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Student loans are considered installment loans, or loans that are repaid through regularly scheduled payments or installments.

Revolving options, like credit cards, let borrowers take out varying amounts of money each month, repay it, and take out more money as they go.

Read on to learn more about student loans, installment loans, and revolving credit — plus how student loans may affect your credit.

What Is Revolving Credit?

Revolving credit is an agreement between a lender and an account holder that allows you to borrow money up to a set maximum amount (or credit limit). The account holder can borrow what they need as they need it (up to their credit limit) and choose to pay off the balance in full or make minimum monthly payments on the account.

As the account holder makes repayments, the amount available to borrow is renewed. Account holders can continue to borrow up to the maximum amount through the term of the agreement. Examples of revolving credit include credit cards and home equity lines of credit (HELOCs).

What Is Installment Credit?

Installment credit is a type of credit that allows a borrower to receive a lump sum loan amount up front, then make fixed payments on the loan over a set period of time. Before the borrower signs an agreement for an installment loan, the lender will decide on the interest rate, fees, and repayment terms, which will determine how much the borrower pays each month.

Common examples of installment loans include federal student loans, private student loans, mortgages, auto loans, and personal loans.

And for borrowers who opt to refinance student loans, those loans are installment loans as well.

Revolving Credit vs Installment Credit

Now that you know student loans are installment and not revolving credit, it’s helpful to understand how these two types of credit compare.

Here’s a high level overview on the differences between installment loans vs. revolving credit.

Revolving Credit

Revolving credit is a more open-ended form of credit obligation. Let’s use the example of a credit card:

1.   The cardholder uses the card to make purchases as they please, pays them off either in-full or partially each month, and continues to make charges on the line of credit.

2.   The amount of money the cardholder spends is their decision (up to their credit limit), and the amount of money they repay each month isn’t set in advance by the lender.

3.   The cardholder can pay off the account balance in full each month, or they can opt to pay the minimum and “revolve” the balance over to the next month (though this will accrue interest on the account).

An important note: To avoid any late fees or potential dings to your credit score, it’s important to pay your monthly revolving bill on time. It’s also wise to keep your balances low, as your credit utilization rate is a major factor in your credit scores.

Installment Credit

Installment credit is less open-ended than revolving credit. Installment credit is a loan that offers a borrower a fixed amount of money over a predetermined period of time. When a borrower signs the loan agreement, they know what the monthly payments will be and how they will need to make payments.

Let’s use the example of a student loan:

1.   The student borrows a specific dollar amount. The lender specifies the interest rate and repayment terms. In the case of federal student loans, interest rates and terms are set by federal law.

2.   The predetermined loan amount is released to the borrower. Typically, the funds are released in a single lump sum payment.

3.   The borrower repays the loan based on the agreed upon terms. Terms will be set by the lender for private student loans, or by law for federal student loans.

An important note: If you only have revolving credit (such as a credit card), taking out an installment loan can diversify your credit mix, which is a factor in determining your credit scores. While an installment loan adds to your total debt, its balance does not factor into your credit utilization ratio (which is specific to revolving credit).

Pros and Cons of Installment Credit

Student loans for undergraduate school, as well as student loans that are refinanced, are considered installment loans, which means they come with a starting balance, are disbursed to the qualifying borrower up front and in full, and are repaid over a set amount of time through a fixed number of payments. There are advantages and disadvantages to taking out an installment loan, and it’s important to be aware of them:

Pros of Installment Credit

Here’s a closer look at two key advantages of installment credit:

Predictable Payments

Installment credit payments are made on a set schedule that’s determined by the lender. This makes them a predictable, long-term strategy for paying off debt, and also makes it easier to factor them into your budget, especially if the installment loan has fixed interest rates.

The monthly payment for an installment loan with a variable interest rate may occasionally change.

Lower Interest Rates

Installment loans often feature lower average interest rates than credit cards or other forms of revolving credit. This can result in significant savings on interest charges over time, especially for large loan amounts.

Cons of Installment Credit

But there are also disadvantages to installment credit. Two key drawbacks include:

Accumulation of Interest

While often lower than credit card rates, interest on an installment loan is paid over the entire life of the loan, which can add up to a significant amount of money over time, particularly for long-term loans.

