SoFi

When your high schooler starts thinking about college, one of the best things you can do is to have The College Talk: a frank discussion about education, career, and life goals. The College Money Talk — the dollars and cents of the process — should be a part of the conversation. This will help you and your child stay on the same page during the college search.

We’ve assembled a list of topics you may want to include, such as how much you, as parents, can contribute toward college. We’ll also guide you through how to structure the conversation, explain financial aid, and more.

Figure Out How Much You Can Afford

First and foremost, parents should look at their finances as a whole: retirement savings, investment accounts, monthly budget, upcoming large expenses, etc. Also think about the current economy, especially inflation and the bear market.

“Parents need to keep in mind their own financial security first and foremost,” says Brian Walsh, senior manager of financial planning at SoFi. “We don’t want parents to take on too much debt or put themselves in a sticky situation because they helped their kids too much.”

Walsh adds that it’s essential for parents to figure out on their own how much they can contribute before talking to their kids. One way to do that is to see how their retirement savings stack up against suggested amounts:

Recommended: Inflation and Your Retirement Savings

Consider the Timing

You may wonder when, and how often, you should have the college and money talk. Walsh says you can relax during the early high school years.

“Things will heat up junior and senior year,” Walsh says. “That’s when you’re looking at schools the kids are interested in, and determining how realistic it is they’ll get into those schools and secure financial aid. Senior year is when everything comes together — making decisions about where to go and ultimately coming up with a plan for how to pay for college.”

Consider blocking out time to have the conversation freshman year in high school, then intermittently throughout junior and senior year. Use your best judgment in broaching the conversation, and choose a time when your kids seem receptive.

Structure the Conversation

Walsh suggests beginning with a discussion of the paths available to your child after college. This may involve different professions and careers and how to attain them, even jobs that don’t require a college education. Your child may also have no idea about the potential earning power of various professions — a great segue into the cost of college.

According to Walsh, it’s best to have this talk in an environment where everyone feels comfortable. That may be a favorite coffee shop or the living room couch. If you’re not sure, ask your student what they prefer.

If you want to make it a more collaborative process, you can give your child assignments. For example, you may work with your child to search for colleges, look up financial concepts, debate the trade-offs of a big-name school vs. a lesser-known institution, and more.

Your student may also want to research the graduation rates of colleges. Walsh suggests having students identify the schools where students tend to graduate in four years or close to that.

When you start the money conversation, consider bringing up the average “net cost.” That’s a college’s cost of attendance (which factors in tuition, fees, books and supplies, and living expenses) minus any grants and scholarships. According to the College Board, the average tuition and fees for 2024-25 of a private college was $43,350. The average tuition and fees for public in-state college was $11,610.

Explain About Financial Aid

Financial aid can come from various sources: colleges and universities, the government, and private lenders. Financial aid can include grants, scholarships, work-study, and loans:

•   Grant: Grants are a type of need-based aid that you don’t have to repay.

•   Scholarship: A financial award based on academics, athletics, other achievements, or diversity and inclusion. It may or may not be based on financial need, and doesn’t have to be repaid.

•   Work-study: An on-campus job that helps cover the cost of school. You must file the Free Application for Federal Student Aid (FAFSA) to qualify for work-study.

•   Federal Student Loan: A loan is money you borrow to pay for college or career school. You must pay back loans with interest. Federal student loans come from the federal government by filing the FAFSA.

•   Private Student Loan: These loans come from a private bank or online lender. Private student loans do not offer the same federal protections that come with federal student loans, such as loan forgiveness and income-driven repayment plans. Consider these factors before you decide to pursue private student loans.

For detailed information on all available financial aid options, reach out to the guidance office or college office at your child’s high school. Online resources, like StudentAid.gov and SoFi’s FAFSA Guide, are also helpful.

“When you’re down to the final couple of colleges, work with the admissions and financial aid offices at those schools,” Walsh says. “They will be the best resources during senior year and going forward.”

Recommended: Scholarship Search Tool

Talk About Debt (and Debt Repayment)

Many high school students don’t have experience with loans or understand them at all.

“One of the risks of student loan debt is that it can feel like Monopoly money — it’s not real,” Walsh says. In your discussion, try to make student debt more concrete for your child.

Walsh recommends going through a sample budget based on the average starting salary of a career related to your child’s preferred major. (Also check out our guide to ROI by bachelor’s degree.) Calculate the amount your child may earn each month. Estimate what they may pay for rent, utilities, groceries, transportation, student loans, and more. How much will they have left over after those expenses?

Although it may feel awkward, it’s worth talking to your kids about student loans to help them understand how to handle them.

Discuss Parent / Child Contributions

“Be transparent with the student so they know what to expect when they look at different schools,” Walsh says. He urges parents not to overextend themselves or feel guilty if they can’t contribute as much as they’d like. About 36% of parents paid the entire bill for their kids to go to college in 2024, down from 43% in 2016.

Look for Ways to Cut Costs

During your college money talk, you may want to explore strategies for cutting expenses. Walk through a sample college budget, and look for ways to save on living arrangements, transportation and travel, Greek life, computers, books and supplies, dining out, and Wi-Fi. Doing all this ahead of time allows you to pick and choose what’s important and plan how parents and kids will spend their money.

