favorite streaming service.

Insurance

Renter’s insurance can help you to protect your belongings, and landlords might require it as part of your lease agreement. Monthly rates can vary based on where you live and how much coverage you want, but as of this writing the average cost is roughly $10-$20 per month depending upon the state in which you reside.

Other insurance plans you may be on the hook for include car insurance if you own a car, health insurance if you’re too old to remain on your parents’ plan (you typically have until you’re 26 years old), dental insurance, disability insurance, and life insurance.

Costs for these policies can vary based on several factors, and based on your situation, you may not even need some of them. If you get insurance through work, for example, the premiums will be taken out of your paycheck and won’t be included in your take-home pay. If not, you can get some quotes now to get an idea of what you’ll be paying.

Debt Payments

If you’re making monthly payments on your student loans or a credit card, those payments will still be there once you move out. If you also have a car loan or medical bills, you’ll also want to make sure to add those to your budget.

Saving

It’s possible that you’ll be living paycheck to paycheck for a while, but it could still be possible to make it a goal to set aside some money for saving each month. How much you can save will depend on your goals and your budget, but even a dollar a day can really add up.

Food

How much you spend on groceries each month is entirely up to you. You can save money by living on a ramen noodle diet, but you’ll likely feel better if you “splurge” on fruits, vegetables, and other whole foods.

Either way, you could expect to spend at least a couple hundred dollars a month on groceries and eating out.

Household Items

When you’re building a budget, it’s easy to forget necessities like toilet paper, toothpaste, shampoo, deodorant, and other toiletries. You may also want to have paper towels, laundry soap, and dishwasher detergent.

All of these expenses are relatively cheap on their own, but they can add up, and hygiene and clean dishes and clothes are essential.

Clothing

The average American household spends roughly $134 on clothing (and related expenses like dry cleaning and repairs) each month. But if you’re on your own, you could likely get by on less than that, especially if you already have a full closet. That said, you may want to review your clothing purchases over the last few months to get an idea of how much you spend in the category.

Miscellaneous Expenses

It’s difficult to give every purchase a category, so it’s a good idea to have one where you can estimate random and unexpected expenses. Some costs, such as car maintenance and repairs or medical bills, don’t come up every month, and you may have some expenses that are unique to your situation.

Do your best to project how much you could spend on these expenses each month and see if you can make room in your budget for them.

How Much Do You Need to Save Before Moving Out?

If you’re wondering, “How much money should I save before moving out?” there’s no one-size-fits-all answer for everyone. Common wisdom suggests that you should have anywhere from three to six months worth of living expenses in an emergency fund. That way, you don’t have to worry about breaking your lease or defaulting on your debts if you lose your job or something else goes wrong.

To find out exactly how much you’ll need, you’d tally up how much you expect to spend on the categories above, then pare them back to your essential expenses. If you lose your job, for instance, Netflix and eating out won’t be as important as meeting your basic needs. Multiply those expenses by three to six, depending on what you’d want to have, then you can start saving from there.

When you move you’ll also incur a few one time expenses, like a security deposit on your new apartment. You probably need to factor in expenses like packing supplies, movers or a truck rental. Then, you’ll still have to furnish the space to your liking after you move in.

How to Save Money to Move Out

Once you have a solid estimate for how much money to save before moving out, you can more easily set a goal for when you want to make the leap. Then you can divide your savings goal by the number of months you have left.

For example, let’s say you want to move out in six months and need $12,000 in your savings account. You’d need to save $2,000 per month to achieve your goal.

That might sound like a lot of money, but if you earn enough and have zero necessary expenses right now, it’s can be easy to prioritize your savings. If it’s too much, though, consider adjusting your goal.

If you’re not clear about how you’re going to do it, you can start with taking a look at your current expenses and find areas where you can cut back. You may also want to look for ways to earn a little extra money here and there to put toward savings.

You know your situation and opportunities better than anyone else, so taking a hard look at your finances can help you do what it takes to reach your goal.

Getting Started with SoFi Checking and Savings

As you’re working to save enough money to move out of your parents’ house, it’s important that your money is safe and easy to access.

SoFi Checking and Savings® account is where you can spend, save, and earn all in one place

Find out more about SoFi Checking and Savings.

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

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2022 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
SoFi Money® is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member
FINRA / SIPC . SoFi Securities LLC is an affiliate of SoFi Bank, N.A. SoFi Money Debit Card issued by The Bancorp Bank.
SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.
SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet..

