AllSLR Archives

Jul

2025

Do Student Loans Count as Income?

By Casey Bond | Fresh Out of School, Student Loans, student_loan | No Comments

On top of sorting out whether you’re eligible for federal student loans and the difference between subsidized and unsubsidized loans, you may be wondering how student loans may impact your taxes and whether student loans count as income. In a nutshell, the answer is no, student loans are debt, and do not count as income.

Fellowships and other forms of financial grants, however, may be counted as income, depending on how the funds are spent. And loans that are forgiven can count as income.

Read on for more about the tax implications of student loans, grants, and student loan repayment. Just keep in mind that this is simply a helpful guide as you begin to explore the basics of student loans and taxes; always seek out a tax professional to help you with your specific situation.

Table of Contents

Are Student Loans Taxable?
Are Scholarships Taxable?
Do Student Loans Come with Any Tax Benefits?
Are Employer Student Loan Payments Taxable?
How Can I Make My Student Loan Repayment Easier?
FAQ

Key Points

• Student loans are classified as debt and do not count as taxable income, unlike certain types of forgiven loans which may be taxed.

• Scholarships and grants can be taxable under specific circumstances, particularly if used for non-qualified expenses like room and board.

• The Student Loan Interest Deduction allows borrowers to deduct up to $2,500 in interest paid on student loans, subject to income limits.

• Employer contributions towards student loans are tax-free up to $5,250 annually, but any amount above this limit is considered taxable income.

• Refinancing student loans may help reduce monthly payments or interest rates, but it may also result in losing federal loan benefits.

Are Student Loans Taxable?

As noted earlier, though, student loans are not taxed as income.

This is generally true of other types of loans as well, like mortgages, and personal loans (unless the loan is forgiven) — basically most debt that needs to be repaid. The IRS considers student loans a form of debt — not income — therefore, it is not taxed.

The only time that student loans (or other types of debt) can be taxed is if they are forgiven during repayment. If you are eligible for a federal student loan forgiveness program and have met the requirements (which vary, and may include stipulations like making eligible payments for 20 to 25 years via an income-driven repayment plan or completing eligible public service work/payment requirements, and others), the remaining balance on your student loans (the amount forgiven) may be taxed as income, depending on the repayment plan. This could amount to a hefty tax bill.

Are Scholarships Taxable?

The high-level answer to this question is: it depends. There are many different forms of scholarships, grants, and fellowships that are awarded to students to cover the costs of studying and research. Some are need-based and some are merit-based. The basic difference between scholarships and loans is that a scholarship is given while a loan is borrowed. You won’t typically have to pay back a scholarship, but you do have to pay back a loan.

Most scholarships are not taxed when you are enrolled in a formal educational institution and the scholarship is directly used to cover the costs of tuition, fees, books, and supplies used for study. These are typically referred to as qualified educational expenses.

There are some situations in which scholarships can be taxed, however. For instance, a scholarship can be taxed as income if you use it to cover what are considered “incidental” expenses related to your education such as travel, room and board, and supplementary equipment and supplies.

Another type of scholarship that can be taxed is a scholarship that has a service-related requirement to it. This frequently applies to scholarships for graduate students. If you are required to teach, provide research assistance, or perform other services as a condition of your scholarship, it can be taxed as income (with some exceptions) and you will be required to report the scholarship as part of your gross income.

(For more about which types of scholarships are considered income and what scholarship-related activities are taxable, check out IRS Publication 970 .)

Do Student Loans Come with Any Tax Benefits?

Student loans aren’t usually taxable as income, and in fact, they may come with a tax benefit that is meant to make repayment a little easier on borrowers investing in their education.

The student loan interest deduction allows you to deduct the amount of interest you paid on both federal and private student loans, up to a maximum of $2,500 per year. In order to be eligible to deduct the full amount in 2025, your modified adjusted gross income (MAGI) must be $85,000 or less (or $170,000 for married couples filing jointly). The amount you’re allowed to deduct in 2025 is gradually reduced if your modified MAGI is more $85,000 but less than $100,000 (or more than $170,00 but less than $200,000 for married couples filing jointly. Income above these thresholds renders you ineligible for the deduction.

As a tax deduction, the amount deducted helps to lower your overall taxable income, potentially resulting in a lower tax bill or higher tax refund. This deduction can also help defray some of your repayment costs.

Recommended: Income-Based Student Loan Repayment

Are Employer Student Loan Payments Taxable?

An increasingly popular benefit offered in some workplaces is help with education costs and student loan repayment. Employers such as Aetna, Fidelity Investments, Google, and more offer student loan assistance programs to employees.

Currently, employers are allowed to contribute up to $5,250 toward employees’ qualified education costs tax-free. Payments or reimbursements above that amount are considered taxable income for the employee. It’s important to note that this special tax treatment is temporary, however, and expires December 31, 2025. After this date, the full amount of any employer contributions toward education expenses or student loan repayment will be taxed as income.

How Can I Make My Student Loan Repayment Easier?

The cost of a student loan comes in the form of the interest you pay each month on the balance owed. Consider this example: Say you have a $30,000 loan with a 7% interest rate. On the 10-year Standard Repayment Plan, you would pay roughly $11,800 in interest in addition to repaying the $30,000 principal.

So what can make repayment easier, other than the student loan interest deduction? One option is to refinance your student loans with a private lender.

If you already have private and/or federal student loans, you may be able to refinance your student loans at a lower interest rate than you currently are paying. If you are eligible to refinance your student loans, you could shorten your term length, qualify to lower the interest rate on your loans, or possibly lower your monthly payment (by extending your term). But you may pay more interest over the life of the loan if you refinance with an extended term.

There are other potential drawbacks to think about. For instance, federal student loans come with several benefits and protections such as deferment, forbearance, income-driven repayment plans, and certain forgiveness programs that private loans do not offer. If you think you might need some of these benefits, or if you are eligible for student loan forgiveness, it might not be the right time to refinance.

However, if you have a steady income and good cash flow — along with other aspects of your financial picture that are appealing to a lender — and you are ready to focus on paying down your loans, refinancing might be the right solution for you.

The Takeaway

Generally, student loans are not considered income, so they are not taxed. The exception is when some or all of your student loan balance is forgiven. In some cases, the IRS may count the canceled debt as taxable income.