You might also suggest that your child begin at a two-year school to save money, then transfer to a four-year institution.

Recommended: A Complete Guide to Private Student Loans

The Takeaway

Paying for college often involves an emotional tug-of-war between a student and their parents. Walsh urges families to use The College Money Talk as a teaching moment. “It’s an opportunity for your child to learn valuable lessons on how debt and savings work,” he says, “and that can help them make better financial decisions in the future.”

Parents should examine their finances and agree on their family contribution before discussing it with their student. Because high schoolers have little experience with money, parents can make it more concrete by walking through sample budgets: one for their expenses while in college, and another that projects their income and student loan debt after graduation.

Ways to pay for college include cash savings, scholarships, grants, federal work-study, and federal and private student loans.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

How do you tell your kid you can’t afford their dream college?

Be honest and empathetic when explaining your financial limitations. Emphasize your support for their education and explore alternative options together, such as scholarships, grants, more affordable colleges, or transferring after two years at a community college. Reassure them that success depends on their effort, not the school’s prestige.

Do most parents pay for their kids’ college?

About 36% of parents paid for their child’s full college costs in 2024. However, that doesn’t mean you must follow suit, particularly if it will put a strain on your finances. Consider all aspects of your financial situation before deciding how much you can put toward the cost of college.

How do middle class families pay for college?

Paying for college involves planning and research, and that’s the case for families at any income level. Most families cover the cost of attendance through a combination of personal savings, need-based grants, scholarships, work-study, and student loans. This involves filing the FAFSA to see the amount of need-based financial aid your child may receive. You can also arrange to set up a payment plan, in which you make payments over the course of 10 or 11 months during each school year.

Photo credit: iStock/SDI Productions

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 04/24/2024 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org).

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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.

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.

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.

SOISL-Q424-045

The high cost of graduate school can make the dream of getting a master’s or a doctorate feel like a financial impossibility for many people. One way to help with tuition is by applying for a graduate fellowship, a merit-based award given by the university you’re attending or from an outside organization.

As with other scholarships and grants, there can be steep competition for these awards. Here’s a guide to graduate fellowships and how to go about applying for one.

What Is a Graduate Fellowship?

Fellowships are awards given to qualified graduate students based on academic merit. The purpose of a graduate fellowship is to give financial support while graduate students pursue their coursework, conduct research, and do intensive study into their particular field area.

Unlike a graduate assistant, who commits to working as a teaching or a research assistant in exchange for pay, academic fellowships do not typically come with any associated work requirements.

Besides helping you cover the cost of tuition, a fellowship may offer an additional cost-of-living stipend and health insurance, and cover related expenses such as attending an academic conference. Fellowships are awarded for a specific amount of time, ranging from a few months to several years.

Perhaps the biggest benefit is, unlike a student loan, you don’t have to pay any money back.

Internal vs External Graduate School Fellowships

There are two main sources of fellowships that can fund your tuition: internal and external. The latter is sometimes referred to as a portable fellowship. Internal funding comes from the university, while external financial support is provided by non-university outlets. (Of course, there are other ways to pay for grad school, too.)

Here’s a breakdown on how they differ:

Types of Graduate School Fellowships

Graduate fellowships vary in duration and purpose, and whether you’re a graduate, doctorate, or postdoctoral student. Here are the two main kinds of fellowships:

•   Graduate or Predoctoral Fellowship: This is for students who are pursuing a master’s or doctorate degree. Funding can come from the institution the student plans to attend or from an external source such as a philanthropic foundation or nonprofit organization.

•   Postdoctoral Fellowship: After a student completes their doctorate program, they can apply for a postdoctoral fellowship. These awards are geared toward people who want additional time to devote to study and research.

Applying for a Graduate Fellowship Program

Expect a long to-do list when applying for a graduate academic fellowship program. These tips can help you prepare your application:

•   Identify fellowships that are the right fit: There are a lot of fellowships out there, so do your due diligence to see which one might best meet your goals. Will this opportunity enhance you both personally and professionally? Because the application process can be intense and time-consuming, be sure you’re pursuing just the right opportunity.

•   Check eligibility requirements: Research the different internal and external fellowship opportunities to see what each requires. Some fellowships may be for U.S. citizens only, have an upper age limit, want students who intend to be or are enrolled in a graduate program, or have never accepted a graduate fellowship before. If you’ve been awarded grad school scholarships, make sure your fellowship is aware of them, too.

•   Start early: An application may call for prerequisite paperwork, personal statements, project or research proposals, transcripts, and letters of recommendation, so you’ll want to give yourself enough time to gather these materials. You don’t want to be scrambling to get everything together at the last minute.

•   Proofread your application carefully: You’ve got one shot to impress people, so don’t submit an application that hasn’t been reviewed and re-reviewed. Be sure to check for spelling and grammar mistakes, and ask a trusted advisor or friend to read it as well. Applications that are polished and absent of mistakes can create a more favorable impression.