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Has your soon-to-be college student chosen the school they’d like to attend in the fall? Or, are they just starting to think about the application process? Either way, it’s never too early to research ways to pay for college.

Student loans, federal and private, are one common method that students and their families use to help them afford college. If you’ve never taken out a student loan before, or you just want more information about the options, it can be difficult to know where to start.

We’re here to help you make sense of the student loan information parents need to know.

Not All Loans Are Created (or Repayed) Equally

When you think about different types of loans, you might think of a car loan, a home loan, and maybe a personal loan. When it comes to student loans, there are two main options:

•  Federal loans – Provided by the federal government

•  Private student loans – Handled by individual lenders with varying terms

Federal Student Loans

After scholarships, grants, and other gifted money opportunities, it is recommended that you first look for additional funding through federal student loans .

These are loans through the U.S. Department of Education, they have eligibility requirements and come in a few forms:

•  Direct Subsidized loans – These are for undergraduate students and are based on financial need.

•  Direct Unsubsidized loans – Undergraduates, graduate students, and professional students can apply for these loans; they are not based on financial need.

•  Direct PLUS loans –These are for graduate and professional students and parents of dependent undergraduates. They are not based on financial need and a credit check is required.

•  Direct Consolidation loan – This option combines all your federal loans into one loan payment under a single loan servicer.

All federal loans have fixed interest rates and are set by Congress each year on July 1st. For most students (Direct Subsidized Loans, Direct Unsubsidized Loans, Subsidized Federal Stafford Loans, and Unsubsidized Federal Stafford Loans), federal loan repayment starts six months after graduation (also known as a grace period).

You can get federal student loans by submitting your Free Application for Federal Student Aid (FAFSA) .

Private student loans

Private student loans come from different institutions: banks, credit unions, and online lenders. Many private student loans mirror the terms and repayment periods of federal student loans, but not always. Differences include:

•  Credit checks – Most federal student loans don’t require a credit check (except PLUS loans); it’s required for private student loans and you’ll need to meet the lenders credit and other eligibility requirements to qualify.

•  Repayment start date – Some lenders might offer loan repayment that starts after you graduate from college, but it’s not always the case. Some lender programs require repayment while you’re still in school.

•  Interest rates – Federal student loans have fixed interest rates that don’t change over the life of the loan; private student loans offer fixed or variable interest rates.

•  Repayment terms – Federal loans have long repayment terms—from 10 to 30 years, depending on your plan. Private student loans also vary in term length, but might not be as long. This could cause you to have higher monthly and interest payments.

•  Loan forgiveness – Some federal student loans offer forgiveness options for certain career paths, or after a period of time has passed; private student loans aren’t required to offer this option to borrowers.

How Parents Can Help

If your college kid has explored all the options for scholarships, grants, gifts and has taken out all the student loans they can and they still need money to afford school, you can take out a Direct PLUS loan for them.

A Direct PLUS Loan is commonly referred to as a parent PLUS loan when made to a parent, and as a grad PLUS loan when made to a graduate or professional student. To get a PLUS loan, you can’t have an adverse credit history (there may be exceptions to this rule if you meet other eligibility requirements) and you must complete the FAFSA before applying.

Before you apply for a loan for or with your child, you can review your credit history annually for free at AnnualCreditReport.com to make sure it’s in top shape to take out a loan. It’s good to note that this free annual credit report does not show credit scores, only history.

Forgiveness Can Happen (But That Doesn’t Mean It Will)
Some student loan repayment plans, like income-driven plans, give graduates the opportunity to have their loans forgiven after a certain number of years. If you are seeking student loan forgiveness, it is recommended to have a thorough understanding of how the program works and to review your account annually to confirm all is in order.

Depending on which industry and sector your student goes into, there might be other chances to get loans forgiven. A qualifying employer includes a government organization , a 501(c)(3) organization, or a not-for-profit organization that is not a 501(c)(3) organization that provides a qualifying public service as its primary purpose.

A qualifying employer never includes a partisan political organization, a labor union, or a for-profit organization. However, it does include AmeriCorps and Peace Corps volunteers.

Some of these jobs include:

•  Public Service

•  Teachers

•  Nurses, doctors, and other healthcare professionals

•  Lawyers(public interest)

•  Armed forces members and veterans

Keep in mind that forgiveness isn’t guaranteed and it’s important to always make at least the minimum payments every month.