Educational grants and scholarships, on the other hand, may or may not count as income. Typically, they are taxed when they are spent on expenses outside of tuition and fees, such as room and board and travel.

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

Does a student loan count as a source of income?

No, a student loan does not count as a source of income. The IRS considers student loans a form of debt, not income, which means, in most cases, that they are not taxed. The only time student loans may be taxed as income is when they are forgiven during repayment.

Do student loans count as household income?

No, student loans do not count as household income. The only time student loans may be considered as income is when the loans are forgiven during repayment. If you have forgiven student loans, you may want to consult with a tax professional about your situation.

Is student financial aid considered income?

It depends on the type of financial aid you receive. For example, student loans are not considered income. Most scholarships used to pay for qualified education expenses are not considered income. A Pell Grant, as long it is used for qualified educational expenses, is also not considered income.

However, earnings from a work-study job, and scholarships that require you to teach or perform other services, are generally considered taxable income. You may want to consult a tax professional about your specific situation.

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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.

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.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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.

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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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.

SOSLR-Q325-006

Jul

2025

Examining How Student Loan Deferment Works

By Kayla McCormack | Debt Payoff, Fresh Out of School, Student Loans, student_loan | No Comments

The SAVE Plan is no longer available after a federal court blocked its implementation in February 2025. However, applications for other income-driven repayment plans and for loan consolidation are available again. We will update this page as more information becomes available.

Federal loans allow you to stop or reduce your payments in some circumstances, such as financial hardship, for up to three years — which is known as deferment. Deferment on private student loans varies by lender, and not all lenders offer it.

One thing you generally don’t want to do is simply stop making payments on your student loan. Whether your loans are federal or private, this puts you at risk of default, which can have a number of negative consequences.

Read on to learn more about student loan deferment, including what it is, how it works, its pros and cons, plus some alternative ways to get student debt relief.

Table of Contents

What Is Student Loan Deferment?
How Does Student Loan Deferment Work?
Why Defer Student Loans
Why Not Defer Student Loans
Types of Student Loan Deferment
Consequences of Defaulting on Federal Student Loans
Consequences of Defaulting on Private Student Loans
Who Is Eligible for Student Loan Deferment?
What If You Have Private Student Loans?
The Limits of Student Loan Deferment
Other Options for Reducing Federal Student Loan Payments
FAQ

Key Points

• Student loan deferment allows borrowers to temporarily pause or reduce payments for up to three years.

• Interest does not accrue on subsidized federal loans during deferment but does on unsubsidized loans.

• Eligibility includes financial hardship, unemployment, military service, in-school enrollment, or medical treatment.

• Deferment can provide financial relief but may increase total loan costs due to accruing interest.

• Alternatives include income-driven repayment plans, forbearance, or refinancing, depending on financial goals.

What Is Student Loan Deferment?

Student loan deferment allows qualified applicants to reduce or stop making payments on their loans for up to three years. If you have a subsidized federal loan, no interest accrues during the deferment period. If you have an unsubsidized federal loan, interest will accrue and will be added to the loan amount (or capitalized) at the end of the deferment period.

Deferments are available on federal loans including Direct Loans, FFEL Program loans, and Perkins Loans.

Private student loans may or may not offer deferment options to borrowers. If you have questions about your private student loan, you’ll want to check in with your lender directly.

How Does Student Loan Deferment Work?

If you have a federal student loan and are no longer in school at least half-time, you will need to apply to defer payments on your student loan. This usually involves submitting a request to your student loan servicer. You will also likely need to provide documentation to show that you meet the eligibility requirements for the deferment (more on eligibility requirements below).

If you have an unsubsidized federal student loan and are granted deferment, interest will continue to accrue during the deferral period. You will have the option to either pay the interest as it accrues or allow it to accrue and be capitalized (added to your loan principal balance) at the end of the deferment period.

Deferments are available on federal loans including Direct Loans, FFEL Program loans, and Perkins Loans.

If a private lender offers deferment, they will likely have their own forms and requirements.

Why Defer Student Loans

Applying for deferment may make sense if you are facing short-term difficulty paying your student loans, since a deferment can provide you with the opportunity you need to stay afloat financially. And, if you have a subsidized loan, deferment won’t make your loan any more expensive in the long run.

Deferring student loans also won’t directly impact your credit score.

Why Not Defer Student Loans

If you’re able to stay on top of your loan payments, then deferment likely doesn’t make sense. If you think that you may have long-term difficulty making your monthly loan payments, deferment may not be the best option either.

If you have an unsubsidized federal loan, interest will continue to accrue during deferment. At the end of the deferment period, this interest will be capitalized on the existing loan amount (or the principal loan value). Moving forward, interest will be calculated based on this new total. So essentially, you are accruing interest on top of interest, which can significantly increase the amount of interest owed over the life of the loan.

Pros and Cons of Student Loan Deferment

Student loan deferment can help borrowers who are struggling financially, but it may not be the right choice for everyone. Here are some pros and cons to consider when evaluating deferment options for federal student loans.

Pros	Cons
Borrowers are able to temporarily suspend or lower the monthly payments on their student loans.	On most federal student loans, interest continues to accrue. This may significantly increase the total cost of borrowing over the life of the loan.
Borrowers may qualify for deferment for periods of up to three years.	Because interest may continue to accrue during deferment, other options — like income-driven repayment plans — may be more cost-effective in the long term.

Types of Student Loan Deferment

For federal student loans, there are a few different deferment options . Here are the details on some of the most common reasons borrowers apply for deferment.

In-School Deferment

Students who are enrolled at least half-time in an eligible college or career program may qualify for an in-school deferment. If you are enrolled in a qualifying program at an eligible school, this type of deferment is generally automatic. If you find the automatic in-school deferment doesn’t kick in when you are enrolled at least half-time in an eligible school, you can file an in-school deferment request form .

Unemployment Deferment

Those currently receiving unemployment benefits, or who are actively seeking and unable to find full-time work, may be able to qualify for unemployment deferment. Borrowers can receive this deferment for up to three years.

Economic Hardship Deferment

This type of deferment may be an option for borrowers who are receiving merit-tested benefits like welfare, who work full-time but earn less than 150% of the poverty guidelines for your state of residence and family size, or who are serving in the Peace Corps.

Economic hardship deferments may be awarded for a period of up to three years.