What You Need To Know About Fellowships for Graduate Students

If you’re thinking about going for a graduate fellowship, you’ll want to be aware of how they work. Read on for all the ins and outs:

Applying for a Graduate Fellowship Program

There are lots of moving parts when it comes to applying for a graduate fellowship. And because these awards are in high demand, you’ll want to get ahead of the crowd of other applicants by submitting your paperwork as soon as possible.

Early Deadlines

Internal and external graduate fellowship deadlines typically fall between the months of October and February. Funds are designated for the next academic year. This means you need to apply to them at the same time you’re also applying to grad school.

If you make the mistake of looking into funding opportunities after you’ve sent out your graduate school applications, it’s too late. Begin your research and applications for graduate school fellowships early so you don’t miss these important deadlines.

Funding Duration

As mentioned earlier, funding for graduate fellowships comes from either the university you’re attending (internal) or from outside organizations (external). When searching for graduate fellowships, keep duration in mind. Financial support varies depending on the fellowship: Some can fund you for a year while others might cover as many as three years.

If you’re in a two-year master’s program and the fellowship only covers a year, you could find yourself worrying about how to pay for that additional year. Working toward a PhD can take up to 8 years, so if you’re pursuing a doctorate, you’ll definitely want to aim for a multi-year fellowship.

Recommended: Graduate Student Loans

Competition

When it comes to easing the burden of graduate school costs, fellowships are a popular option — which means they can be highly competitive. Fellowship programs look for highly qualified people who are also high achievers.

External graduate fellowship opportunities cast a wider net, so you have more options. But if you’re applying for an external fellowship, you’re up against a bigger pool of applicants from all over the country and even internationally. With an internal fellowship, you’ll find yourself competing with far fewer candidates.

Reserved Assistantships

Graduate assistantships are very much like work-study programs. However, instead of getting paid to do something totally unrelated to your field, like washing dishes in the cafeteria, these part-time teaching, research, and service administrative positions within the university exist to give you more focus in your chosen field.

Teaching and research positions are typically geared toward a student’s area of study, while an administrative position can be in any university department, such as the library service, residence hall, or university office.

Compensation can be in the form of hourly pay, a monthly stipend, or a tuition waiver. You may even be able to find an assistantship that pays your tuition and gives a stipend. Some schools also offer their assistants student health insurance.

These positions not only offer financial support, but are often highly convenient for students who already spend the majority of their time on campus. In one central location, you can attend classes, study your discipline, network, and earn money.

As with other internal graduate fellowships, application procedures vary by school. Check with the specific institution for deadline and application information.

Recommended: College Tuition Payment Plans

Part-Time and Online Graduate Programs

Not all graduate students can attend school full-time or be onsite. Though many fellowships (internal and external) do require a student to be full-time, some accept part-time students. Fellowships for online students exist as well, but might also be more geared to full-time students. You will probably have the most options for part-time or online degree programs with externally funded fellowships.

Also, if you’re counting on student loan deferment for graduate students, make sure that part-time and online students are eligible.

Internal Funding Sources

Colleges and universities that award graduate fellowships get the money to fund them from several sources. Where a school gets its money can depend on whether it’s a private or public college, for-profit, or non-profit. Funding for fellowships can come from student tuition and fees, federal and state governments, and endowments, which are funds donated by individuals or an organization.

Postdoc Fellowships

These fellowships are awarded to people who have earned their doctorate degree. A postdoc fellowship allows the PhD holder to acquire additional academic knowledge and research training. Areas a postdoc fellow might undertake include teaching, grant writing, presenting findings to others, and leading projects and other team members.

Postdoctoral fellows are typically paid in the form of a stipend. Both internal and external sources can fund a postdoc fellowship.

Long-term Career Prospects

Fellowships can bolster your resume and get the attention of prospective employers. As a graduate fellow, you’ve shown you’re motivated, disciplined, and serious about your focus of study. You’ve also shown you’re highly qualified and stood out from a pool of other candidates.

Education pays off when it comes to employment. According to the U.S. Bureau of Labor Statistics, people with higher levels of education and advanced degrees typically earn more money and have lower rates of unemployment compared with people who have less education and lesser degrees.

Graduate and postdoctoral fellows can go on to have long-lasting careers as researchers, university professors, expert scholars, writers, and authors. They can also work in their specialty for a corporation, government agency, or at a nonprofit organization.

Recommended: The 14 Best Jobs for MBA Graduates

The Takeaway

A graduate fellowship can help fund your postsecondary education, easing stress and averting debt. You can find fellowship opportunities through your college or university of choice, or through external sources such as foundations and non-profit organizations. The competition for fellowships is steep, but applying early on can increase the chances you’ll be rewarded with one.

If you need additional funding for living expenses, you can rely on cash savings, grants, scholarships, and federal and private student loans.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

Can I have more than one fellowship?

Yes you can, but it may not always be beneficial. Before applying to any external opportunities, check your school’s policy regarding additional fellowships. Some colleges will allow you to have more than one, but they will also look at your whole financial package as well. Schools have the ability to decrease your fellowship amount if you’ve also been awarded another one.

Is a fellowship prestigious?

