student_loan Archives | Page 61 of 142

Aug

2023

What Happens When Someone Pays My Student Loans?

By Anna Davies | Fresh Out of School, Going to College, Student Loans, student_loan | Comments Off

Can you pay off someone else’s loan? As a general rule, yes — so if you’re a student loan borrower and someone offers you assistance in paying off your loans, you may want to take them up on it. But it’s important to understand the implications. While a parent, grandparent, or even a mysterious benefactor could pay off your student loans, they may be responsible for a gift tax if they contribute more than the annual limit. The gift could also come with emotional strings attached.

Read on to learn about the tax implications of paying off someone else’s student loans — and how to repay your loans if the responsibility is all yours.

Student Loan Repayment

For federal student loan borrowers, the end of the three-year pause on federal student loan payments has made repayment top of mind again. The resumption of federal student loan payments, which was part of the debt ceiling bill President Joe Biden signed into law in early June 2023, requires interest accrual to resume on September 1, 2023, and payments to resume on October 1, 2023. (Borrowers who held private loans did not have any uniform break in payments.)

Additionally, the President’s plan to forgive up to $20,000 in federal student loan debt was struck down by the Supreme Court in late June 2023. That means federal student loan borrowers no longer have that course of action.

The bottom line: If you have a student loan balance, it needs to be paid. If you have a cosigner — which may be the case if you have private student loans or federal PLUS Loans — then that person is legally responsible for repaying the loans if you are unable to do so. But if your student loans are solely in your name, you are responsible for repayment according to the outlined terms.

Getting Help From Your Employer

More employers are offering student loan repayment as a perk. Through CARES Act legislation, employers can contribute up to $5,250 per employee per year toward student loans without the payment counting toward the employee’s taxable income, through 2025.

💡 Quick Tip: Often, the main goal of refinancing is to lower the interest rate on your student loans — federal and/or private — by taking out one loan with a new rate to replace your existing loans. Refinancing makes sense if you qualify for a lower rate and you don’t plan to use federal repayment programs or protections.

Can Parents Pay Off Their Child’s Student Loans?

Yes they can. But can parents pay off student loans without a gift tax? It depends. If a parent is a cosigner, paying the student loans in full will not trigger a gift tax. In the mind of the IRS, the parent is not providing a gift but is paying off a debt.

However, if a parent is not a cosigner, a gift tax could be triggered, depending on how much they pay.

How the Gift Tax Works

The gift tax applies to the transfer of any type of property (including money), or the use of income from property, without expecting to receive something of at least equal value in return, the IRS says — adding that if you make an interest-free or reduced-interest loan, you may be making a gift.

There are some exceptions. Gifts between spouses aren’t included in the gift tax. That means if you are married and your spouse pays off your loans, that would not trigger a gift tax event. (The IRS includes lawfully married same-sex couples.)

Tuition paid directly to qualifying educational institutions in the United States or overseas is also not subject to gift tax. But student loans are different.

The annual exclusion for gifts is $17,000 in 2023. That means an individual can give you up to $17,000 without triggering the gift tax, which the givers, not receivers, generally pay. If your parents file taxes jointly, they would be able to give a combined $34,000 a year, which could include paying down loans. Borrowers who have the good fortune to snag $17,000 from Mom, Dad, Granddad, and Grandma could get a total of $68,000 without any family member having to file a gift tax return.

Note, though, that even a gift of more than $17,000 towards your student loans doesn’t mean that your generous benefactor is on the hook for paying a tax on their gift. The excess amount just gets added to the lifetime exclusion — currently set at $12.92 million. As long as the benefactor’s total lifetime gifts are below that amount, they don’t have to worry about paying a gift tax. Still, if bumping against that lifetime exclusion is a concern, they can spread out their support over the years to avoid gifting you more than $17,000 in a calendar year.

The upshot is that the main concern when it comes to helping children out with their student loans is probably not the gift tax, but whether the parent can afford it. It’s a good idea for parents to consider their retirement plans and test what-ifs before offering to pay their children’s student loans. Working with a financial planner may help parents find a path that works for them and their children.

It’s also not an all-or-nothing decision. Some parents choose to pay a portion of student loans or offer cash toward repayment in lieu of other gifts.

Recommended: Should Parents Cosign on Student Loans?

What Happens When Someone Pays Off Student Loans For You?

A person can pay off student loans for you in a couple of ways:

• Pay the lender directly

• Pay you, with the expectation you will pay the lender

But if someone pays off your debt, is that income? Once another person has paid off your student loans, it’s as if you had paid them off yourself. You would not have any tax liability.

Other Options to Pay Off Student Loans

Not everyone has a benefactor, of course. While someone taking your student loan balance down to zero can seem like a dream, there are realistic ways to ease the burden of student loans, no third party required.