Military Deferment

Members of the U.S. military who are serving active duty may qualify for a military service deferment. After a period of active duty service, there is a grace period in which borrowers may also qualify for federal student loan deferment.

Cancer Treatment Deferment

Individuals who are undergoing treatment for cancer may qualify for deferment. There is also a grace period of six months following the end of treatment.

Other Types of Deferment

There are other situations and circumstances in which borrowers might be able to apply for deferment. Some of these include starting a graduate fellowship program, entering a rehabilitation program, or being a parent borrower with a Parent PLUS Loan whose child is enrolled in school at least half-time.

Consequences of Defaulting on Federal Student Loans

If you simply stop making payments as outlined in your loan’s contract, you risk defaulting on your student loan. Default timelines vary for different types of student loans.

Most federal student loans enter default when payments are roughly nine months, or 270 days, past due. Federal Perkins Loans can default immediately if you don’t make any scheduled payment by its due date.

Consequences of defaulting on federal student loans includes:

• Immediately owing the entire balance of the loan

• Losing eligibility for forbearance, deferment, or federal repayment plans

• Losing eligibility for federal student aid

• Damage to your credit score, inhibiting your ability to qualify for a car or home loan or credit cards in the future

• Withholding of federal benefits and tax refunds

• Garnishing of wages

• The loan holder taking you to court

• Inability to sell or purchase assets such as real estate

• Withholding of your academic transcript until loans are repaid

Consequences of Defaulting on Private Student Loans

The consequences for defaulting on private student loans will vary by lender but could include repercussions similar to federal student loans, and more, including:

• Seeking repayment from the cosigners of the loan (if there are any cosigners)

• Calls, letters, and notifications from debt collectors

• Additional collection charges on the balance of the loan

• Legal action from the lender, such as suing the borrower or their cosigner

To avoid these negative consequences, one option for borrowers struggling to pay federal student loans is deferment.

Recommended: Private Student Loan Consolidation

Who Is Eligible for Student Loan Deferment?

To be granted a deferment on federal loans, borrowers need to meet certain criteria.

You may be eligible if you’re:

• Enrolled at least part-time in college, graduate school, or a professional school

• Unable to find a full-time job or are experiencing economic hardship

• On active military duty serving in relation to war, military operation, or response to a national emergency

• In the 13-month period following active duty

• Enrolled in the Peace Corps

• Taking part in a graduate fellowship program

• Experiencing a medical hardship

• Enrolled in an approved rehabilitation program for the disabled

Borrowers who re-enroll in college or career school part-time may find that their federal student loans automatically go into in-school deferment with a notification from their student loan provider.

Loans may also keep accruing interest during deferment — depending on what types of federal student loans the borrower holds. Borrowers are still responsible for paying interest if they have a:

• Direct Unsubsidized (Stafford) Loan

• Direct PLUS Loan

If you don’t pay the interest during the deferment period, the accrued amount is added to your loan principal, which increases what you owe in the end.

Recommended: Student Loan Deferment in Grad School

What if You Have Private Student Loans?

Private lenders aren’t required to offer deferment options, but some do. For example, some might allow you to temporarily stop making payments if you:

• Lose your job

• Experience financial hardship

• Go back to school

• Have been accepted into an internship, clerkship, fellowship, or residency program

• Face high medical expenses

Typically, even while a private student loan is in deferment, the balance will still accrue interest. This means that in the long term, the borrower will pay a larger balance overall, even after the respite of deferment.

In most cases, even with accrual of interest, deferment is preferable to defaulting. Borrowers with private loans could contact the lender to ask what options are available.

The Limits of Student Loan Deferment

Keep in mind that deferment is not a panacea. By definition, it’s temporary. Federal student loan borrowers will ultimately need to go back to making payments once they are no longer deferment-eligible. For example, a borrower’s deferral might end if they leave school, even if their ability to pay has not improved.

Federal loans can only be deferred due to unemployment or financial hardship for up to three years. With private loans, there may not be an option to defer at all, and if it is an option, the limit may be no more than a year.

Other Options for Reducing Federal Student Loan Payments

Besides student loan deferment, you have other choices if you can’t afford the total cost of your monthly payments. Here’s a look at some alternatives to deferment.

Income-Driven Repayments

For a longer-term solution, you may want to consider an income-driven repayment plan.

If you qualify, you may be able to reduce your monthly payment based on your income. Enrolling in an income-driven repayment plan won’t have a negative impact on your credit score or history. On certain income-driven repayment plans, student loan balances can be forgiven after 20 or 25 years, depending on the payment plan that the borrower is eligible for.

With an income-driven repayment plan, your monthly payment is based on your total discretionary income. That means if you change jobs or see a significant increase in your paycheck, you’ll be expected to pay a higher monthly bill on your student loan payment.

Forbearance

Student loan forbearance is another way to suspend or lower your student loan payments temporarily during times of financial stress, typically for up to 12 months. Generally, forbearance is not as desirable as deferment, since you will be responsible for accrued interest when the forbearance period is over no matter what type of federal loan you have.

When comparing deferment vs. forbearance, you’ll want to keep in mind that there are two types of forbearance for federal student loan holders: general and mandatory.

General student loan forbearance is sometimes called discretionary forbearance. That means the servicer decides whether or not to grant your request. People can apply for general forbearance if they’re experiencing:

• Financial problems

• Medical expenses

• Employment changes

General forbearance is only available for certain student loan programs, and is only granted for up to 12 months at a time. At that point, you are able to reapply for forbearance if you’re still experiencing difficulty. General forbearance is available for:

• Direct Loans

• Federal Family Education Loan (FFEL) Program loans

• Perkins Loans

Mandatory forbearance means your servicer is required to grant it under certain circumstances. Reasons for mandatory forbearance include:

• Serving in a medical residency or dental internship

• The total you owe each month on your student loan is 20% or more of your gross income

• You’re working in a position for AmeriCorps

• You’re a teacher that qualifies for teacher student loan forgiveness

• You’re a National Guard member but don’t qualify for deferment

Similar to general forbearance, mandatory forbearance is granted for up to 12 month periods, and you can reapply after that time.

Another Option to Consider: Refinancing

Depending on your personal financial circumstances, another long-term solution could be student loan refinancing. This involves applying for a new loan with a private lender and using it to pay off your current student loans. Qualifying borrowers may be able to secure a lower interest rate or the option to lengthen their loan’s term and reduce monthly payments. Note that lengthening the repayment period may lower monthly payments, but will generally result in paying more interest over the life of the loan.