Prepayment Penalty

Some loans impose prepayment penalties if a borrower pays their loan off early. This isn’t necessarily the case for all installment loans — as mentioned, student loans generally don’t have prepayment penalties. But it’s important to read the fine print in the loan agreement to determine whether a prepayment fee will be triggered if the loan is paid off early.

Recommended: How to Avoid Paying a Prepayment Penalty

How Student Loans Affect Your Credit Score

Student loans, like other loans, are noted on your credit report and they may affect your credit in both positive and negative ways.

On the plus side, making consistent, on-time payments, can help borrowers establish a positive payment history, which is the most significant factor (35%) in a FICO® credit score. Successfully managing an installment loan can also help diversify your credit mix, which can also have a positive impact on your credit profile.

However, failing to make your loan payments can negatively impact your credit. A federal student loan payment is considered delinquent even when your payment is just one day late. After 90 days of missed payments, your loan servicer will report the delinquency to the national credit bureaus. Late payments can stay on your credit report for up to seven years.

(After 270 days of missed payments, your loan will go into default, which can have very serious consequences for your credit and your financial situation in general. If you are having trouble repaying your student loans, reach out to your lender or loan servicer right away to see what your options are.)

If you apply for a private student loan or student loan refinancing, lenders will typically do a hard credit inquiry, which may temporarily lower your credit score. Most federal student loans do not require hard credit inquiries.

Ways to Pay for School

There are a variety of ways to pay for college, including student loans, savings, financial aid, and scholarships. Here’s a closer look at your options:

Federal Student Loans

Federal student loans are installment loans available to students. To apply, students fill out the Free Application for Federal Student Aid (FAFSA®) each year. Federal student loans have fixed interest rates that are set annually by Congress, offer different repayment options, and have some borrower protections and benefits such as deferment and the option to pursue Public Service Loan Forgiveness.

However, there are borrowing limits for federal student loans, and other changes are coming to the federal student loan program as of the summer of 2026, so students may need to review other sources of financing when determining how they’ll pay for college.

Private Student Loans

Private student loans are installment loans you can use to pay for a college education. Private student loans are offered by private lenders. To apply for them, borrowers can browse the offerings of individual lenders like banks, credit unions, and online lenders and decide which private student loan works best for their finances. As a part of the application process, lenders will generally review the applicant’s (or their cosigner’s) credit history and credit score among other factors.

Private student loans can help bridge funding gaps after other sources of financing — such as federal loans, grants, and scholarships — have already been exhausted. This is because private lenders are not required to offer the same borrower protections as federal student loans. If you think private student loans are an option for you, shop around to find competitive terms and interest rates, and be sure to read the terms and fine print closely.

As mentioned, a borrower may choose to refinance private student loans at a later date, especially if they can qualify for more beneficial terms or a lower interest rate. Federal student loans can also be refinanced, but if a borrower chooses this option, they will lose access to federal benefits and protections like federal deferment and forgiveness.

Personal Savings

Using personal savings to pay for college means less debt and more flexibility. Not only that, but it costs significantly more to borrow money to pay for college than it does to use personal savings.

Using personal savings to pay for college means less debt and more flexibility. Using savings also allows you to save money on interest, which can make college less expensive. That said, not everyone has enough savings to cover the full cost of attending college.

Grants

Unlike student loans, which require repayment, grants are a type of financial aid that doesn’t require repayment. Grants are typically based on financial need. Completing the FAFSA will put you in the running for federal, state, and institutional grants.

Recommended: The Differences Between Grants, Scholarships, and Loans

Scholarships

A scholarship is a lump sum of funds that can be used to help a student pay for school. Scholarships usually don’t have to be repaid, and can be need-based or merit-based. You can find out about scholarships through your high school guidance office, college’s financial aid office, or by using an online scholarship search tool.

Work-Study Programs

Federal work-study programs allow students with financial need to work on- or off- campus and earn money through part-time jobs. The program encourages students to do work related to their course of study or community service.