These strategies include student loan consolidation, student loan refinancing, and in some cases, student loan forgiveness.

The one thing that won’t help: if you stop paying your student loans. Ignoring your student loan payments will result in an increased balance, additional fees, and a lower credit score.

If you hold federal student loans and stop paying them, part of your wages could be garnished, and your tax refund could be withheld. If you default on a private student loan, the lender might file a suit to collect from you.

In other words, coming up with a repayment plan is crucial.

💡 Quick Tip: When refinancing a student loan, you may shorten or extend the loan term. Shortening your loan term may result in higher monthly payments but significantly less total interest paid. A longer loan term typically results in lower monthly payments but more total interest paid.

What Is Student Loan Consolidation?

If you have federal student loans, you may consider consolidation, or combining multiple loans into one federal loan. The interest rate is the weighted average of all the loans’ rates, rounded up to the nearest one-eighth of one percentage point.

Federal student loan consolidation via a Direct Consolidation Loan can lower your monthly payment by giving you up to 30 years to repay your loans. It can also streamline payment processing.

Consolidating federal loans other than Direct Loans may give borrowers access to programs they might not otherwise be eligible for, including additional income-driven repayment plan options and Public Service Loan Forgiveness.

What Is Student Loan Forgiveness?

Although President Biden’s federal forgiveness program was blocked by the Supreme Court, there are still several paths toward student loan forgiveness for federal student loan holders. They include:

• Income-based repayment. Federal income-driven repayment plans promise loan forgiveness after a certain amount of time, depending on the plan.

For instance, under President Biden’s new SAVE Plan, which is based on income and family size, qualifying federal student loan borrowers with undergraduate federal loans can get their monthly payments reduced by half — from 10% to 5% of their discretionary income. And after 10 to 20 years of making payments (the number of years depends on how big their original student loan balance was), the remainder of what they owe will be forgiven.

• Public Student Loan Forgiveness: This federal program was designed to help graduates working in public service have any remaining loan balance forgiven if they meet criteria that include working for a qualifying organization and making 10 years’ worth of payments.

• Disability discharge: Some people may have their loans forgiven because of total and permanent disability.

What about bankruptcy? It’s extremely difficult to have student loans discharged through bankruptcy.

What Is Student Loan Refinancing?

With student loan refinancing, a borrower takes on one new, private student loan to pay off previous federal and/or private student loans. Ideally, the goal is a lower interest rate. The repayment term might also change.

However, there is a very important caveat for those with federal student loans: Refinancing those federal loans means that borrowers will no longer be eligible for federal repayment plans, forgiveness programs, and other benefits. If a borrower needs access to those programs, student loan refinancing won’t make sense.

But for borrowers who have no plans to use the federal programs, a lower rate could make refinancing worthwhile. Using a student loan refinancing calculator can help a borrower see how much money they might save by refinancing one or all of their loans.

Refinancing Student Loans With SoFi

Even if your parents, grandparents, or others in your life are not in a position to pay off your student loans for you, understanding your options for potentially lowering your monthly payments or saving money over the life of a loan can give you multiple avenues to explore as you work toward taking control of your finances.

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

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

FAQ

Can I pay off my child’s student loans?

Yes, you can pay off your child’s student loans. But, depending on the amount, there may be tax implications.

Is paying off a child’s student loans considered a gift?

Yes. Paying student loans for someone else is considered a gift and would incur a gift tax for any gift above $17,000, which is the gift exclusion cutoff for 2023.

That means both parents can contribute $34,000 per calendar year toward their child’s student loans without owing gift tax.

Can I pay off my sibling’s student loans?

Yes. You can absolutely win sibling of the year and pay off your sibling’s student loans. Just know that any gift above $17,000 in 2023 will trigger a gift tax that you will be responsible for paying.

Photo credit: iStock/Halfpoint

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.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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 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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Aug

2023

The Top Gifts for College Students

By Josephine Nesbit | Financial Independence, student_loan, Terminology | Comments Off

When someone heads off to college, they are often setting up a whole new household. They want and need items that help them get their new lifestyle up and running. If you are buying gifts for a student, you can help them achieve that by giving them items that are convenient, practical, and a little bit fun.

That’s where this list can come in handy. It identifies some of the most useful, in-demand gifts you could give a recent high-school grad or current college student. Plus there are clever ideas that may well elicit an “I love it!” from the recipient, such as a subscription to a favorite streaming service.

Read on for smart, inspiring ideas for presents for the students in your life.

Apparel and Accessory Gifts for College Students

College students need to be prepared for any situation on campus, whether that’s a winter storm, a job interview, or a trip to the school’s gym to workout. Clothing and accessories are college gifts that are likely to be appreciated. They’re practical, of course, and can help the recipient save money on clothes.