Refinancing could be a good option for borrowers with strong credit and a solid income, among other factors. Unlike an income-driven repayment plan, your monthly payment wouldn’t change based on your income.

Either way, you’ll want to keep in mind that refinancing federal student loans with a private lender means you no longer have access to any federal borrower protections or payment plans. So, if you are taking advantage of things like income-driven payment plans or deferment, you likely don’t want to refinance. But for other borrowers, student loan refinancing might be a useful solution.

If you have more than one student loan, refinancing could also simplify your repayment process.

Recommended: A Guide to Refinancing Student Loans

The Takeaway

If you take out a federal student loan and at some point need to pause or reduce your payments, you may be able to qualify for deferment, forbearance, or an income-driven repayment plan. Each option has its pros and cons.

If you’re considering a private student loan (or refinancing your federal loans), keep in mind that private loans don’t come with government-sponsored protections like forbearance and deferment don’t apply. However, private lenders may offer hardship and deferment programs of their own.

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.

FAQ

How long can you defer student loans for?

Depending on the type of deferment you are enrolled in, federal loans can be deferred for up to three years. Private student loans may not offer an option to defer payments, and if they do, the limit will be set by the individual lender.

Why would you defer student loans?

Deferment can be helpful if you are facing a temporary financial hurdle, because they allow you to pause or reduce your payments for a period of time.

Are there any reasons not to defer student loans?

Most loans will continue to accrue interest during periods of deferment. When the deferment is over, this accrued interest is then capitalized on the loan. This means it’s added to the existing value of the loan. Moving forward, interest is charged based on this new total. This can significantly impact the total amount of interest that a borrower has to pay over the life of a loan.

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 Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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

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

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

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOISL-Q325-005

Jul

2025

Is Money Really Everything?

By Timothy Moore | Family Finances, Life & Career, money | Comments Off

Some people may believe that money is everything, but is that truly the case? There’s no denying that money plays a central role in our lives. It provides access to healthcare, education, and the freedom to pursue passions. It offers security, stability, and, at a basic level, ensures our survival.

However, money isn’t without its downsides. Research suggests that an increase in wealth can sometimes lead to higher levels of stress. Constant comparisons with others can breed dissatisfaction and financial disagreements remain a leading cause of divorce, regardless of wealth.

This raises an important question: Is money really everything in life? To answer that, it’s worth exploring what money can and cannot do for us — and whether its value is as absolute as it often seems.

Needing Money to Survive

Money has the ability to improve one’s life, but the question of whether more money always leads to more happiness has long been up for debate.

Amid all the misconceptions about money, however, there is a fundamental truth: We need money to survive.

According to the American Academy of Family Physicians (AAFP), poverty and low-income status can lead to shorter life expectancy, higher death rates for the 14 leading causes of death, and higher infant mortality rates.

From food and shelter to health care and education, money provides the things needed to survive.

💡 Quick Tip: Want to save more, spend smarter? Let your bank manage the basics. It’s surprisingly easy, and secure, when you open an online bank account.

What Money Can Do For Us

Is money everything? Probably not: Things like love, friendship, time, and passion are all important aspects of life (though money can help in those areas —for example, money can enable you to pursue passions and afford experiences with family and friends).

But even if money isn’t everything, it can do a lot of important things, such as:

Meeting Basic Needs

Money allows us to meet our most basic needs, like food, shelter, and health care. Without those things, we would die.

On Maslow’s hierarchy of needs — a well-known model for understanding the motivations behind human behavior — humans must satisfy such basic needs before they can focus on more complex needs like love and belonging, esteem, and self-actualization.

Paying Down Debts

Multiple studies indicate that carrying debt is bad for your mental and physical health. Adverse effects include high blood pressure, anxiety, depression, and even a weakened immune system.

On top of that, debt can lead to money fights with a significant other. It can also impact your ability to secure credit in the future — whether for a car, house, or even a credit card.

Thus, having enough money to pay down your debts can help avoid a lot of figurative and literal headaches.

Recommended: How to Manage Your Money

Improving Our Quality of Life

Beyond meeting basic needs, money can help improve one’s quality of life. Having more money makes it easier to see expensive doctors, join a gym, and buy healthier foods. It also enables the pursuit of higher education without needing to get a student loan.

Money also allows you to afford experiences with friends and family — whether it’s going to a concert, traveling with your family, or just having lunch out with a coworker. Beyond that, money allows a person to pursue passions and hobbies, such as gardening, woodworking, painting, playing in sports leagues, or fixing up cars.

Feeling Secure and Free

Having enough money to pay the bills and provide for your family can create a sense of security. With a well-padded emergency fund, you may not worry about the cost of emergencies like unexpected vet bills or car trouble like those living paycheck to paycheck might. “An integral part of financial wellness is having a cash reserve,” says Brian Walsh, CFP® and Head of Advice & Planning at SoFi. “Research shows that having cash to cover the unexpected has a big impact on financial stress, anxiety, and satisfaction.”

Not only can money provide you with a sense of security, but it can also give you more freedom to pursue passions and buy material goods you enjoy without worrying about the price tag.

💡 Quick Tip: If you’re saving for a short-term goal — whether it’s a vacation, a wedding, or the down payment on a house — consider opening a high-yield savings account. The higher APY that you’ll earn will help your money grow faster, but the funds stay liquid, so they are easy to access when you reach your goal.

Making a Difference

Parents with more money may be able to provide things for their children that others cannot — like paying for a child’s college education, which can help pave the way to a promising future. Beyond your own family, money can allow you to make a difference in the world through charitable donations to causes you care about.

What Money Can’t Do For Us

After reading the list above, you may wonder: Is everything about money? While money can purchase material possessions and enable certain experiences, there are some things money simply cannot do.

Buying More Time

No matter how much money you have, no one can buy more time. If you spend a large chunk of your life working at a job you don’t like — and miss out on experiences and memories with people you love — you can’t buy that time back. And while deep pockets can perhaps enhance one’s health and healthcare, it won’t necessarily extend your life.