Work-study programs are funded by the federal government. Students may be awarded a certain work-study amount by filling out the FAFSA. Not all schools participate in federal work study, however, so if you are interested in this option, make sure your school offers it.

The Takeaway

Student loans are a common form of installment credit. This means they are dispersed as a lump sum and require making fixed, regular payments over a predetermined period. Unlike revolving credit such as credit cards, student loans offer predictable budgeting and often come with lower interest rates.

Managing student installment loans responsibly can positively impact your credit profile. However, late or missed payments can have serious negative consequences. Understanding the differences between installment and revolving credit, and exploring various funding options for education, can empower you to make informed financial decisions for your academic journey and beyond.

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

Is a student loan an installment loan?

Yes, a student loan is an installment loan. This means you receive a lump sum of money up front and repay it over a set period with a predetermined number of regular payments.

Is a student loan a revolving loan?

No, a student loan is not a revolving loan. Revolving loans, like credit cards, allow you to borrow varying amounts up to a set credit limit, repay, and then borrow again. Student loans are installment loans, meaning you receive a lump sum and repay it with fixed, scheduled payments over a set period.

What are the benefits of an installment student loan?

The benefits of an installment student loan include predictable payments, which makes budgeting easier, and often lower interest rates compared to revolving credit. They also allow you to finance a major purchase like an education and can help diversify your credit mix.

Can student loans help build credit?

Yes, student loans can help build credit. Making regular, on-time payments on your student loan demonstrates responsible financial behavior, which contributes positively to your payment history — a major factor in your credit score. Successfully managing an installment loan like a student loan can also help diversify your credit mix, which can further enhance your credit profile.

What’s the difference between federal and private student installment loans?

Federal student loans generally offer lower rates and more borrower protections, such as income-driven repayment and potential for loan forgiveness. Also, they typically do not require a hard credit inquiry. Private student loans, offered by banks and other financial institutions, may have fewer borrower protections and repayment options, and usually require a credit check and potentially a cosigner. Interest rates and terms for federal loans are set by law, while private loan terms depend on the lender and borrower’s creditworthiness.

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., Puerto Rico, U.S. Virgin Islands, or American Samoa, 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 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Bank, N.A. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

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.

SOISL-Q425-031

The office of Federal Student Aid provides over 9.9 million college students with more than $120 billion in grant, work-study, and student loan funds each year to help pay for college or career school. However, there are situations where students can lose their financial aid.

Students will want to consider how their grades affect financial aid to avoid having federal college aid taken away. Generally, you’ll need to make satisfactory academic progress (SAP) each term to continue receiving federal financial aid, but you may be able to regain lost aid by filing a financial aid appeal.

If you’ve received aid through private scholarships or grants, you may need to meet their minimum requirements to remain eligible for gift aid. Private lenders may also have minimum GPA requirements, but these vary by lender.

Types of Financial Aid

There are many types of financial aid available to college students from the federal government, states, schools, and private sources. This funding can be used to cover most higher education costs, such as tuition and fees, room and board, and books.

Sallie Mae’s 2025 “How America Pays for College” survey found that while parent income and savings covered nearly 50% of college costs during the 2024–25 academic year, families still heavily relied on financial aid and federal loans to cover the other half.

Grants & Scholarships

College grants and scholarships are a form of financial aid that can help make college more affordable because they don’t usually need to be repaid. The U.S. Department of Education, colleges, and universities award an estimated $256.7 billion in grant and scholarship money to students each year. The Sallie Mae survey found that scholarships and grants covered approximately 27% of school costs for families in 2024-25.

The biggest differences between college grants and scholarships are where the funds come from, eligibility requirements, and the application process. Grants are typically given based on financial need while most scholarships are merit-based. Scholarships may be awarded to students based on their academic or athletic achievements, extracurricular activities, fields of study, and more.

💡 Quick Tip: You can fund your education with a competitive-rate, no-fees-required private student loan that covers up to 100% of school-certified costs.

Federal Work-Study

Federal Work-Study is a form of financial aid that offers students funds via part-time employment on campus. Several factors determine whether a student is eligible to participate in the Federal Work-Study program, including their family’s income and the student’s enrollment status at the school.