1. Backpack

A good-quality and versatile backpack is a college staple. Your college student may want a waterproof bag with plenty of compartments with room for books, a laptop, and other personal items. The backpack should also be comfortable to carry around throughout the day and durable enough to last for several semesters.

2. Messenger Bag or Tote Bag

An office-ready tote or messenger bag can be great for internships or interviews. Plus, it can be used beyond college.

3. Activewear

Whether they’re playing on a college team, a regular at the gym, or just like the style and comfort, activewear can be a useful gift for most college students. There are many different styles and brands at various price points.

4. Gym Bag

For college students who may use the school’s gym facilities or participate in a sport, a gym bag is essential. Make sure to get an appropriate size bag depending on how much they need to carry.

5. Outdoor Winter Gear

This may not be as important if they’re attending school in a warm location, but students need warm winter clothing when they’re walking back and forth between classes. Your college student may need warm winter boots for the snow, a heavy coat, thick socks, a hat, and gloves. And those can be pricey, so they make a great gift.

💡 Quick Tip: Don’t think too hard about your money. Automate your budgeting, saving, and spending with SoFi’s seamless and secure online banking app.

6. Waterproof Gear

The last thing a college student wants is a wet bag while they’re carrying their textbooks and laptop. A waterproof backpack and an umbrella should help protect expensive gear and a raincoat and boots should keep your college student dry between classes.

7. College Hoodies/Sweatshirts

One popular gift for college students is a hoodie or sweatshirt with the school’s team logo. This can typically be found through the college’s website or they may sell them on campus as well.

This type of gear can be especially fun for students to wear when getting involved in on-campus activities and showing their school spirit.

8. Loungewear

The dorm will be home for the next couple of semesters so it’s important to be comfortable. Loungewear can be found online or in stores and come in a variety of styles and prices.

9. Professional Attire

A professional outfit is a must for the college student going on interviews or for any formal gathering. If you don’t feel comfortable picking out an office-ready outfit, there are subscription services available with styles based on the information filled out by the recipient, or a gift card to a specific store may work as well.

Another great idea for a present for a college student: a gift card to a specific store.

Recommended: What Is College Like?

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Dorm Room Gifts for College Students

There are too many dorm room college essentials to list. The little things go a long way and can help make college life more comfortable and enjoyable.

10. Bedding/Blankets

Most colleges only supply a mattress, so students must bring their own sheets, blankets, and pillows. Colleges typically have dorm beds with a twin XL mattress, but it should be confirmed with the school before buying bedding. Make sure to buy an extra set of sheets so that they always have a clean set.

11. Basic Kitchenware

Whether your college student has a dorm room kitchen or will mostly be eating in the dining hall, basic kitchenware is a necessity for a quick meal or a late-night snack. Basic kitchenware includes utensils, knives, plates and bowls, cups, and food storage containers.

12. Laundry Basket

Dorms typically don’t provide a washer and dryer in the dorm room so students will need to bring their laundry to the communal laundry room.

13. Alarm Clock

Getting up on time for classes can sometimes be a struggle so your college student may need a little help. A digital alarm clock should do the trick even for the heaviest of sleepers.

14. Bathrobe

Aside from the comfort and luxury that bathrobes may bring, they’re a necessity for college. A bathrobe will give a little bit of extra security when your college student goes to take a shower.

15. Storage

Dorm rooms are usually small, so your student will want to maximize every inch they have. There are tons of great storage solutions from under-bed bags and bins, over-the-door storage racks, and hanging strips or hooks.

16. Desk Supplies

Desk supplies are a must-have and make great gifts for college students. Consider desktop organizers, pens and pencils, a lamp, and also a comfortable desk chair.

17. Lap Desk

A lap desk can make a convenient gift for college students to make studying around campus more comfortable. They’re portable and perfect for taking notes or setting a laptop.

18. Streaming Service

It’s easy to spend a lot of money on streaming services, and college students are typically on a tight budget. Get a gift card for one or a couple of streaming services to gift your college student.

19. Personal Safe

If your student has expensive or important items, it’s important they’re kept in a safe location. A small personal safe to protect valuables can give your college student some peace of mind when living with roommates. Plus, if they work a cash job and want to save the money for tuition, they will have a safe place to stash it.

20. Games

Board games or card games are perfect for a relaxing night with roommates and friends.

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Food and Drink Gifts for College Students

College cuisine doesn’t have to be instant ramen or dining hall meals. You might help your student get set up to cook meals for themselves, which can be a way to 33 Ideas for Saving Money While Dorm Shopping

Tech Gifts for College Students

When picking out a tech gift, choose something that will make school life a little easier and maybe add some fun in between classes. The right gadgets will make workloads more seamless and save your student a lot of time and energy.