Creating Real Relationships

You cannot buy deep connections with friends and family. You may gain new friends with more money, but real relationships are typically based on love and respect for one another. In fact, the more time you spend trying to make money, the less time you’ll likely have to focus on building relationships with people you care about.

Recommended: How to Change Your Money Mindset

Fulfilling Passions

Some people may have high-paying jobs and love what they do. But others may take high-paying jobs just for the paycheck, even if there’s something else they’d rather be doing.

While it’s important to earn money to care for yourself and family, remember that it’s also valuable to allow yourself to do things that make you happy.

Can Money Buy You Happiness?

Science says yes, to a certain extent. In 2010, Daniel Kahneman and Angus Deaton released their now-famous research that indicates money does buy you happiness, but only up to a certain point. They found that the effect plateaus around $75,000 ($108,000 in today’s dollars) annually. Beyond that threshold, additional income doesn’t significantly boost emotional well-being and happiness.

A more recent study, however, throws that into question. The 2021 paper by Matthew Killingsworth demonstrates a continued, linear correlation between money and happiness. That is, a person who makes $150,000 is likely to be significantly happier than one who makes $100,000.

But there is also data to suggest that more money can lead to unhappiness. For example, per capita income in the United States increased by 150% from 1946 to 1990, yet the percentage of people who considered themselves happy dropped during that time.

Research also indicates that more income can lead to more stress, that materialism can contribute to unhappiness, and that comparing one’s finances with one’s peers can contribute to dissatisfaction.

So can money buy you happiness? The answer: yes and no.

What’s More Important Than Money?

Science can only go so far to prove fundamental truths about the human experience. How can a person truly measure the value of love, family, and friendship to each individual? And how can you separate money from things you deem important, like your mental and physical health?

Understanding that it’s a nuanced subject, here are some things that you may find are more important than wealth; things that refute the the idea that money is everything:

• Love: For many people, sharing love and companionship with friends, family, partners, and children is paramount. It can be the most valuable thing in the world.

• Health: Having a sound body and sound mind are important. Many rely on jobs for health insurance and the money they need to afford everything from prescriptions to gym memberships to emergency room visits. However, one can overdo it at work. It can be important to remember to also focus on your mental health, especially if you’re working too much and too hard to make money.

• Passion: While some people would prefer to work a high-pressure job for more money, the Great Resignation (in which people left their jobs in droves as the COVID-19 pandemic progressed) showed us that many people would rather pursue their passions and accept a lower paycheck for it. To them, a passion-filled life is more important than money.

• Time: Each person has a finite amount of time in life. If you spend too much of it focused on making money, you may miss out on life-changing experiences and wonderful memories with friends and family.

The Takeaway

Money can allow you to satisfy basic needs like food and shelter. It may also enable you to pursue higher education, access higher-quality health care, and fund experiences and hobbies that you are passionate about. That said, money can never buy you more time or true relationships, and having more money could even make you unhappy. So while money may matter, it’s not necessarily everything when one thinks about happiness at a basic, human level.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 3.80% APY on SoFi Checking and Savings.

FAQ

Where did the phrase “money isn’t everything” come from?

The origin of the phrase “money isn’t everything” isn’t clear, but it’s a common expression in the English language. The intent of the expression is that you shouldn’t focus solely on money because other things — love, friendship, time, passion, etc. — are also important and can bring you happiness.

What happens if we are too dependent on money?

Money is important for affording the basic things we need to survive, but research shows that focusing too much on money can lead to more stress, isolate us from people we care about, and even cause depression.

Is too much money a bad thing to have?

We need money to survive and to improve our quality of life. Having more money allows us to care for ourselves and the people we love. However, if you’re earning that money at the expense of your mental and physical health — and missing out on core life experiences because you’re busy with work — having more money could be a bad thing. Some research indicates that well-off people can experience stress factors that relate specifically to being wealthy, such as feeling pressured to live up to certain expectations, needing to support family members, and feeling obligated to maintain their social status.

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SoFi members with Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below).

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider 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, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Eligible 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 an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% 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 Eligible 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 Eligible 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 Eligible 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 Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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.

We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/.
Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOBNK-Q325-015

Jul

2025

What Is a Jumbo Loan & When Should You Get One?

By SoFi Editors | Home Ownership, mortgage, Terminology | No Comments

A jumbo loan is a home mortgage loan that exceeds maximum dollar limits set by the Federal Housing Finance Agency (FHFA). Loans that fall within the limits are called conforming loans. Loans that exceed them are jumbo loans.

Jumbo mortgages may be needed by buyers in areas where housing is expensive, and they’re also popular among lovers of high-end homes, investors, and vacation home seekers.

Key Points

• A jumbo loan is a mortgage that exceeds FHFA limits.

• Since jumbo loans are for greater amounts than conforming loans and aren’t government-backed, they may carry higher risk for lenders.

• Conforming loan limits are set by county, with high-cost areas sometimes given higher limits.

• Qualifying for a jumbo loan may be more rigorous than qualifying for a conforming loan.

• Interest rates can be similar to or lower than conforming loan rates.

What Is a Jumbo Loan?

To understand jumbo home loans, it first helps to understand the function of Freddie Mac and Fannie Mae. Neither government-sponsored enterprise actually creates mortgages; they purchase them from lenders and repackage them into mortgage-backed securities for investors, giving lenders needed liquidity.

Each year the FHFA sets a maximum value for loans that Freddie and Fannie will buy from lenders — the so-called conforming loans.

Jumbo Loans vs Conforming Loans

Because jumbo home loans don’t meet Freddie and Fannie’s criteria for acquisition, they are referred to as nonconforming loans. Nonconforming, or jumbo, loans usually have stricter requirements because they carry a higher risk for the lender.

Jumbo Loan Limits

So how large does a loan have to be to be considered jumbo? In most counties, the conforming loan limits for 2025 are:

• $806,500 for a single-family home

• $1,032,650 for a two-unit property

• $1,248,150 for a three-unit property

• $1,551,250 for a four-unit property

The limit is higher in pricey areas. For 2025, the conforming loan limits in those areas are:

• $1,209,750 for one unit

• $1,548,975 for two units

• $1,872,225 for three units

• $2,326,8875 for four units

Given rising home values in many cities, a jumbo loan may be necessary to buy a home. Teton County, Wyoming, for instance, has an average home value of $2,219,744 and a conforming loan limit of $1,209,750.