As with other forms of federal financial aid, a student’s grades affect their eligibility. Students are expected to make SAP, which is a school’s standard for satisfactory academic progress toward a degree or certificate.

Student Loans

Student loans can either come from the federal government or private lenders. To qualify for a federal student loan, students must demonstrate financial need, fill out the Free Application for Federal Student Aid (FAFSA®), be enrolled in an eligible degree or certificate program at least half-time, and maintain SAP.

Another option is to take out a private student loan; however, this is generally only considered after all other options have been exhausted. Private student loans may be more expensive than federal student loans and don’t offer the same borrower protections, such as access to income-driven repayment and forgiveness programs. Private lenders can set their own terms and repayment plans so you should read the loan terms closely before making any borrowing decisions.

Recommended: How to Pay for College

How Grades May Affect Financial Aid

If you find yourself struggling in school, you may be wondering how grades affect financial aid.

State and federal financial aid, such as grants, loans, and work-study, require students to maintain satisfactory academic progress while working toward a degree. Academic performance is evaluated based on each school’s individual policy.

Your school’s policy will tell you what grade point average (GPA) or equivalent you must maintain, the minimum number of credit hours you need, the required pace of course completion, maximum time frame allowed, and more.

As far as how grades affect financial aid, federal regulations state that students must maintain a 2.0 cumulative GPA, or a grade of “C”, on a 4.0 scale. Additionally, students must complete at least 67% of cumulative credits attempted, and progress through their undergraduate program no longer than 150% of the published length of the educational program.

Private scholarships and grants may have their own academic requirements. Dropping below the minimum requirements could result in termination of the scholarship or grant money for the following term but typically does not require repayment. If you receive a scholarship or grant, make sure you read the fine print to see if your grades affect your financial aid.


💡 Quick Tip: Parents and sponsors with strong credit and income may find more-competitive rates on no-fees-required private parent student loans than federal parent PLUS loans. Federal PLUS loans also come with an origination fee.

Do Grades Affect Private Student Loans?

Typically, no. However, each lender has different eligibility criteria for student borrowers. Similar to other types of loans, private student loans are given based on factors including your (or you cosigner’s) finances and credit history and, depending on the lender, there may or may not be a GPA requirement. Private lenders usually care more about your ability to repay the loan than your grades, but again, each lender is different.

If you’re interested in a private student loan, check with the lender to see if there are any student loan GPA requirements before making your decision.

Recommended: I Didn’t Get Enough Financial Aid: Now What?

Regaining Lost Financial Aid Due to Low Grades

Have you lost financial aid due to low grades? You may still be able to get it back. Losing financial aid due to low grades means you aren’t satisfying your school’s SAP requirements.

Visit a Financial Aid Office

One of the first things to do after losing financial aid due to low grades is to visit your school’s financial aid office to discuss your options. Your financial aid office can help you formulate a plan to improve your grades so that your financial aid can be reinstated.

Make sure to ask about the requirements for the financial aid that you are or were receiving and find out if you’re able to file a financial aid appeal.

File a Financial Aid Appeal

You can file a financial aid appeal, or an SAP appeal, if your school allows it and if the poor performance was due to circumstances outside of your control. There must be a link between poor performance and the special circumstance. Some acceptable situations include:

•   Death of a relative

•   Severe personal injury or illness

•   Other special circumstances determined by the school

If you can prove your lower grade directly correlates to one of these situations, then it may be possible for you to regain your financial aid. Check your college’s website for directions and for more information on filing a SAP appeal.

The Takeaway

Your grades do affect your financial aid and federal student loans. Generally, if your cumulative GPA dips below a 2.0, you will no longer be considered to be in good academic standing. However, if your low grades are due to extenuating circumstances, you can try to appeal. Other forms of financial aid, like private grants and scholarships, may also have their own set of academic requirements.

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 financial aid be taken away for bad grades?

It’s possible. You must remain in good academic standing to keep any type of state or federal financial aid, such as grants, loans, and work-study. Private scholarships and grants may also have their own set of requirements to keep any gift aid.