26. Laptop

A laptop is an essential school supply. While there’s always the library, laptops give students the freedom and flexibility to work on academic assignments anytime and anywhere. Laptop quality, functions, features, and prices vary widely, so make sure you know what your college student is looking for in a laptop.

Bonus: A laptop can be a way a student can earn money at home (or at their dorm room), whether selling things online or perhaps tele-tutoring in a subject they love.

27. Portable Charger

A portable charger ensures your college student can study, take notes, and work on assignments without worrying about their battery dying. Portable chargers come in a variety of forms with a range of features.

28. Noise-Canceling Headphones

Dorm rooms and other areas around campus sometimes don’t make the best environment for studying. Noise-canceling headphones give your college-bound student a distraction from the surrounding noise.

29. Power Strip

You can never have too many power outlets. Your college student’s dorm room may not have enough outlets for their needs.

30. USB Flash Drive

College students may need a reliable USB flash drive to use when going to the library to work on a project, when a printer isn’t working, or when moving large files. Flash drives come in a range of storage capacities and prices.

31. Portable Bluetooth Speaker

It may not be a must-have, but a portable bluetooth speaker is a fun gift for college students. There are even waterproof models for a little extra protection.

The Takeaway

Still, stumped when it comes to finding gifts for college students? Cash or gift cards go a long way and it allows your college student to purchase exactly what they want or need. A gift card can be used for their favorite restaurant or store or some cash can go towards college books, saving for college tuition, or anything else they may need.

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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.

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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.

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Aug

2023

A Guide to Choosing the Right College Major

By Kelly Boyer Sagert | Life & Career, Student Loans, student_loan | No Comments

After spending months researching and applying to colleges, you’ve finally decided on a school.

You should be proud of this achievement. But weighing and comparing schools isn’t the only decision you’ll be faced with. At some point, you’ll also need to choose a major.

Many college freshmen haven’t settled on a field of study, so you’re not alone if you’ve been wondering, “What should I major in?” Choosing what to study at college can feel nerve-racking, but it doesn’t have to be that way.

There are steps you can take to make an informed decision you’ll be happy with. One tool that can help you narrow your options? Taking a college major quiz.

Read on to learn more about choosing a major, take our college majors quiz, and then discover the strategies that will help you pick the right major.

When Is It Necessary to Declare a Major?

Schools usually require that you declare a major by the end of your sophomore year. Generally, there’s not a particular rush to declare. What’s more important is that you take a variety of classes if you’re still trying to figure out “what should I major in?,” to find the subjects that interest you most.

Just be aware that if your chosen field requires sequential classes, you may not be able to take quite as long to shop around for a major. For instance, it’s easier to switch out of being a science or engineering major than it is to switch into that field.

Why Choosing the Right Major Is Important

Your college major is the first stepping stone to your career. It won’t decide your entire career path, just as your first job won’t determine your entire career, but it will launch you on a particular trajectory and help you develop certain skills you’ll need to be successful.

Practically, you’ll want to choose a major with college program costs you can afford, that will pay you the kind of income you’re looking for, and has good employment prospects for the future.

On a more personal level, some of the most important considerations are: Is it something that truly engages you? Does it set you up for a career that you’ll enjoy? And does it suit your personality?

It seems obvious to say that you should choose a degree based on your interests, but it’s a consideration that you should respect. True engagement in a topic can have numerous ripple benefits. For instance, you’ll probably be more motivated and committed to lifelong learning and less likely to feel burnt out in school or later in your career.

College Major Quiz

Now that you understand why the right major is important, take this college major quiz to help answer the question, “which college major should I choose?”, and find the right area of study for you.

Satisfaction Survey Results

How do college graduates feel about the majors they chose? BestColleges.com conducted a survey to see how happy college graduates were with their choice of major. The survey asked numerous questions, with results tabulated for each question from each of the following generations: Millennials, Gen X, Baby Boomers, and the Silent Generation.

Here are three key findings:

• 61% of respondents would change their major if that were possible.

• About 26% of participants would change their major to reflect their passions.

• About 30% of the Millennials who participated said they should have chosen a major with better job opportunities.

It’s important to remember that this survey focused on people who graduated and were looking back at decisions they’d already made about their majors. As a current college student, you still have the ability to make the right decision.

6 Steps to Choosing Your College Major

Here are some key steps you can take to find the best college major for you.

1. Exploring

What’s tough about making a decision about which major to choose when you’re a teenager is that you haven’t tried a lot of things yet. The first year or two of college is a fine opportunity to explore, even if you think you know what major you’ll choose.