Recommended: The Cost of Living By State

Qualifying for a Jumbo Loan

Approval for a jumbo mortgage loan depends on factors such as your income, debt, savings, credit history, employment status, and the property you intend to buy. The standards can be tougher for jumbo loans than conforming loans.

The lender may be underwriting the loan manually, meaning it’s likely to require much more detailed financial documentation — especially since standards grew more stringent after the 2007 housing market implosion and during the pandemic.

Lenders generally set their own terms for a jumbo mortgage, and the landscape for loan requirements is always changing, but here are a few examples of potential heightened requirements for jumbo loans.

• Your debt-to-income (DTI) ratio. This ratio compares your total monthly debt payments and your gross monthly income. The figure helps lenders understand how much disposable income you have and whether they can feel confident you’ll be able to afford adding a new loan to the mix.

To qualify for most mortgages, you need a DTI ratio no higher than 43%. In certain loan scenarios, lenders sometimes want to see an even lower DTI ratio for a jumbo loan, or they may counter with less favorable loan terms for a higher DTI.

• Your credit score. This number, which ranges from 300 to 850, helps lenders get a snapshot of your credit history. The score is based on your payment history, the percentage of available credit you’re using, how often you open and close accounts such as credit cards, and the average age of your accounts.

To qualify for a jumbo loan, some lenders require a minimum score of 700 or higher for a primary home, or up to 760 for other property types. Keep in mind that a lower score doesn’t mean you won’t be able to get a jumbo loan. The decision depends on the lender and other factors, such as the loan program requirements, your debt, down payment amount, and reserves.

• Down payment. Conforming mortgages generally require a 20% down payment if you want to avoid paying private mortgage insurance (PMI), which helps protect the lender from the risk of default.

Historically, some lenders required even higher down payments for jumbo mortgages, but that’s not necessarily the case anymore. Typically, you’ll need to put at least 20% down, although there are exceptions.

A VA loan can be used for jumbo loans. For borrowers with full entitlement, the Department of Veterans Affairs will insure any size loan. For those with partial entitlement, it will insure the part of the loan that falls under conforming loan limits minus anything still owed to the VA. The loan may be available from some lenders with nothing down and no PMI. VA loans have a one-time “funding fee,” though, which is a percentage of the amount being borrowed.

• Your savings. Jumbo loan programs often require mortgage reserves, money or assets borrowers could use to cover their housing costs. The number of months of PITI house payments (principal, interest, taxes, insurance), plus any PMI or homeowner association fees, needed in reserves after loan closing depends on many factors. For a jumbo loan, some lenders may require reserves of six to 24 months of housing payments.

You don’t necessarily need to have all the money in cash. Part of mortgage reserves can take the form of a 401(k), stock portfolios, mutual funds, money market accounts, and simplified employee pension accounts.

Also, depending on the loan program, a lender may be comfortable with lower cash reserves if you have a high credit score, low DTI ratio, a high down payment, or some combination of these things.

• Documentation. Lenders want a complete financial picture for any potential borrower, and jumbo loan seekers are no exception. Most lenders operate under the “ability to repay” rule, which means they must make a reasonable, good-faith determination of the consumer’s ability to repay the loan according to their terms. Applicants should expect lenders to vet their creditworthiness, income, and assets.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Questions? Call (888)-541-0398.

Jumbo Loan Rates

You might assume that interest rates for jumbo loans are higher than for conforming loans since the lender is putting more money on the line.

But jumbo mortgage rates fluctuate with market conditions. Jumbo mortgage rates can be similar to those of other mortgages, but sometimes they are lower.

Because the absolute dollar figure of the loan is higher than a conforming loan, it is reasonable to expect closing costs to be higher. Some closing costs are fixed, such as a loan processing fee, but others, such as title insurance, are tiered based on the purchase price or loan amount.

Pros and Cons of Jumbo Loans

Benefits

Because a jumbo loan is for an amount greater than a conforming loan, it gives you more options for ownership of homes that are otherwise cost-prohibitive. You can use a jumbo loan to purchase all kinds of residences, from your main home to a vacation getaway to an investment property.

Drawbacks

Due to their more stringent requirements, jumbo loans may be more accessible for borrowers with higher incomes, strong credit scores, modest DTI ratios, and plentiful reserves.

However, don’t assume that jumbo loans are just for the rich. Lenders offer these loans to borrowers with a wide variety of income levels and credit scores.

Lender requirements vary, so if you’re seeking a jumbo loan, you may want to shop around to see what terms and interest rates are available.

The most important factor, as with any loan, is that you are confident in your ability to make the mortgage payments in full and on time over the long term.

How to Qualify for a Jumbo Loan

To qualify for a jumbo loan, borrowers need to meet certain jumbo loan requirements. You’ll likely need to show a prospective lender two years of tax returns, pay stubs, and statements for bank and possibly investment accounts. The lender may require an appraisal of the property to ensure they are only lending what the home is worth.

Is a Jumbo Loan Right for You?

You’ll need to come up with a large down payment on a property that merits a jumbo loan, and some of your closing costs will be higher than for a conventional loan. But depending on where you wish to buy, the cost of the property, and the amount you wish to borrow, a jumbo loan may be your only choice for a home mortgage loan. It’s a particularly attractive option if you have good credit, a low DTI, and a robust savings account. And sometimes jumbo home loans actually have lower interest rates than other loans.

What About Refinancing a Jumbo Loan?

After you’ve gone through the mortgage and homebuying process, it could be helpful to have information about refinancing. Some borrowers choose to refinance in order to secure a lower interest rate or more preferable loan terms.

This could be worth considering if your personal situation or mortgage interest rates have improved.

Refinancing a jumbo mortgage to a lower rate could result in substantial savings. Since the initial sum is so large, even a change of just one percentage point could be impactful.

Refinancing could also result in improved loan terms. For example, if you have an adjustable-rate mortgage and worry about fluctuating rates, you could refinance the loan to a fixed-rate home loan.

Jumbo Loan Limits by State

The conforming loan limits set by the Federal Housing Finance Agency can vary based on the county where you are buying a home.

In most areas of the country, the conforming loan limit for a one-unit property increased to $806,500 in 2025 (the amount rises for multiunit properties). The chart below shows exceptions to the $806,500 limit by state and county.