Yes, fellowships are prestigious. Fellowships are merit-based academic awards given to outstanding students that fellowship committees believe will make an important and long-lasting contribution to their field of study. Since there is heavy competition for these awards, recipients have submitted applications with impressive faculty recommendations, a project or research proposal, and a well-written personal statement.

How do you find fellowships for graduate school?

To find graduate school fellowships, start by researching your university’s financial aid office and graduate department. You can find external fellowships on websites of professional organizations related to your discipline and through databases on sites such as Profellow.com and Bigfuture.collegeboard.org.

Photo credit: iStock/AntonioSolano

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 04/24/2024 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org).

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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.

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.

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.

SOISL-Q424-051

More and more young people are on the fence about going to a traditional four-year college. One popular decision-making strategy is to create a list of pros and cons of going to college. To get you started, we’re going deep into the benefits and downsides of attending college.

Keep reading to learn how college is correlated to more positive outcomes for grads, from lower unemployment to better health, as well as the financial risks.

On the Fence About Going to College?

Feeling torn about college can be a natural result of low motivation to continue schooling, a good job situation, or nontraditional career goals. Most people of all educational backgrounds would agree that college is not for everyone.

If you have a great job lined up now, waiting to attend school might make sense. On the other hand, if you need a degree to fulfill your goal of becoming a wildlife biologist, you may have little choice but to sign up for classes. The key is to be honest with yourself and clear about the consequences of your decision.

Here, we’re taking an in-depth look at the pros and cons of going to college.

Pros of Going to College

Going to college offers numerous benefits, from expanding career opportunities to personal growth. Below is a look at the pros of going to college.

Higher Earning Potential

One of the major reasons to attend college is salary potential. Let’s take a look at the median weekly earnings across various degree levels, according to the Bureau of Labor Statistics:

•   Doctoral degree: $2,109

•   Professional degree: $2,206

•   Master’s degree: $1,737

•   Bachelor’s degree: $1,493

•   Associate degree: $1,058

•   Some college, no degree: $992

•   High school diploma: $905

•   Less than a high school diploma: $721

According to these figures, a worker with a bachelor’s degree makes $30,576 more per year than a high school grad.

Access to More Jobs

Candidates with a college degree have access to a wider variety of jobs. Prior to the 1980s, two-thirds of jobs required at most a high school diploma. But by 2031, 72% of all workers will need some college under their belts, according to the Georgetown University Center on Education and the Workforce.

Value of Learning

When you head into a college classroom, you learn more than just the job skills required in the white collar workforce. You also learn critical thinking, time management and organization, money management, writing and speaking, teamwork, and project management.

Those who don’t attend college may not have the opportunity to develop specific skills that employers are looking for.

Networking

College offers opportunities to network on campus, through classes, at career fairs, through student organizations, and more. Career development offices at colleges and universities also help students network and connect with career and internship opportunities.

Lower Unemployment

Individuals who earn a bachelor’s degree are half as likely to be jobless compared to high school grads. And during times of economic upheaval, college graduates fare better.

As of May 2024, the unemployment rate for those with a bachelor’s degree was 2.1%, compared to 5.9% for those with no high school diploma.

The national unemployment rate is currently (November 2024) 4.2%, according to the Bureau of Labor Statistics.

Lower Poverty

A total of 11.1% of the U.S. adult population reported earnings at or below the poverty level in 2023, according to the U.S. Census Bureau. Digging through the data shows that adults with a bachelor’s degree or higher experience the lowest levels of poverty.

Adults who reported being at or below the poverty line obtained the following levels of education:

•   Less than a high school diploma: 25.1%

•   High school degree or equivalent: 13.1%

•   Some college or associate’s degree: 8.5%

•   Bachelor’s degree or higher: 4%

Healthier

Studies show that college graduates tend to have better health outcomes than those without a degree. They are more likely to have access to health insurance, engage in preventative care, and adopt healthier lifestyles. Higher education often correlates with increased health awareness, better job benefits, and overall improved well-being.

Better Educated Children

Studies suggest that parents who place a priority on educational attainment and model achievement for their kids (including going to college) typically have children who also value education. This leads to better-educated children.

More Likely To Save for Retirement

Most companies no longer offer pension plans to workers, so individuals must create their own retirement savings plan or join one offered by an employer. College graduates are more likely to contribute to a retirement plan like a 401(k). Even when high school graduates have access to similar plans, college grads contribute 26% more to their retirement plans than their high school graduate counterparts.

Cons of Going to College

The cost of college, the availability of high-paying jobs that don’t require a degree, and underemployment all contribute to reasons not to attend college. Here is a look at the cons of going to college:

Cost of College

The average cost of attendance (tuition, fees, and room and board) for an undergraduate education increased 169% between 1980 and 2020, according to the Georgetown University Center on Education and the Workforce.

These costs may encourage you to begin thinking about alternatives to college, particularly if you or your family will struggle to come up with the money to pay for college. Student loans may also be a challenge to pay back later on.

Recommended: Private Student Loans vs Parent Plus Loans

Cost of Tuition

Tuition is typically the most expensive part of attending college. According to the College Board, the average tuition cost for first-time, full-time undergraduate students in 2024-25 was:

•   Public four-year institutions: $11,610

•   Private nonprofit four-year institutions: $30,780

•   Private for-profit four-year institutions: $43,350

However, it’s important to remember that many students pay far less than the sticker price to attend college. The cost of attendance displayed on a college website may not be the amount it will cost you to attend.