To begin, think about what you enjoy and what you’re good at. In addition to subjects, include skills such as leadership or organization. Next, consider the majors that match up with those interests. Branch out beyond the same subjects you took in high school.

Sign up for academic or pre-professional clubs—they’re a great way to learn more about career possibilities, create a support network as you’re enrolling in classes, seek out job-related opportunities, and meet people who share your interests. If you plan on working while you’re in college, find a job in a field you’re interested in.

2. Talking to People

As you’re thinking about, what major should I choose?, speak with other students, professors, and guest lecturers about their career experience. You’re likely to learn more about what a career is like by talking to someone with real-life experience.

Find a career counselor at your school who is willing to discuss with you options for majors and career opportunities.

It’s also no secret that we can have very skewed opinions of ourselves. Often, we’re too hard on ourselves or don’t recognize our own talents. It can help to have conversations with the people in your life (family, friends, teachers, coaches, and so on) whom you know will provide constructive observations and advice. It’s entirely possible that you’ll learn something about your strengths you never knew before.

3. Thinking About the Money

While no one expects that you have money figured out, you should have a general idea about how the decisions you make in college will affect you later in life.

First, investigate the starting salaries for different majors and entry-level jobs. This is an especially important exercise if you have student loans. As you’re choosing a major, it’s helpful to understand the basics of student loans and what they cover.

For instance, you’ll need to be aware of when you need to start putting money toward student loans, and how much your payments might be. Your loans can affect your financial future for many years, so make sure your major and career of choice will allow you to cover what you owe.

Even if you don’t have student loans, having a realistic idea about salaries, job availability, and cost of living in the area where you expect to live is important. Find a major that works within your budget and schedule.

It’s also important to look ahead. Is a career of choice expected to be in demand in the future? Is the demand expected to actually increase?

Recommended: Private Student Loans Guide

4. Getting Granular

At this point, it may be obvious to you which major is best. If not, and you’re still asking, “what major should I choose?”, a good strategy can be to create an in-depth list that includes:

• Your strengths

• Your weaknesses

• Activities you enjoy

• Tasks you dread

Also ask a college counselor if you can do aptitude testing. Are career fairs that you can attend coming to your school? Do some volunteer work or see if you can secure an internship in an area of special interest. Spread your net wide and take all you’ve listed and learned to make a choice that’s right for you.

5. Post-graduate Plans?

Is a bachelor’s degree what’s needed for the career you’re considering? Or will more schooling be required? Before finalizing your major, it makes sense to be clear about how much education you’ll need for a particular job.

If a master’s degree or more is required, is this something you’re interested in pursuing? And can you afford it?

And again, it makes sense to think about your student loans and the repayment terms they have. One thing to know is that you don’t necessarily have to stick to those terms if they won’t work for you. Refinancing student loans could help you get a more favorable rate and term, and possibly make your payments more affordable.

When you refinance, you replace your current loans with a brand-new private loan. It’s important to explore the advantages of refinancing student loans as well as the disadvantages.

One thing to know is that refinancing federal student loans makes them ineligible for federal programs and protections, like income-driven repayment plans. If you think you’ll need access to these benefits, refinancing may not be the best choice for you.

6. Filling in the Gaps

Once you choose a major, you might also want to select a minor. Having a minor opens up another academic discipline and can provide you with additional skills that can help you pursue your ideal career.

If, for example, you want to become a psychiatrist, it can make sense to have a business minor if you want to open a solo practice.

Whenever possible, it makes sense to choose a minor at the same time you declare your major. This allows you to strategically schedule classes so you can graduate within the planned time frame.

In the end, no matter what major and minor you decide on, know that your flexibility, creativity, and passion for life-long learning will have much to do with your success.

SoFi Private Student Loans

As you’re determining your major and also thinking about paying for college, student loans can help you cover some of the cost of college. If you’re exploring student loan options, shop around for the best rates and terms. SoFi private student loans have low fixed or variable interest rates and no fees. It’s easy to apply online and you can add a cosigner in just minutes. Additional benefits include exclusive member discounts and the flexibility to choose from multiple repayment options.

Students are encouraged to explore their federal student loan options before applying for any private loans. Federal student loans come with benefits that may not be offered by private lenders. Private student loans can also be more expensive than federal student loans.

If you have student loans and you’d like to lower your monthly payments, refinancing might be one way to do it. SoFi offers loans with low rates, flexible terms, and no fees. And you can find out if you prequalify in just two minutes. Note: You may pay more interest over the life of the loan if you refinance with an extended term.

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

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.

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

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. SoFi Bank, N.A. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

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

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

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Aug

2023

How Do You Change Your Major?