Repayment Matters

Regardless of circumstance, paying back student loans is vital. Grace periods help, but you may still struggle when the time comes to start repayment. However, not paying your student loans could have some serious consequences, including:

•  Credit rating – On-time payments have one of the biggest impacts on your credit rating. Delinquent student loan payments can have a negative effect on your credit.

•  Default – If you are having trouble making payments call the organization that notified you, explain your situation and discuss your options. Generally, delinquent payments after 90 days are reported to the credit bureaus. When a loan is considered to be in default can vary depending upon the loan program parameters. For a loan made under the William D. Ford Federal Direct Loan Program or the Federal Family Education Loan Program, you’re considered to be in default if you don’t make your scheduled student loan payments for a period of at least 270 days (about nine months).

•  For a loan made under the Federal Perkins Loan Program, the holder of the loan may declare the loan to be in default if you don’t make any scheduled payment by the due date. Consequences of student loan default include but are not limited to – negative credit rating, loan due and payable in full (loan acceleration), loss of deferment, forbearance, loss of eligibility for other benefits.

•  Forgiveness – Regardless of repayment plan, one of the keys to forgiveness is making qualifying loan payments as defined under the program.

Keep in mind that borrowing a loan using your credit and income for your child impacts your credit history.

Considering SoFi Private Student Loans

Working on covering the cost of your child’s tuition? If you have exhausted all of your federal student loan options, private student loans might be next on your consideration list.

Another option to explore is student loan refinancing. However, refinancing a federal student loan would eliminate it from federal protections, like income-driven repayment plans, deferment, or forbearance.

SoFi’s private student loans offer flexible repayment plans, no origination fees, and no late fees. Not only that, but the application is all online and takes just a few minutes.

Is your child’s financial aid package not covering their full tuition cost? Learn more about how SoFi private student loans can help fund your child’s education.

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

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.

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.

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Buying a house is quite possibly the largest investment that most people will ever make. And when you consider that the median price of a new home in the U.S. is $342,000 , the thought of actually hitting that milestone may seem out of reach for some. It is also one of the most confusing, especially for first-timers. Homebuyers attempt to master a whole slew of new vocabulary terms, from “contingencies” to “escrow” to “fixed versus adjustable rate mortgages.”

One of the most mystifying terms is PMI, which stands for “private mortgage insurance.” When you hear “insurance,” you may think it’s there to protect you in case something goes wrong with your home loan.

Actually, PMI is there to protect the lender that’s likely offering you a conventional mortgage whether it be a refinance or a purchase loan.

If you are making a down payment of less than 20% of the home’s value, the lender will typically require PMI on the mortgage from a private insurance company. Why would you pay for insurance that benefits your lender and not you? And should you take on this expense? Read on to find out how PMI works.

Why PMI?

The purpose of PMI is to make low down payment mortgages less risky for the lender so they in turn can offer you a loan if you don’t have sufficient funds for a 20% down. If you have PMI and default on your home loan, the insurer will be responsible for paying a portion of the loan balance, so that the lender isn’t on the hook for the entire amount.

When a lender is considering whether to extend a mortgage loan, and on what terms, they look at something called the loan-to-value ratio, or LTV. This is equal to the mortgage balance divided by the value of the property.

The more money you have for a down payment, the less you need to take out a loan for, and therefore the lower your LTV ratio. Whether you’re buying a home or refinancing, the higher your LTV ratio, the more of a gamble you’re likely to appear to lenders. And they’ll usually want you to have PMI when your LTV is less than 80%, which is what happens when you put less than 20% down.

Who Takes Out PMI?

Private mortgage insurance has been around for more than 60 years . Over that time period, more than 30 million families , including 1 million in 2017, relied on PMI in order to buy or refinance a mortgage. A significant amount of those who did were low-income or buying their first homes.

Specifically, more than 40% of borrowers who have taken out PMI earned less than $75,000 a year, and 56% were first-time homebuyers. In 2017, the top five states for homeowners with PMI were Texas, California, Florida, Illinois, and Michigan.

PMI generally costs between 0.55%-2.25% of the mortgage amount annually, but premium costs can vary depending upon the loan scenario.

How to Pay PMI

There are a few different options for paying PMI, which depend on your preferences. Most borrowers pay PMI as a monthly premium that is added on to the mortgage payment. You can see what the premium is in both the loan estimate you get when you apply for the mortgage and again in your closing disclosure.