Opportunity Cost of Time Spent Not Working

When you attend college, your available hours to work are reduced by classes and studying. You may spend up to two years in a classroom for an associate degree, or lose four years to obtain a bachelor’s degree. You’ll also lose out on income you could have been earning.

High-Paying No-Degree Jobs

Some high-paying jobs don’t require a college degree. Often, individuals can make up for a lack of degree by showcasing on-the-job experience. Here is a list of jobs that don’t require a degree:

•   Patrol officer

•   Home health aide

•   Personal care aide

•   Wind turbine technician

•   Recreation and fitness worker

•   Massage therapist

•   Landscaper and groundskeeper

•   Medical assistant

•   Computer support specialist

Underemployed College Graduates

Underemployment refers to recent college graduates (ages 22 to 27) with a bachelor’s degree or higher who are working in a job that doesn’t require a bachelor’s degree. In June 2024, about 40.5% of recent U.S. college graduates were underemployed in the United States.

Dropping Out

Less than half of college students graduate on time, and 32.9% of students drop out of college each year. The problem with dropping out is that you might get saddled with student loan debt but not have the degree to show for it.

Some of the risk factors for dropping out include part-time enrollment in college, full-time employment while attending school, gap years and leaves of absence, and students who are not dependent on their parents.

Earning Potential of Different Majors for College Graduates

The major you choose can affect your income. However, it’s important to remember that majoring in history doesn’t prevent you from going to work for an insurance company. Still, according to the Georgetown University Center on Education and the Workforce, your major does matters.

Top-paying college majors earn $3.4 million more over a lifetime than the lowest-paying tier of majors. The highest earners belong to STEM fields (science, technology, engineering, math), health, and business. These jobs typically earn $65,000 or more annually over the course of a career, with an entry-level salary of $37,000.

Is College Right for You?

Let’s put some pros and cons of college side-by-side. You may consider adding to them based on your own thoughts and research.

Alternatives to College

A traditional four-year institution isn’t the only type of college you can attend. You can also consider attending a trade school, community college, industry-specific education program, or even learning on-the-job. Let’s go over the details of each of these opportunities, which can be more cost-effective than other educational institutions.

Trade School

A trade school (also called a technical or vocational school) teaches students skills for specific occupations, often for in-demand fields. Students can learn mechanical trades, truck driving, cosmetology, and more, and earn a certificate for their learning efforts. Trade schools often cost less than traditional four-year colleges and universities, so graduates may end up with less student loan debt.

Many trade schools expect students to complete an apprenticeship with an experienced practitioner. Full program training may last between three months and a year.

Recommended: What Trade Jobs Make the Most Money?

Community College

A community college is a tax-funded public college that, like trade school, usually offers a cheaper alternative to a four-year college experience. Community colleges usually offer one- or two-year associate degrees, certificates, or workforce training. Community college degrees often transfer to four-year institutions, allowing students to move over to a flagship state university.

Community colleges may offer flexible class schedules, often allowing students to work or take care of family at the same time. About 41% of students are enrolled in community colleges.

Industry-Specific Education Programs

Sector-based training, where people are trained for jobs in high-demand fields, is on the rise. This training may focus on health care, information technology, advanced manufacturing, or transportation and logistics. Employers offer the training to middle-skilled candidates, mutually benefiting workers and companies that need to fill jobs.

Learning on the Job

Employers will sometimes hire uncredentialed candidates with the understanding that individuals will secure certifications within a certain timeframe. Such training is typically paid for by the company. Workers benefit by getting paid while they’re in school and receiving free education.

The Takeaway

While a bachelor’s degree is associated with numerous benefits, from lower unemployment to better health, remember that correlation is not causation. If you’re ambitious and creative with good people skills, you may do just as well without an expensive four-year college degree.

Alternatives include community college, trade school, and learning on the job. It’s true that some careers require a bachelor’s degree, but many high-paying jobs do not. Be honest about your motives, and carefully consider the pros and cons of your decision.

When it comes to paying for college, students can rely on cash savings, scholarships, grants, and federal and private student loans.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

What are the biggest reasons for not going to college?

There are a wide variety of college pros and cons, but the biggest reasons involve not being able to afford it, not being ready for the opportunity, and already having a job. If you’re deeply worried about the cost but still want to go to college, there are tuition-free colleges you may want to consider.

What are the most important reasons to attend college?

One of the most important reasons to attend college is to be able to achieve a career goal that you have set for yourself. Even if you don’t know exactly what you want your major to be, you may pursue higher education to discover that goal. Another important reason to attend college involves acquiring skills that help your overall development, both personal and professional.

How does college compare to trade school as far as cost and benefit go?

The average tuition cost of a trade school is much lower than a four-year college or university. Trade school costs an average of $15,000, but typically ranges between $12,000 and $20,000 in total.

Photo credit: iStock/FG Trade

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 04/24/2024 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org).

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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.

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.

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.