While private lenders typically don’t have any student loan GPA requirements, each lender is different.

Do you get more financial aid if you get good grades?

Most federal financial aid programs do not take your grades into consideration when determining how much financial aid to give. However, bad grades can hurt your federal financial aid availability.

Good grades are even more important to recipients of merit scholarships and some grants but there are scholarships that do not take grades or GPA into consideration.

Will my FAFSA be affected if I fail a class?

As long as you meet your school’s definition of Satisfactory Academic Progress (SAP), one failed class won’t affect your financial aid package.

Photo credit: iStock/harunhalici

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., Puerto Rico, U.S. Virgin Islands, or American Samoa, 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 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

SoFi Bank, N.A. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

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.

SOISL-Q425-033

When you have a new baby on the way, you may be eager to create a nursery that’s comfortable, functional, and stylish. You can drop big bucks to turn a spare room into a dream nursery. But if you’re willing to put in some elbow grease and think outside the box, you could get the job done for much less.

Here are some creative DIY nursery ideas that won’t break the bank.

Use Paint to Make a Big Impact

If home improvement shows have taught us anything, it’s that paint can be a powerful — and cheap — way to change things up. In fact, for the cost of a few gallons of nontoxic paint, a roll of painter’s tape, and drop coverings, you can completely transform any room.

The options are limited only by your imagination. Paint all four walls the same shade to create a cohesive look, or focus the color on one wall to make a real statement. Use painter’s tape to create shapes or patterns, like stripes or chevrons, that pack the same punch as wallpaper but without the mess. If you’re artistic, paint a mural with animals or popular cartoon characters. Or considering all the time your baby will spend in their crib, you may decide to spiff up the ceiling with a pop of color.

Price tag: $75 to $200


💡 Quick Tip: Need help covering the cost of a wedding, honeymoon, or new baby? A SoFi personal loan can help you fund major life events — without the high interest rates of credit cards.

Get a Soft Rug

If you have hardwood floors, a soft rug won’t just help your feet stay warm when you come in for late-night feedings. You’ll also want a cozy surface for your baby to play, and later, learn to crawl.

You can get an area rug at a local hardware or furniture store that can bring out some of the colors in your decor and provide a soft buffer between your baby and the floor.

Price tag: $50 to $500

Make Your Own Art

Blank walls are boring, but art can be expensive to buy. So why not make your own creations?

One idea: Get jumbo letters from the local craft store that spell out your baby’s name and hang them on the wall.

Or figure out the theme of the room to help you come up with other ideas. For example, you can go to the zoo with a camera and then print out pictures of animals for an animal-themed room. Or become inspired by the night sky and put up sparkly stars and a moon on the walls. You can also find cool fabric and tack it onto a canvas for a fabric panel.

Price tag: From $25

Help Baby Sleep

Having a newborn goes hand in hand with frequent wake-up calls. But there are ways you can help baby settle down after a 3 a.m. feeding or stay asleep during a mid-afternoon nap.

Blackout curtains are a great way to prevent sunlight from seeping through window coverings — and interrupting a good nap. Making a set is doable with the help of a sewing machine and a trip to the local fabric store.

Hanging a mobile above the crib can also keep your little one entranced until their eyes start to close. You can make your own with everyday household and craft supplies, like pom poms, fabric, or paper. Simply attach the items to a string or embroidery floss, attach to a lightweight frame or embroidery hoop, and hang.

Price: From $10

Get Creative With Storage

Even if you’re a minimalist, chances are your baby will require a lot of stuff: clothes, toys, diapers, pacifiers, books…you get the idea. As you’re putting together your nursery, be sure you have ample places to store all those things. Bins, boxes, shelves, and drawers can make clean-up a breeze.

Storage systems don’t have to be expensive. You can get budget-friendly ones at local discount furniture stores. Or check online or garage sales for a used piece of furniture that you can refinish or repaint.

Just remember to fasten all the furniture to the wall so that when your baby starts pulling themselves up and walking, nothing topples over on them.