By Emma Diehl | Student Loans, student_loan | Comments Off

Declaring a major in college isn’t a minor decision, but that doesn’t mean you can’t change your mind at some point down the road. Indeed, roughly one-third of undergraduates actually change majors at some point during their college careers, and around 10% change majors more than once.

While the decision to change your major can be stressful, actually making the switch doesn’t have to be. The key to a smooth transition is to do some strategic planning and to keep up communications with the university.

Read on to learn how to learn more about how to change your major.

First, Declaring a Major

Many colleges and universities ask undeclared students to choose a major by the end of their sophomore year. That’s because many students spend the first year or two taking general education classes.

Once a student is ready to declare a major, the official process will vary school by school. Generally, a student will need to schedule a meeting with their assigned academic advisor, and might need to meet with a department advisor for their chosen major.

In a department or advisor meeting, students will review their academic progress and roughly outline the rest of the required courses they need in order to complete their major.

These courses and their timing aren’t set in stone, but it can help give students an idea of how heavy their course load will be until graduation, and set expectations for how long it’ll take them to complete the degree.

From there, the request to declare a major needs to be approved by that specific department or college. That might be as informal as a meeting or as formal as an application.

💡 Quick Tip: Pay down your student loans faster with SoFi reward points you earn along the way.

Possible Reasons to Change a Major

Deciding to change majors is a personal choice. There’s no one sign for all students. In fact, a combination of factors may inspire a switch.

While not an exhaustive list, here are a few reasons a student might feel it’s a good idea to change majors:

• More excitement about a different area of study: Maybe a computer science student is more excited by a single art history elective than anything else on their schedule. If they dread every class but the elective, it might be time to change majors. Of course, a major isn’t only about passion for the subject, but that does come into play. When nearly every class is boring, it might be time for a change.

• Poor grades: College courses should be challenging, but if a student is regularly failing, or just barely passing required courses, it might be time to consider a different major. Not only does it indicate that the area of study might be outside someone’s talents, but bad grades can also jeopardize graduation and completing the degree on time. If a student is giving a course her all and still coming up short, it might be time to consider alternatives.

• Really, really good grades: This might sound counterintuitive, but if courses aren’t challenging, then the major might not be the best fit. If a student feels bored in class but continues to ace the coursework, it might be a good idea to look at other majors or consider a double major or minor.

• Money: Selecting a major is often the delicate balance between something loved and something that leads to a career post-graduation. Picking a major solely because it could mean big bucks after college could lead to regrets down the line. Remember that post-grad life should feel fulfilling, too.

• An awful internship: Now this can be a little tricky. If students end up hating a summer internship related to their major, they should try to evaluate if it was the work or the management that they disliked. It might have been a poor fit culture wise but a good fit workwise.

If any or all of the above sound familiar, it might be time to think about changing majors. Additionally, it might just be helpful along the way to evaluate satisfaction with a major, even if you decide to continue in that area of study.

Considerations Before Changing a Major

If it feels like it may be time to change majors, here are a few considerations to keep in mind before crossing the t’s and dotting the i’s:

• What courses transfer? If the desired new major is far outside the current area of study, a student might have to basically restart college. For example, a psychology major who changes tack to engineering might not have much overlap on core curriculum. Just like mapping out courses when declaring a major the first time, students should consider doing the same before changing majors. It can show how much work or courses will be required.

• Will it cost more? Depending on school pricing or area of study, changing majors might end up costing a student more in the long run. That could be from additional course fees or taking more classes to catch up over the summer. Once the course load is mapped out for a major change, crunching the numbers is a good idea.

💡 Quick Tip: Even if you don’t think you qualify for financial aid, you should fill out the FAFSA form. Many schools require it for merit-based scholarships, too. You can submit it as early as Oct. 1.

• Will it take longer? It may not be possible to graduate in four years if the new major is vastly different or the change comes late in an academic career. More time at school could mean more taking out more student loans. (Then again, less than half of bachelor’s degree earners graduate within four years.)

• Will it line up with post-graduate goals? It’s important to enjoy an area of study, but it’s also important to ensure it aligns with jobs a student wants after graduating. If a premed student switches to international relations but hates the job prospects, that might be a poor choice.

Time, money, or heavy course loads don’t have to squelch a change in major, but they should be factors a student is aware of before making the switch.

How to Change a Major

The reality is, deciding to change majors is likely harder than the actual process of doing so. Changing majors won’t be so different than declaring a major in the first place.

First, a student should schedule a meeting with their current academic advisor to talk through the choice. The advisor may be able to offer insight or even provide course recommendations in the new major.

Typically, the student is required to fill out a short form and have their current as well as new academic advisor sign it to make the major change official.

Depending on the college or area of study, a student might have to apply to the specialty school on campus they wish to transfer to as well.