SOISL-Q424-052

If you’re like many Americans, you may have student loans, and you may also hope to own your home at some point. You may worry that carrying student debt and buying your own place are mutually exclusive, but that’s not necessarily the case.

Yes, it can be true those with higher student loan balances may be less likely to be homeowners than peers with lower amounts of debt. However, understanding your debt-to-income ratio and other aspects of your financial profile can be vital. This insight can both inform how much room there is in your budget for a home loan payment and highlight how to improve your odds of being approved for a mortgage.

With this guide, you’ll learn the ropes, such as:

•   Understanding how mortgage lenders evaluate your finances

•   How your student loans impact your profile

•   Steps you can take that may boost your chances of getting a home loan application approved when you have student debt.

Getting a Mortgage When You Have Student Loans

Student loans are a familiar financial burden. Currently, Americans hold in excess of $1.7 trillion in student loan debt. A significant 70% of undergraduates finish school with an average sum of $37,000 or more in student loans.

You may wonder how having student loans can impact your eligibility for a mortgage. Here’s what you should know: When a lender is considering offering you a home loan, they want to feel confident that you will pay them back on time. A key factor is whether they think you can afford the mortgage payment with everything else on your plate. To assess this, a lender will consider your debt-to-income (or DTI) ratio, or how high your total monthly debt payments are relative to your income.

For the debt component, the institution will look at all your liabilities. These can include:

•   Car loans

•   Credit card payments

•   Student loans.

In the case of student loans (other than those forgiven by Biden administration), banks know that you’re likely to be responsible for that debt. It usually can’t be discharged in a bankruptcy and it’s not secured to an asset that a lender can recover.

Many industry professionals say that your debt-to-income ratio should ideally be below 36%, with 43% the maximum. If you have a high student loan payment or a relatively low income, that can affect your debt-to-income ratio and your chances of qualifying for a mortgage.


💡 Quick Tip: When house hunting, don’t forget to lock in your home mortgage loan rate so there are no surprises if your offer is accepted.

Can You Get a Mortgage With Student Loan Debts?

Are you wondering, “How much house can I afford with student loans?” Here are some important facts. Having student loan debt doesn’t disqualify you from getting a mortgage, but it can make it harder. So here’s how student loans are calculated for a mortgage: That student loan debt will increase your DTI ratio, which can make it harder to qualify for funds from lenders.

For example, here’s a hypothetical situation: Say you earn an annual salary of $60,000, making your gross monthly income $5,000. Say you owe $650 per month on a car loan and have a credit card balance with a $500 monthly minimum payment.

And let’s say you have student loans with a minimum payment of $650 a month. All your debt payments add up to $1,800 a month. So your debt-to-income ratio is $1,800/$5,000 = 0.36, or 36%. That’s right at the limit that some conventional lenders allow. So you can see how having a high student loan payment can affect your ability to qualify for a mortgage.

Another way that student loans can affect your chances of buying a home is if you have a history of missed payments. If you don’t make your minimum student loan payments each month, that gets recorded in your credit history.

When you fail to make payments consistently, your loans can become delinquent or go into default. Skipping payments is a red flag to your potential mortgage lender: Since you haven’t met your obligations on other loans in the past, they may fear you’re at risk of failing to pay a new one as well.

That said, if you have an acceptable DTI ratio and a history of on-time payments on your student loans, you likely have a good shot at being approved for a mortgage. It’s not a matter of having to make a choice between paying off student loans or buying a house.

Estimate How Much House You Can Afford

Taking into account the debt-to-income ratio you just learned about, use this home affordability calculator to get a general idea of how much you can afford. This tool is one you can use to help estimate the cost of purchasing a home and the monthly payment.

How Student Loan Debt Affects Your DTI Ratio

As mentioned above, student loan debt can increase your DTI ratio. How much it will increase your DTI number will depend on how big your loan debt is. Currently, the average federal student loan debt is $37,338 per borrower. The figure for private student loan debt is $54,921.

Obviously, to get that average figure, many different amounts are factored in. Consider these two scenarios:

•   Person A earns $120,000 and has $80,000 in student loan debt, plus a car payment, plus $15,00 in credit card debt.

•   Person B earns $80,000, and has $10,000 in student loan debt, no car payment, and $3,000 in credit card debt.

It’s likely that Person B will have an easier time qualifying for a home loan than Person A. It boils down to one having a higher DTI ratio.

Recommended: Strategies to Pay Off Student Debt

Improving Your Chances of Qualifying for a Mortgage

Are you wondering how to buy a house with student debt? Your student loan debt is just one part of the picture when you go shopping for a home loan. Lenders look at many other aspects of your financial situation to assess your trustworthiness as a borrower. By focusing on improving these factors, you may be able to increase your chances of getting a mortgage.

•   Credit score: One of the most important things to address is your credit score, since this is a key measure lenders use to evaluate how risky it would be to lend to you. Your credit score is determined by many factors, including whether you’ve missed payments on bills in the past, how much debt you have relative to your credit limits, the length of your credit history, and whether you’ve declared bankruptcy.

If your credit score is below 650 or 700, you may want to work on building it. Starting by consistently making your payments on time, paying off debt, or responsibly opening a new credit line may help.