The PMI factor can change between these two estimates because the appraisal valuation which drives the final LTV (loan to value) may be received by the lender after the Loan Estimate is generated. Another option is to pay your PMI all at once in a single sum when you close on the house. Or you can ask the lender if they can cover some or all of the PMI cost through lender rebate money.

Generally, in this scenario a borrower accepts a higher rate and the rebate money in that higher rate comes back to the borrower as a credit and the borrower can use that lender credit to cover some or all of the PMI cost. Ask a lender to generate a quote with different PMI payment options so you can compare and choose the best plan for your budget.

Keep in mind that some PMI policies are refundable and some are non-refundable. A third scenario is to pay some of the PMI up front and get the rest added on to your mortgage payment each month.

If you’re confused about the different policies and payment options, ask the lender’s representative to explain the options to you and ask for a quote on how much you will owe in different scenarios. If you are purchasing a home you may be receiving a seller credit towards your closing costs, this can be another way to cover the PMI in one lump sum and not have ongoing monthly payments.

How to Get Rid of PMI

For a principal residence or second home, the borrower can initiate cancellation of PMI under the following scenario: The LTV ratio must be:

•  75% or less, if the seasoning of the mortgage loan is between two and five years.

•  80% or less, if the seasoning of the mortgage loan is greater than five years.

If Fannie Mae’s minimum two-year seasoning requirement is waived because the property improvements made by the borrower increased the property value, the LTV ratio must be 80% or less.

For automatic termination of PMI the guidelines are:

•  Loan is closed on or after July 29, 1999 and is secured by a one-unit principal residence or second home.

•  on the applicable termination date, provided the borrower’s payments are current on the termination date.

The applicable termination date is:

•  the date the principal balance of the mortgage loan is first scheduled to reach 78% of the original value of the property, or

•  the first day of the month following the date the mid-point of the mortgage loan amortization period is reached, if the scheduled LTV ratio for the mortgage loan does not reach 78% before the mid-point.

How to Avoid PMI

PMI can come in handy for people who want to become homeowners and otherwise wouldn’t qualify for a mortgage. However, the costs can add up, and unlike other types of insurance, you’re not gaining any protections yourself. Luckily, there are ways to avoid PMI altogether.

As stated above, lenders can cover the cost of PMI through lender credit. Lender credit can be generated by the borrower taking a higher rate in exchange for rebate money which is used to pay for some or all of the PMI cost. Whether or not this higher rate ends up saving you money vs paying a lower rate and monthly PMI depends on your unique situation.

An alternative is to take out a mortgage that is not a conventional loan, such as a Federal Housing Administration Loan . FHA loans require a government insurance (MIP) which usually runs with the life of the loan. FHA loans have an upfront premium as well as a monthly premium. Whether a conventional or government loan is the best fit for you depends on many factors , such as your credit history and the mortgage market.

The most surefire way to help avoid paying PMI is to save 20% down before you buy a house. Even if it might take you a bit longer to become a homeowner, consider whether it makes sense to rent until you can save up that magic number.

There are also some loan programs that do not require PMI. VA loans would be one loan program that does not require PMI and some lenders do not apply PMI requirements to their Jumbo loan products. It is good to note that SoFi offers as little as 10% down on their Jumbo purchase loans with no PMI.

If you’d like to put away more than you currently are, start by making a budget. Note down all the money coming in and going out every month, and see if there’s room to cut expenses so that you can save a bit more. Once you’ve freed up some cash, set up an automatic transfer from your savings to your checking account to make sure that money is set aside.

If you don’t have a lot of wiggle room as far as cutting spending, you may want to consider ways to increase your income. This can include asking for a raise, applying for a higher-paying job, or taking on a side hustle.

If you can save 20% down before applying for a mortgage and avoid PMI, you may save yourself a significant chunk of money for years to come. That said, only you can decide whether paying PMI is worth it in your particular situation and housing market.

Looking Into a Mortgage with SoFi

With SoFi, you make your dream home a reality with competitive rates, no hidden fees, and as little as 10%. When deciding on loan eligibility, SoFi, like other lenders, will consider your credit history, your income, your employment, and other factors. You can see if you pre-qualify in just two minutes online.

Explore a mortgage loan with SoFi.

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

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 Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

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If you’ve ever asked yourself the question, “if you withdraw from college, can you go back?” the simple answer is yes. But whether you left due to financial problems, family responsibilities, or other reasons, returning to college can be challenging.