Recommended: 20 of the Most Popular College Majors

The Takeaway

How to change your major? It requires thought and a talk with your academic advisor. Changing majors can alter a lot about the college experience, from course load to post-grad plans. It can also impact how many years you’ll spend in school and the total cost of your education.

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.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

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

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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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Aug

2023

Is There Mental Health Student Loan Forgiveness?

Student Loan Forgiveness for Mental Health Workers

By Anna Davies | Financial Independence, Student Loans, student_loan | Comments Off

With mass student loan forgiveness blocked by the Supreme Court, you may be curious about what other relief options are available, especially if you work (or plan to work) in a field that requires graduate school — and significant student debt — but may not pay a high salary.

The good news is that there are multiple programs that offer student loan forgiveness or relief for mental health professionals, including counselors and therapists. Forgiveness programs for mental health professionals are designed to encourage individuals to enter and stay in the profession.

Read on to learn about programs and strategies that can help you repay any student loans you have taken out (or plan to take out) to become a mental health professional.

How to Plan for the Future With Student Loan Debt as a Mental Health Professional

Whether you take out private student loans or federal student loans to pay for your education in the mental health field, you’ll need to consider how you will eventually repay those loans. It can also be challenging to navigate career opportunities when you know that you have student loans to repay. The good news: You’re not alone. And there is no one right path to pay back student loan debt.

It can be helpful to talk to graduates and see how they paid off student loans. One big crossroads can be whether to take a higher paying job in the private sector or work in a nonprofit role that could give you an avenue toward loan forgiveness through a program like the Public Service Loan Forgiveness Program (PSLF). Another option to manage repayment is to use an income-driven repayment plan, like the new Saving on a Valuable Education, or SAVE, Plan (which will replace the existing Revised Pay As You Earn, or REPAYE, Plan).

There may also be programs unique to your career. For example, the Health Resources and Services Administration (HRSA), a government branch, offers loan repayment programs for mental health professionals who meet certain criteria, such as serving in a health professional shortage area. Speaking with your supervisor, your colleagues, and keeping abreast of news within professional organizations can help alert you to unique repayment opportunities.

What is a Student Loan Forgiveness Program?

A student loan forgiveness program operates the way it sounds: Student loans can be forgiven if certain criteria within the program are met. But each student loan forgiveness program has different criteria. It’s important to completely understand the scope of the forgiveness program. Reading this student loan forgiveness guide can help you understand where the national conversation is regarding loan forgiveness in the future as well as options available for forgiveness now.

When student loans are forgiven, usually after a set amount of payments, the balance is forgiven. But that balance may be taxed, depending on the program. For example, forgiveness received under PSLF is not considered taxable, according to the IRS. But under PAYE and REPAYE programs, any canceled student loan debt is considered taxable.

There may also be loan repayment assistance programs (LRAPs) for your profession or field, as well as state-sponsored loan forgiveness programs.

Will Student Loans be Forgiven After Ten Years?

Loans are not automatically forgiven after ten years. But one potential avenue for mental health student loan forgiveness is the federal Public Service and Loan Forgiveness (PSLF) program. This program requires eligible candidates to work with a qualifying organization and make 120 qualifying monthly payments. It also requires that the loans you hold be federal Direct Loans (or that the federal loans you currently have are consolidated into a Direct Loan).

Qualifying for PSLF can be challenging and requires borrowers to certify their employment to be sure their payments count toward the program. In addition to making 120 payments while working at a qualifying employer, you have to be working for a qualifying employer when you submit the forgiveness application and when the loan is forgiven.

Consult with your loan servicer if you have any questions and be sure to read all of the details about the program.

Typical Requirements for Student Loan Forgiveness

In general, forgiveness programs have criteria. These may include:

• A history of payments, with no payments skipped

• Working at a qualifying organization, in a qualifying capacity (ie, full-time instead of part-time)

• Correctly filling out paperwork for forgiveness

• Potentially paying taxes on the amount forgiven

Understanding the criteria, reading the fine print, and researching any points of confusion can be helpful in ensuring that your application is processed successfully. The eligibility and forgiveness requirements may vary depending on the forgiveness program, so be sure to fully understand the criteria for the loan forgiveness option you are pursuing.

Difference Between Loan Forgiveness, Loan Cancellation, and Loan Discharge

These three terms are sometimes used interchangeably. Quite simply, all three terms mean you’re no longer required to pay some or all of your loan. But there are no “easy” ways to get out of paying student loans.

Usually, forgiveness and cancellation mean that, due to either a forgiveness application or your current job, you no longer have to pay loans. Discharge refers to a situation beyond your control, such as total and permanent disability or the closure of your school. In very rare cases, student loans are discharged due to bankruptcy. You will likely have to apply for cancellation, forgiveness, or discharge and will likely need to continue making payments while the application is processed.