•   Automate your payments. If keeping up with payments has been challenging in the past, setting up automatic payments to your credit card. You might also establish automatic payments to, say, your utilities through your providers or your bank to help you stay on track without having to memorize due dates. In the case of a bankruptcy, you’ll typically have to wait 10 years for it to disappear from your record.

•   Strengthen your work history. Your employment matters to a lender because, if you’re at risk of losing your job, your ability to pay back the loan could change as well. Gaps in employment, frequent job changes, or lack of work experience can all be red flags for a financial institution.

If employment history is a weakness in your application, perhaps you can focus on finding a more stable role than you’ve had in the past as you are saving for a house. This could also be a matter of waiting until you’ve been in a new job for a couple of years before applying for a mortgage.

•   Save up for a bigger down payment. Another way to improve your prospects is to save more money for your down payment. If you have enough to put at least 20% down on a home, your student loans may become less of a factor for the lender.

You can save for a down payment by putting funds in an interest-bearing savings account or CD, asking wedding guests (if you’re getting hitched) to contribute to a “house fund,” earning more income, or even asking a family member for a gift or loan.

•   Focus on your DTI ratio. Another key area you could focus on is your debt-to-income ratio. Tackling some of your debts — whether student loans, credit card balances, or a car loan — could help lower that ratio. Another strategy is to increase your income, perhaps by asking for a raise, getting a new job, or taking on a side hustle. This can help you pay down debt and improve your DTI ratio.

How Student Loan Refinancing May Help

If you’re buying a home with student loans, another way to potentially improve your debt-to-income ratio is to look into student loan refinancing. When you refinance your student loans with a private lender, you replace your existing loans — whether federal, private, or a mix of the two — with a new one that comes with fresh terms.

Refinancing can help borrowers obtain a lower interest rate than they previously had, which may translate to meaningful savings over the life of the loan. You may also be able to lower your monthly payments through refinancing, which can reduce your debt-to-income ratio.

Refinancing isn’t for everyone, since you can lose benefits associated with federal loans, such as access to deferment, forbearance, loan forgiveness, and income-based repayment plans.

But for many borrowers, especially those with a solid credit and employment history, it can be an effective way to reduce debt more quickly and improve the chances of getting a mortgage.


💡 Quick Tip: Not to be confused with prequalification, preapproval involves a longer application, documentation, and hard credit pulls. Ideally, you want to keep your applications for preapproval to within the same 14- to 45-day period, since many hard credit pulls outside the given time period can adversely affect your credit score, which in turn affects the mortgage terms you’ll be offered.

Don’t Let Student Loans Hold You Back

With many Americans holding student loan debt, it’s understandable that this financial burden could pose a hurdle for some would-be homeowners. But can you get a mortgage with student loans? Yes, student loans and a mortgage aren’t mutually exclusive. Paying for your education doesn’t have to cost you your dream of owning a home.

If you’ve been making payments on time and your debt is manageable relative to your income, your loans might not be an issue at all. If your student loans do become a factor, you can take steps to get them under control, potentially improving your chances of qualifying for a mortgage. One option could be refinancing those loans.

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

FAQ

Can I refinance student loans to improve my mortgage eligibility?

Refinancing student loans might improve your mortgage eligibility. If you obtain a lower rate, you could potentially pay down your student loans more quickly, which could lower your debt-to-income (DTI) ratio. However, refinancing federal loans can mean you are no longer eligible for loan forgiveness and other programs.

Can a cosigner help if I have student loans and want to buy a house?

Having a cosigner on your student loans could help with your mortgage qualification if you are “on the bubble” in terms of qualifying. A cosigner with a strong financial profile and credit history could help tip you into the approval zone.

Will a history of on-time student loan payments positively impact my mortgage application?

A history of on-time loan payments is an asset. It can help build your credit score, which is one of the factors lenders use to assess whether to approve your mortgage application.

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.

SOSL18136

As a student, it can be easy to focus solely on the college application process and completely forget about financial aid. You spend so much time studying for the SATs (or ACTs) and tweaking your college essay so it perfectly represents you, that after you’ve been accepted and the reality of tuition payments set in, you might feel momentary panic.

It’s no secret that college tuition is expensive. Students and parents save for years to pay for higher education, but sometimes that’s just not enough. According to a Sallie Mae® study, parent income and savings covered 37% of college costs in the 2023-24 school year, while student income and savings covered 11% of the costs.

Many of us rely on financial aid to bridge the payment gap. Financial aid may come from multiple sources, including scholarships, grants, work-study, federal student loans, and private student loans. Keep reading for a look at financial aid secrets you should know.

Types of Financial Aid

Scholarships and grants are extremely useful forms of financial aid, since students are not typically required to pay back the money they receive. An online survey of students and parents found 27% of college families in 2023-24 relied on scholarships and grants to cover a portion of college expenses, according to Sallie Mae’s study.

Scholarships, grants, and savings often aren’t enough to cover the cost of attending college. Sallie Mae says 23% of college families borrowed money to help pay for college in 2023-24. Some families used home equity loans and credit cards, but federal student loans represented the most frequently used source of borrowed money followed by private student loans.