Price: From $100

Recommended: 25 Tips for Buying Furniture on a Budget

How Do You Pay for a Nursery Room Renovation

DIY-ing a nursery may save you money, but you’ll still need to make room in the budget. This can be a challenge if you’re also trying to balance the cost of hospital bills, doctor’s visits, and pricey essentials like a stroller, car seat, or crib. Here are some options you may want to consider.

Personal Savings

Tapping into your savings allows you to access the cash you need right away. However, if you’re planning to take unpaid maternity leave or are budgeting for medical expenses, you may decide it makes more sense to leave your emergency fund untouched.

Credit Card

Like personal savings, a credit card lets you pay for DIY nursery supplies now. However, at the end of the month, you’ll be billed for whatever you’ve spent. It’s important to make at least a minimum payment by the due date to avoid a late fee. But to avoid paying interest entirely, you’ll need to pay off the balance in full each month.

Recommended: Tips for Using a Credit Card Responsibly

Personal Loan

Generally speaking, a personal loan can be used for virtually anything, including decorating a nursery. Interest rates are relatively low, which means that you can likely get a loan at a low rate compared to a credit card. For that reason, it might be a much better idea than putting the expenses on a credit card, which typically have higher interest rates.

A typical term length for a personal loan (or a home improvement loan) is anywhere from one to 10 years. Extending your repayment over multiple years could reduce your monthly payments. But keep in mind, the longer the term length, the more you’ll pay in interest over the life of your loan.

When looking for a loan, you may want to look into securing a fixed interest rate so that you can lock in your low rate over the life of your loan.

Recommended: How to Apply for a Personal Loan

The Takeaway

When you’re expecting a new baby, you naturally want to give them the world. This may include a room they’ll be happy to call their own. Fortunately, you can get the nursery of your dreams without having to spend a lot of money. There are creative, affordable ways to create a statement, like painting the walls or ceiling a fun shade or designing an adorable mural. Not as crafty? Explore simple, inexpensive projects, like making a mobile to hang over the crib. For bigger expenses, consider using savings or a personal loan.

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

FAQ

Where can I get ideas for decorating a nursery?

There are many good places to find inspiration for a baby’s nursery. You could see what friends have done, look on Pinterest, go to furniture/decor stores, or be inspired by a favorite children’s book.

How to pay for a nursery room?

To pay for a nursery’s set-up and decor, you can use savings, a personal loan, or a credit card (though they may charge high interest rates). You can save on costs by DIY-ing some projects and seeing if friends and family with older children have any hand-me-down items, like a rocking chair.

How can I make a small nursery work?

To make a small nursery work, look for multifunction furniture, like a dresser with a changing pad on top to save space. Some cribs are available with storage underneath or you can stow toys in baskets below it. Also consider removing closet doors that hinder circulation and hang fabric instead.

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.

SOPL-Q425-009

Not all wills are alike. There are actually four main kinds and one of them may be right for you. Sure, writing a will can be an easy task to put off until “someday.” But what if the worst were to happen before “someday?” That could mean a complicated and emotionally draining legal process for your loved ones. Creating a will not only can provide peace of mind for your loved ones after you die — it can also provide peace of mind for you right now.

The simple definition of a will is a document that states your final wishes. This alone was sufficient a century ago, when many people had limited property to pass down. But in the modern era, when “property” encompasses everything from the contents of your long-forgotten storage unit to the crypto you decided to buy on a whim, a simple will may not encompass your complex life.

Not only that, but a will is a document that only takes effect after you die. But what if you were medically unable to make decisions? Modern end-of-life documents encompass your wishes if you were medically or otherwise unable to make decisions on your own. Among these documents is one that also has the world “will” in its name.

4 Kinds of Wills

As you begin estate planning, you’ll likely come across four common types of wills. These are:

•   A simple will

•   A joint will

•   A testamentary trust will

•   A living will

Let’s look at each type of will more closely.

What Is a Simple Will?

A simple will may be the type of will that pops into your mind when you hear the word “will.” This will can:

•   State how you want your property bequeathed upon death

•   Provide guardianship specifications for minors

Upon death, a simple will is likely to go through a legal process known as probate to divide assets. Sometimes, in the case of high-net-worth individuals, probate can be expensive. (For those with complex situations and a positive net worth, a trust can help handle those what-ifs. It can transfer assets out of your estate and into the trust, which can be advantageous in terms of taxes.)