Recommended: Bankruptcy and Student Loans, Explained

Student Loan Forgiveness Options For Mental Health Workers

Depending on your place of employment, you may have other options for forgiveness through specific mental health worker programs. There also may be scholarships and grants available in your field of study. Also something to consider: Some private employers offer student loan repayment as part of their packages. This can be worth asking potential employers as you look for jobs. There are also other federal programs to know about:

PPACA and HERA Student Loan Programs for Counselors

As part of the Patient Protection and Affordable Care Act, legislation expanded opportunities for student loan forgiveness for healthcare professionals, including mental health counselors. While many of these forgiveness programs are state-run, this act did ensure that any forgiven funds would not be considered taxable income for people seeking forgiveness through programs supporting health care professionals working in underserved areas.

Under the Higher Education Reconciliation Act (HERA) certain federal loans, including Stafford Loans, and Direct Loans (both Subsidized and Unsubsidized Direct Loans) are eligible for a graduated repayment plan. Under this plan, your federal loan repayments start low and gradually increase every two years. This can be an option if you expect your income to increase over the years.

National Health Services Corps Loan Repayment Program

The National Health Services Corps offers loan repayment programs through your state. Each state has different eligibility requirements, including eligible disciplines. These state-run programs also may differ in terms of service commitments but usually, the commitments start at two years for an eligible position. These will generally be at centers funded by the Health Resources and Services Administration.

Mental Health Loan Forgiveness Alternatives

The criteria and requirements for some forgiveness programs can be challenging to fit. But that doesn’t mean there’s no way to pay down loans. Understanding all your options can help you navigate the best potential avenue for you.

Refinance Your Mental Health Student Loan

Refinancing your student loans could potentially help save you money in the long term, and might give you more flexibility in your budget.

When you refinance, you take all your loans and consolidate them into one loan. For qualifying borrowers, this loan may have a lower interest rate, which could reduce the amount of money you owe in interest over the life of the loan. It also may have a different payment term, so that you are paying the loan off over a longer (or shorter) period of time. Keep in mind that, while a longer loan term may result in lower monthly payments, it might also mean paying more in interest over the life of the loan.

You can often check your loan refinance rate without affecting your credit score and choose terms that work for you.

Scholarships and Grants

There may be scholarships and grants, either from your institution or your place of work. This can help pay down student loan debt. It’s also worth remembering that some private-sector employers may offer student loan repayment as a perk. Talking with colleagues, supervisors, and the financial aid office at your school may help you find programs that may be specific to your field or your school.

Pay Off Student loan Debt

In some cases, it may make sense to prioritize paying down student loan debt. This may include taking on part-time work, decreasing living expenses, and trying to carve out opportunities to pay more than the monthly student loan payment. These strategies can help you pay off your student loans faster and, in turn, could lower the total cost of the loans.

The Takeaway

Working as a mental health professional can be rewarding, but might require you to borrow money to pay for your education. There are numerous options both for taking out and paying back student loans for mental health counselors and therapists. Depending on your profession and employer, you might qualify for certain types of loan forgiveness, such as Public Service Loan Forgiveness Program (PSLF), if you have federal student loans.

It can be helpful to talk to colleagues about their student loan pathway, join professional organizations, and keep an ear to the ground regarding grants, scholarships, and employer-sponsored loan repayment programs.

Also keep in mind that you can use a private student loan to help pay for your undergraduate or graduate education in the mental health field (or to refinance loans you already have). While private loans don’t come with government-sponsored protections like PSLF, some private lenders offer hardship and deferment programs of their own.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ on Mental Health Forgiveness

How do counselors and mental health professionals plan for the future with student loan debt?

Understanding options for paying back loans can be helpful for mental health professionals. Depending on what type of loan you have and what type of mental health work you do, your loan repayment options might include Public Service Student Loan Forgiveness (PSLF), income-based repayment plans, and refinancing your student loans. You might also consider taking a job in the private sector, which may pay more and allow you to comfortably cover loan payments.

Do healthcare workers qualify for loan forgiveness?

In some cases, healthcare workers qualify for eligible forgiveness programs. This depends on the state the healthcare worker resides, as well as their place of employment.

What are some student loan forgiveness options for mental health workers?

Mental health workers who work in underserved areas may be able to apply for forgiveness programs run at their state level for healthcare professionals. Eligibility depends on criteria including place of employment. Student loan forgiveness options may also include the federal Public Service Loan Forgiveness program (PSLF), as well as some income-based repayment options.

Photo credit: iStock/Vertigo3d

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

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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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