State	County	2025 limit for a single unit
Alaska	All	$1,209,750
California	Alameda, Contra Costa, Los Angeles, Marin, Orange, San Benito, San Francisco, San Mateo, Santa Clara	$1,209,750
California	Monterey	$970,600
California	Napa	$1,017,750
California	San Diego	$1,077,500
California	San Luis Obispo	$967,150
California	Santa Barbara	$913,100/td>
California	Santa Cruz	$1,178,750/td>
California	Sonoma	$897,000
California	Ventura	$1,017,750
Colorado	Adams, Arapahoe, Broomfield, Clear Creek, Denver, Douglas, Elbert, Gilpin, Jefferson, Park,	$833,750
Colorado	Boulder	$862,500
Colorado	Eagle, Garfield, Pitkin	$1,209,750
Colorado	Grand	$874,000
Colorado	Routt	$1,012,000
Colorado	San Miguel	$994,750
Colorado	Summitt	$1,067,200
Connecticut	Fairfield	$851,000
Florida	Monroe	$967,150
Guam	All	$1,209,750
Hawaii	All	$1,209,750
Idaho	Teton	$1,209,750
Maryland	Calvert, Charles, Frederick, Montgomery, Prince George’s County	$1,209,750
Massachusetts	Dukes, Nantucket	$1,209,750
Massachusetts	Essex, Middlesex, Norfolk, Plymouth, Suffolk	$914,250
New Hampshire	Rockingham, Strafford	$914,250
New Jersey	Bergen, Essex, Hudson, Hunterdon, Middlesex, Monmouth, Morris, Ocean, Passaic, Somerset, Sussex, Union	$1,209,750
New York	Bronx, Kings, Nassau, New York, Putnam, Queens, Richmond, Rockland, Suffolk, Westchester	$1,209,750
Pennsylvania	Pike	$1,209,750
Tennessee	Cannon, Cheatham, Davidson, Dickson, Macon, Maury, Robertson, Rutherford, Smith, Sumner, Trousdale, Williamson, Wilson	$989,000
Utah	Summit, Wasatch	$1,149,825
Utah	Wayne	$997,050
Virgin Islands	All	$1,209,750
Virginia	Arlington, Clarke, Culpeper, Fairfax, Fauquier, Loudoun, Madison, Prince William, Rappahannock, Spotsylvania, Stafford, Warren, and the cities Alexandria, Fairfax, Falls Church, Fredericksburg, Manassas, Manassas Park	$1,209,750
Washington	King, Pierce, Snohomish	$1,037,300
Washington D.C.	District of Columbia	$1,209,750
West Virginia	Jefferson County	$1,209,750
Wyoming	Teton	$1,209,750
Source: Federal Housing Finance Agency

The Takeaway

What’s the skinny on jumbo loans? They’re essential for buyers of more costly properties because they exceed government limits for conforming loans. Luxury-home buyers and house hunters in expensive areas may turn to these loans, but they’ll have to clear the higher hurdles involved.

SoFi can help you save money when you refinance your mortgage. Plus, we make sure the process is as stress-free and transparent as possible. SoFi offers competitive fixed rates on a traditional mortgage refinance or cash-out refinance.

A new mortgage refinance could be a game changer for your finances.

FAQ

What are jumbo loan requirements?

Jumbo loans typically require a credit score of at least 700, a low DTI, and a down payment of at least 20%, although there are always exceptions.

What is the difference between a jumbo loan and a regular loan?

A jumbo loan is a home mortgage loan that exceeds maximum dollar limits set by the Federal Housing Finance Agency. Jumbo loans are typically used by buyers in regions with higher-priced housing but are also popular among luxury homebuyers and investors.

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

^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

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.

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

SOHL-Q225-175

Jul

2025

What to Do After You Graduate From Law School

By Kayla McCormack | Debt Payoff, Fresh Out of School, Student Loans, student_loan | No Comments

Life after law school can be an exciting time as you look forward to your new career. There are plenty of opportunities available to those with a JD. Some avenues to consider include practicing law at a firm; specializing as an attorney in a field like patents, contracts, immigration (and many more); working as general counsel in-house at a corporation; or even pursuing a career in government.

The path you choose depends on the type of law you studied, your interests, and your past experiences. According to the Bureau of Labor Statistics (BLS), the median salary for lawyers in 2024 was $151,160 annually.

Once you find your first post-law school gig, you will also likely have to start thinking about repaying any law school student loans.

Key Points

• Career paths after law school include working at a law firm, clerking for a judge, pursuing an advanced degree, or transitioning into non-legal careers like politics, journalism, or lobbying.

• Law school graduates often carry significant student loan debt, with an average of $130,000, making repayment strategies a key financial priority.

• Making interest payments while still in school can help reduce total loan costs and prevent interest from accruing.

• Budgeting effectively post-graduation can help balance savings, emergency funds, credit card payments, and student loan repayment.

• Refinancing law school loans may lower interest rates and simplify payments, but it removes access to federal benefits like income-driven repayment and loan forgiveness programs.

Finding Jobs After Law School

After getting a law degree, what to do really depends on why you decided to go to law school in the first place. Did you have dreams of working at a major law firm, becoming a public defender, or going solo with your own practice?

Maybe you’ve decided you no longer want to practice law and would rather apply your new skills to a relevant career or continue to further your education. If you are considering what to do after law school, you can start by examining what workplace environment you find the most exciting and attainable.

Landing at a Law Firm

A law firm is an obvious choice for where to work after getting your JD. But the size, location, and culture of the law firm can greatly impact your experience and job satisfaction. Attorneys working at smaller firms may offer stronger partnership prospects than larger law firms. However, depending on location, the pay could be comparatively lower, and your training may come in the form of on-the-job experience.

While the path to promotion may be longer at a larger firm, they may have more resources and a higher salary. Depending on your preferences and career interests, a major law firm with a big name might be a better fit to help you find your specialty.

Considering a Clerkship

A clerkship is an important career milestone for many attorneys. Usually taking place under the guidance of a certain judge, a clerkship allows law school graduates to see the inner workings of the legal system. Many are considered prestigious resume boosters and offer valuable first-hand experience working under a judge and a leg up on networking from the start.

There are federal and state court clerkships, but federal opportunities like with Supreme Court or circuit court judges can be more difficult to secure because of their prestige. However, state clerkships can also be beneficial, especially if you plan on practicing in the local area.