Here are some things to know about going back to college after dropping out and how to help make the process go smoothly.

Having Some Ideas About Your Major

Regardless of how long it’s been since you left school, you’ll have to make up for lost time. At the same time, you may have had experiences during your time away from school that helped you solidify what you want to do with your life and career.

As a result, it’s a good idea to think about choosing a major. Whether it’s a bachelor’s or master’s degree, or a certificate program, knowing what subject you want to study and to what extent will help you finish your schooling faster.

If you’re still not sure about what you want to pursue, you can take some time to explore your options. Consider auditing a course or two to get a better idea about what you enjoy, if your first day back is still months away. The key is to do your due diligence before you return to campus, so you don’t feel like you’re spinning your wheels when you get there.

Carefully Considering Which College to Attend

In some cases, it makes sense to return to the college you originally attended. But it may also be worth checking out other universities to see if you can save money on tuition, or have a better college experience.

There are a few things to consider when making this decision. For example, each college has its own criteria as to what’s considered a required course versus an elective course. If you attend a different college, you may have to retake certain required courses.

Also, in some situations, it may make sense to find a less expensive college. Comparing colleges in your area can help make sure you get a good education without overspending. This is especially important if you had to leave college due to financial difficulties.

Easing Into It

Returning to college after a hiatus is different than returning to school after summer vacation. It may take some time to adjust to your new schedule and study requirements, and it’s possible that you’ve forgotten even some basic knowledge that you’ll need to brush up on.

If you have a desire to make up for lost time, you may consider trying to finish your degree or certificate program as quickly as possible. But as with any other activity, you may end up burning out if you spread yourself too thin.

Maybe instead of taking on a full workload your first semester back, you can take the minimum number of credits you need to be a full-time student, or maybe just a class or two. It can’t hurt to give yourself some time to get back into the swing of things, both mentally and emotionally.

There’s no right way to do this, so do regular check-ins with yourself and your loved ones to make sure you have enough capacity to accomplish your goals.

Building a Support System

Figuring how to get back into school after dropping out can be a draining process, especially if you’ve been away for a while. Maybe you have a family now, or you’re quitting your job to focus on school full time.

Regardless of your situation, it’s good to have support in your decision to further your education. Consider looking into your college’s mental health and career centers for additional resources and support.

You can speak with your partner, friends or family members about your decision to return to college. Help them understand your reasons and goals, especially if returning to college affects them.

The sooner you start building a support system, the easier it will likely be to make returning to college a smooth process.

Securing Financing

Even if you pick a relatively inexpensive university, a college education isn’t cheap. In an ideal scenario, you’ll be able to avoid student loans altogether. Scholarships, grants, and a full-time job can help you get through school without needing to borrow money.

But, if you do need some help to bridge the gap, you can start by filling out the Free Application for Federal Student Aid (FAFSAⓇ) form to see what you qualify for federal student aid (which could include grants, loans, and work-study). If you have a solid credit history and a good income, among other financial factors, private student loans might score you a lower interest rate.

Figuring Out What to Do With Your Existing Student Loans

If you still have student loans from your first stint in college, you don’t necessarily need to continue paying them when you return. The U.S. Department of Education and many private student lenders may allow you to defer your student loan payments while you’re in school at least half-time.

Keep in mind, though, that deferring your payments won’t stop the interest from accruing. If you don’t make interest-only payments while you’re enrolled, the unpaid interest will capitalize when you leave school and increase your overall debt.

If you’re generally unhappy with your existing student loans, another action to consider might be refinancing your student loans, especially if you qualify for a lower interest rate than on your original loans. You could also potentially extend your repayment term, lowering your monthly payment amount if you need to free up some near-term cash (but you’d pay more in interest overall).

Alternatively, if you’re in a more stable financial position, you might qualify to secure a shorter loan term, which could help pay off your loan more quickly and, therefore, make fewer interest payments.

But it’s important to note here that refinancing with a private lender would render you ineligible for programs and repayment plans extended to federal student loan holders like deferment, forbearance, and income-driven repayment. So you may wish to weigh your options carefully before considering refinancing.

Going back to college after dropping out isn’t easy, but it can be a stepping stone to get to where you want to be in life. As you consider returning to college, create a plan and allow yourself time to adjust to college life.

Also, make sure you have a good plan for your existing student loans. Whether it’s refinancing them and requesting a deferment, you can always look for opportunities to save yourself money as you try to finish up your degree or certificate.