However, in many situations, a simple will can provide peace of mind for people in good health. Later, these individuals may want to take on more complex estate planning, but a will provides a good foundation when it comes to making sure guardians are named and property is divided according to your wishes.

A simple will can be created through online templates, and the cost can be zero dollars to several hundred dollars. More expensive online options may come with support from an attorney who can help answer questions. Once created, a will then needs to be made legal according to state laws. This may include signing the will in front of witnesses. You may also want to have it notarized. Having a hard copy of the will, as well as people who know how to access it in case of your death, can ensure the will is found in a timely manner.

Recommended: How to Make a Will: 7 Steps

What Is a Joint Will?

A joint will functions in much the same way as a simple will, except it is a will created by two people, usually who are married to each other. It merges their wishes into a single legal document. In many cases, this kind of will dictates that property will be left entirely to the surviving partner. Here’s the catch, though: Upon death, property will be distributed in the manner dictated by the will. The surviving person does not have the ability or authority to make changes to what the will says once the initial spouse has died.

This can sound streamlined, especially if couples were planning to leave everything to each other anyway. But this type of will can cause headaches. For example, if the surviving spouse has more children or gets remarried, it can be almost impossible to provide for additional people not named in the initial, joint will.

There could be problems even if the surviving spouse does not remarry. For example, if the marital home is considered an asset to be given to the couple’s children upon the death of both of the will’s creators, it may be impossible for the surviving spouse to sell a home to downsize.

One alternative that may suit married couples is to create two individual wills. This may provide a greater degree of flexibility and better achieve the desired effect without ruling out all of life’s what-ifs.

What Is a Testamentary Trust Will?

A testamentary trust will is usually part of big-picture estate planning. It is a document that creates a trust that goes into effect when you die. This trust can outline how certain types of property will be divided. A testamentary trust can have certain stipulations (for example, someone only inherits X piece of property when they reach Y age). This can also be used for people with minors or dependents to help ensure that wishes are followed.

What’s more, a testamentary trust can also help provide for pets. Because a pet can’t own property, naming your “fur baby” within a will can set up a legal headache. But a testamentary trust can ensure that your pet will be provided for according to your wishes.

It’s worth noting that a testamentary trust will go through the probate process, and it may not have the same tax benefits for recipients as other types of trusts. Weighing the pros and cons of different trust options can be helpful before settling on the best one for your situation.

What Is a Living Will?

This is a hard topic to think about, but what if you were in an accident and were knocked unconscious? What if you were undergoing treatment for a serious medical condition and couldn’t fully grasp the options offered to you? There’s a way to put a trusted relative or friend in the decision-making role. A living will, which is also known as an advance directive, specifies your wishes if you were medically incapacitated or unable to make or communicate decisions about your medical care. It also stipulates who your healthcare proxy, also known as a medical power of attorney, would be to make medical decisions on your behalf.

If you are creating a living will, you may also want to create a power of attorney document. This designates a person — who may or may not be the same person as your healthcare proxy — who has the right to make financial decisions on your behalf. Having a living will can cover unexpected situations that may occur before death and can be an integral part of end of life planning.

Recommended: How to Write a Will Online: 8 Steps

The Takeaway

While end of life planning can be a challenging or sad endeavor, it’s an important step in making sure your assets are directed where you want them to go and that other important wishes are executed as you want. There are four main types of wills to help you legally record your plans; more than one may suit your needs. And you can decide to use online services or work in person with an attorney.

In either case, making a will can give you peace of mind right now — and help smooth things along for your loved ones in the future during a difficult time.

When you want to make things easier on your loved ones in the future, SoFi can help. We partnered with Trust & Will, the leading online estate planning platform, to give our members 20% off their trust, will, or guardianship. The forms are fast, secure, and easy to use.

Create a complete and customized estate plan in as little as 15 minutes.

Photo credit: iStock/LaylaBird

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