To top it all off, the financial aid application process can be confusing. Between federal aid and other scholarships, it can be difficult to keep everything straight.

Most often, the first step in applying for financial aid is filling out the Free Application for Federal Student Aid (FAFSA®). You can begin filling out the FAFSA on October 1 for the following academic year. The federal FAFSA deadline for the 2024–25 academic year is June 30, 2025, but you’ll likely want to file well before the school year starts – colleges and states may have their own FAFSA deadlines.

Taking the effort to apply for financial aid early can have a positive impact on your tuition bill. Below we highlight seven financial aid secrets you should know.

Financial Aid Secrets You Should Know

1. Decision Day vs Summer Melt

May 1 is usually decision day, the deadline when prospective college students must decide which college they plan to attend in the fall. But even after this deadline, students can change their minds. This phenomenon is known to industry professionals as “summer melt,” and sometimes it’s triggered by FAFSA verification setbacks.

Students who receive insufficient need-based financial aid, for example, might be compelled to reconsider their college enrollment decisions. Summer melt can give you an opportunity to select a more affordable school for you if you’ve encountered a FAFSA verification roadblock.

Summer melt is a common problem that causes schools to lose students during the summer. Because of this, schools may have a bit of secret wiggle room in their acceptance policy to admit new students over the summer for the fall semester.

Recommended: Should You Choose a College Based on Price?

2. Writing a Letter

You might be able to take advantage of summer melt with this secret: write a letter. After you get your financial aid offer, you could write a letter to your school’s financial aid office to open the lines of communication.

Let them know how excited you are to attend school in the fall. That’s where you could include a thoughtfully worded inquiry for any additional aid that you might qualify for as a result of summer melt.

When students decide to switch schools or not attend at the last minute, it means that they also won’t be using their financial aid award — which could now be available to other students.

3. Calling the Financial Aid Office

Another way to potentially take advantage of summer melt is to call your school’s financial aid office. Instead of calling immediately after you receive your financial aid award, think about calling in June or July. This allows financial aid offices time to account for students who have declined their financial aid packages.

An appropriately timed call to the financial aid office at your school could mean additional financial aid is allocated to your package — no guarantees, of course, but it never hurts to ask.

4. Submitting Paperwork and Applications On Time

Every school’s financial aid office has to follow a budget. Some financial aid is offered on a first-come, first-served basis, so it helps to submit forms, like the FAFSA, and other applications, on time or even ahead of schedule.

You may be out of luck if you apply for assistance after your university’s financial aid office has met their budget for the year. Some states have early winter deadlines for awarding scholarships and grants. Tennessee residents, for example, must complete their FAFSA by April 15 to be considered for a state-funded Tennessee Student Assistance Award grant.

5. Being Prepared

Have the basics ready to go before you sit down to fill out the FAFSA. If you have all of the information you need before you begin filling out the FAFSA, you’ll likely have an easier time filling out the information.

Usually, each parent and the student will need to create a username and password, which is called the Federal Student Aid ID (FSA ID). You’ll also need:

•   Social Security numbers (for you and your parents)

•   Bank statements and records of untaxed income (possibly)

•   You and your parents’ tax returns (aid awards are based on income from two years ago)

•   Any W2 forms

•   Net worth calculations of your investments (for students and parents)

6. Being Wary of Services that Charge You for Help

If you need assistance filling out the FAFSA, avoid any services that charge you. The first F of FAFSA stands for “Free,” so there is no need to pay for a service to fill the form out for you.

If you need assistance filling out the FAFSA, there are plentiful online resources through the U.S. Department of Education .

7. Filing the FAFSA Every Year

For every year you are a student and want to receive federal aid, you’ll have to file the FAFSA. Get in the habit of filing it every fall, so you’re closer to the top of the financial aid pile.

Navigating financial aid can feel overwhelming, but understanding key strategies can significantly impact your college funding.

The Takeaway

Scholarships and grants can be super helpful additions to a federal financial aid package. The money can reduce your tuition bill and doesn’t usually need to be repaid. Work-study can also be beneficial in helping college students make ends meet, as can federal and private student loans.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

What is the most common FAFSA mistake?

The most common FAFSA mistake is providing incorrect or incomplete information, such as inaccurate income details or failing to list all schools you’re considering. Errors can delay processing or reduce financial aid eligibility, so double-check entries and ensure all required documents, like tax returns, are accurate and up to date.

How can I maximize my financial aid eligibility?

To maximize financial aid eligibility, submit the FAFSA early, accurately report income, and reduce assets in the student’s name. Explore scholarships and grants, appeal for additional aid if circumstances change, and ensure all financial aid deadlines are met. Focus on schools with robust need-based aid programs for added support.

How do I get a bigger financial aid package?

To secure a larger financial aid package, submit the FAFSA early and accurately, apply for scholarships and grants, and appeal for more aid if your financial situation changes. Choose schools with strong aid programs, minimize student-owned assets, and maintain good academic performance to qualify for merit-based assistance.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.

Terms and Conditions Apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 04/24/2024 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org).

This content is provided for informational and educational purposes only and should not be construed as financial advice.

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.

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.

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.

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.

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