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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.

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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.

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Credit card companies are competing for your business, and they’ve learned that customers’ heads turn when there are free offers on the table. Easy credit feels even easier when you are rewarded for using a particular card.

Charge enough on your card within a certain timeframe, and you could be eligible to earn travel miles, gift cards, points, and other rewards that feel great.

However, remember that every worm on a hook is meant to jerk you out of the water. Hey, chum, welcome to the world of credit card churning.

What is Credit Card Churning?

Credit card churning occurs when you open and close credit cards for the sole purpose of earning a sign-up bonus. The trick is to do it over and over again, with several credit cards. The end goal is to earn as many rewards as you can. In other words, maximizing your eligibility for points and prizes.

Types of Sign-up Bonuses

Of course, there is no such thing as a free lunch or a free reward. Being rewarded usually costs you. In order to earn the credit card rewards, you are typically required to spend a certain amount of money on that credit card, and it has to be done within the first few months (in most cases, three months).

The way you’re lured into a sign-up bonus is by earning a large amount of rewards by spending only a small amount. This usually happens only with a new credit card, as a “welcome” offer. If you play your cards right and are careful about what and where you spend, you may save a lot of money, and get rewarded in the meantime.

Winning at Credit Card Churning

Keep these rules in mind to beat the house at its own game:

Pay Off Your Balance in Full Each Billing Period

This is a good tip even if you’re not gunning for reward points, if we do say so ourselves. If you don’t pay off your balance at the end of the month, the rewards you earn will get drowned out; it’s only going to sink you further down the debt rabbit hole. Take the money and run?

Not so fast. There is no bigger credit card churning buzzkill than taking months or even years to pay off the debt you accumulate racking up charges to earn a sign-up bonus.

While we’re on the subject, remember that paying off your credit card balance in full every month will keep away the interest charges that accrue when you don’t make a full monthly payoff.

Look at it this way: when it comes to credit card churning, it’s you against the credit card companies. Reap their rewards, but don’t open yourself up to suffocating debt and high-interest charges.

Credit card churning can only work if the consumer hits the rewards thresholds, but practice responsible spending. If you’re someone who doesn’t manage credit card debt well, or tends to overspend just to cash in on the rewards, it might be better to steer clear of credit card churning.

Be Timely With Your Credit Card Payments

Don’t be even a day late. Late fees are killer, and they’ll damage the credit rating you’ve worked so hard to keep strong. If other credit providers see a pattern of late payments, and they may not be so fast to offer you their credit card, which means no rewards.

An excellent way to avoid late payments is to schedule automatic payments through your debit card, or checking or savings accounts. This way, you just set it and forget it!

Have a Plan for Your Rewards

Enjoying the rewards you earn may mean so much more to you when you have a goal of how to use them. Perhaps the points are for airline miles or a vacation destination. Maybe you can use them toward a new wardrobe or the latest electronics. Keeping your eyes on the prize will prevent you from squandering your reward points on something silly or regrettable. Stay strong.

Don’t Bite Off More Than You Can Chew

Fight the temptation to get greedy. New credit cards with amazing reward offers are a dime a dozen. They’re like buses: another one will come along soon.

Think about where you may be in a few short months if you take on too many credit cards and too much debt. That won’t be worth any amount of reward points. Only use the number of cards that you can tolerate without sinking yourself.

How Are Those Credit Card Fees Working for You?

Credit card companies tend to be selective about what they promote to you. The reward offer may get you all hog-tied and happy before you find out about a few minor details, like annual fees, transfer fees, and other charges. If your card requires an annual fee, ask yourself if acquiring it is worth the reward points.

You Better Shop Around

Be extremely selective in choosing your rewards-based credit cards. The competition among credit card companies for your business is intensely competitive. Take your time and wait for the best offer. Try those credit card comparison websites .

Remember that credit card companies often change up their offers; they’re not always written in stone. An offer that doesn’t seem so hot may suddenly get amazing only a month later. That can work backward too. An incredible offer can expire in just a month or two. Be proactive about your credit card reward shopping.

Be Wary of No-Interest Credit Cards

It certainly sounds tempting to get a credit card that charges zero interest, and as long as you plan to pay off your balance in full every month, you’re already ahead.

However, this type of offer can bite you on the back end with extremely high-interest rates when the period expires, or a “transfer charge” when transferring your high-interest credit cards.