Getting an Advanced Degree

If you have a desire to specialize in a specific field of law, staying in school to get a post-JD degree is another avenue to consider after getting a law degree.

You might want to pursue this type of degree after having some relevant work experience, which can help you first figure out what particular field of law you want to study. These specialty degrees include Air and Space Law, Sports Law, Global Food Law, Cannabis Law, and more.

Alternative Careers Outside Law

Pivoting after law school to a different career is another option to consider when looking at jobs. If you, like many, have graduated with six-figures worth of student loan debt, you’ll obviously want to find a steady job so you can make regular student loan payments.

Other jobs that may fit with the skill set you curated in law school may include political advisor, journalist, lobbyist, and teacher.

Tackling Law School Debt

Depending on your earning potential and chosen career path, it might make sense for you to aggressively pay off your law school debt in 10 years or less.

Another option is to try to maximize your law school loan forgiveness opportunities.

In order to make your degree count towards your personal and professional goals, figuring out how to approach your debt is a key part of what to do after law school.

Ready to tackle your law school debt?
Refinancing your student loans
could help you pay it off faster.

Making Payments While Still in School

While the government does not require you to make payments on most federal student loans while still in school, you could consider paying the amount of student loan interest that builds up each month to help keep your student loan debt from growing.

Whether you need to pick up a side hustle or prioritize how much you save, making at least interest-only payments on your student loans while still in school can help reduce the amount of interest that will accrue on your student loans. This can ultimately reduce the amount of interest that accrues and help set you up for success after law school.

Sticking to Budget Basics

After your law degree, it can be wise to take stock of your budget and work to balance your goals for savings, emergency funds, credit card payments, and student loans. The average student loan debt from law school currently sits at $130,000, so you’ll want to prioritize making a plan to get these paid off as quickly and efficiently as possible.

Ultimately, you’ll likely want to pick a student loan repayment plan that works for your personal budget, no matter what jobs after law school you are considering. You may decide to pay down debt while also building up a basic emergency fund as part of your financial foundation.

Refinancing Law School Loans

Refinancing your law school loans means that a private lender will issue one new loan that pays off your existing federal and/or private student loans. This new loan comes with new terms, ideally with a lower interest rate or shorter repayment period. Instead of paying multiple student loans, such as from undergraduate and graduate school, there is only one new loan to pay off.

While there are many advantages to student loan refinancing, be aware that refinancing federal loans means that you will not be able to take advantage of benefits like income-driven repayment plans and Public Service Loan Forgiveness. So it may not make sense if you are taking advantage of one of these benefits or plan to in the future.

The Takeaway

Life after law school can mean something different for everyone. Whether you pursue a private practice, family law at a small firm, or corporate law at a large one, there are many career opportunities to pursue as you pay off your student loan debt.

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

FAQ

What is the next step after graduating law school?

There are many career opportunities available after graduating law school, including joining a law firm, doing a clerkship with a state or federal judge, getting an advanced degree to specialize in a specific type of law, or switching to a different career in which you can use the skills you learned in law school, such as a teacher, a political advisor, or a lobbyist.

What jobs can you get if you graduate law school?

Jobs you can get after you graduate law school include working at a small or large law firm, becoming a clerk to a state or federal judge, landing a position as in-house counsel at a corporation, or working for the government or a nonprofit. To help decide which path is right for you, consider your interests and career goals.

What field of law pays the most?

Typically, the highest-paid lawyers specialize in such areas as corporate law, tax law, intellectual property law, medical malpractice, and entertainment law.

SOSLR-Q225-068

Do Student Loans Count as Income?

Are Student Loans Taxable?

Are Scholarships Taxable?

Do Student Loans Come with Any Tax Benefits?

Are Employer Student Loan Payments Taxable?

How Can I Make My Student Loan Repayment Easier?

The Takeaway

FAQ

Does a student loan count as a source of income?

Do student loans count as household income?

Is student financial aid considered income?

Examining How Student Loan Deferment Works

What Is Student Loan Deferment?

How Does Student Loan Deferment Work?

Why Defer Student Loans

Why Not Defer Student Loans

Pros and Cons of Student Loan Deferment

Types of Student Loan Deferment

In-School Deferment

Unemployment Deferment

Economic Hardship Deferment

Military Deferment

Cancer Treatment Deferment

Other Types of Deferment

Consequences of Defaulting on Federal Student Loans

Consequences of Defaulting on Private Student Loans

Who Is Eligible for Student Loan Deferment?

What if You Have Private Student Loans?

The Limits of Student Loan Deferment

Other Options for Reducing Federal Student Loan Payments

Income-Driven Repayments

Forbearance

Another Option to Consider: Refinancing

The Takeaway

FAQ

How long can you defer student loans for?

Why would you defer student loans?

Are there any reasons not to defer student loans?

Is Money Really Everything?

Increase your savings with a limited-time APY boost.*

Needing Money to Survive

What Money Can Do For Us

Meeting Basic Needs

Paying Down Debts

Improving Our Quality of Life

Feeling Secure and Free

Making a Difference

What Money Can’t Do For Us

Buying More Time

Creating Real Relationships

Fulfilling Passions

Can Money Buy You Happiness?

What’s More Important Than Money?

The Takeaway

FAQ

Where did the phrase “money isn’t everything” come from?

What happens if we are too dependent on money?

Is too much money a bad thing to have?

What Is a Jumbo Loan & When Should You Get One?

What Is a Jumbo Loan?

Jumbo Loans vs Conforming Loans

Jumbo Loan Limits

Qualifying for a Jumbo Loan

First-time homebuyers can prequalify for a SoFi mortgage loan, with as little as 3% down.

Jumbo Loan Rates

Pros and Cons of Jumbo Loans

Benefits

Drawbacks

How to Qualify for a Jumbo Loan

Is a Jumbo Loan Right for You?

What About Refinancing a Jumbo Loan?

Jumbo Loan Limits by State

The Takeaway

FAQ

What are jumbo loan requirements?

What is the difference between a jumbo loan and a regular loan?

What to Do After You Graduate From Law School

Finding Jobs After Law School

Landing at a Law Firm

Considering a Clerkship

Increase your savings
with a limited-time APY boost.*

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Ready to tackle your law school debt?
Refinancing your student loans
could help you pay it off faster.

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