Charges like that could equal the same amount of money you would be paying in the interest you thought you were passing by. Be sure you’re aware of the cons of no-interest cards, as well as the pros.

Get Your Reading Glasses

Always read the fine print. That amazing offer may have some exclusions and exceptions and other unpleasant surprises. The credit card company may be looking for a certain kind of cardholder too; after all, they’re in business to make money. You may not be the customer the credit card company is looking for; you may have too many credit cards, to begin with, or have a credit rating that may not be acceptable.

Find out which of the reward rules are subject to change, and if there are any expiration dates or winning rewards. If you are not great at reading the fine print, find somebody who is, or call the credit card customer service line and get your answers.

Avoid Grubby Fingers

Don’t think for a minute that nobody is on to your credit card churning plan. The credit card companies can get rather jealous. They don’t want to share with you. Credit card companies don’t like applicants who are opening too many credit cards in a short period of time. This could mean 24 hours or 24 months.

Be Overly Protective of Your Credit Score

A credit score is an overview of your credit history and payback behavior. Making timely monthly payments and not defaulting on any of your credit cards or loans, and you’ll be on the right path. It also helps to keep your ratio of credit-cards-to-debt rather low.

Always consider your credit score before you consider credit card churning.

Know What You’re Getting Into

When it comes to credit card churning, stay woke. Consistently. Know exactly what the offer is, and what you need to do to get it. Know the deadline for spending the money that will make you eligible for the rewards.

Keep up on your progress toward your rewards goal; how much more do you have to spend and how much more time do you have before the offer expires?

When to Avoid Credit Card Churning

Think of credit card churning as a privilege you have to earn rather than a right that doesn’t require prior deliberation. If you fall into any of these following categories, think twice before opening another credit card.

The biggest takeaway here is if you have credit card debt, it doesn’t make sense to continue to rack up debt in the name of credit card churning—instead, it’s best to make a plan to get out of credit card debt ASAP.

If Your Credit is Bad

Credit card rewards are meant for customers with good-to-excellent credit, not for customers with late payments or delinquent accounts. Think of this as an opportunity to work up your credit score. Once you do, you may be eligible for some offers.

If You’re About to Take on More Debt

Are you about to sign a mortgage, or are on the verge of a car or school loan? Applying for extra credit cards for the sake of their rewards will more than likely affect your credit score, thereby possibly standing in the way of your loan request.

If you’re thinking about credit card churning, wait until after you secure that all-important loan, or at least wait until your loan is approved, your payments are underway and your monthly budget adjusts to the debt increases.

If You Don’t Use a Credit Card That Often

Not over-using a credit card shows reserve, discipline, and smarts. However, your lack of credit card usage may not make sense for a credit card churn. In some cases, credit cards will only grant you rewards if you spend a certain amount of money, which means increasing your spending (and your debt).

That sounds like a slippery slope to us, and no amount of rewards in the world is worth high credit-card usage and suddenly unmanageable debt.

If You’re Already Earning Rewards on Your Credit Cards

Some credit cards offer travel points and other rewards, without you having to get into a spending contest.

If you are pretty disciplined about your monthly spending and careful about avoiding too much debt, you’ll probably already steadily earning points and rewards on the credit cards you have. Call customer service and ask what you are eligible for.

If This is Your First Credit Card

Usually, getting your very first credit card is a chance to prove that you are responsible with credit. You can use that first card to spend wisely and prudently, and pay your balance in full each month. This will build and strengthen your credit score, and keep your finances on the straight and narrow.

If you get involved with credit card churning right off the bat, it could lead to trouble that you don’t need when you’re first establishing credit. Fixing credit once it is broken takes a long time, and can stand in the way of the things you may want and need to buy. Wait until you’re further along in the credit game, and when you’re earning money to handle a bit more debt.

Don’t Let Credit Card Churning Get the Best of You

Credit card churning can be more harmful than it appears on the surface. It can lead to confusion, missteps, and more unmanageable debt.

It may be helpful to organize your finances. Talking to a financial planner may help you see the big picture and help you organize your different lines of credit.

You may also consider an account like SoFi Checking and Savings®. SoFi Checking and Savings is an online bank account where you can save, spend, and earn, all in one place. Plus, you’ll pay no account fees and earn 4.60% APY on all your cash.

We work hard to give you high interest and charge no account fees. With that in mind, our interest rates and fees charged are subject to change at any time

Ready to get your finances in order? Try SoFi Checking and Savings!

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

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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SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet..

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