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When you want to improve your income potential or change your career to offer your kids more opportunities, you’ll have to manage a myriad of responsibilities — possibly with a full course load to boot. Going back to college can demand a lot from moms physically, mentally, and financially.

The financial impact of going back to school as a mom can seem staggering, so consider scholarships for moms as one way to make an impact.

Keep reading to learn more on scholarships for moms, scholarships for single moms, and scholarships for working moms. We’ll also walk through how to find these scholarships and look into other ways of paying for college.

Who Is Eligible for Scholarships?

Almost anyone can get a scholarship, but you must meet the eligibility requirements set forth by the scholarship guidelines. Some scholarships will require students to be independent students. Independent students are defined by the U.S. Department of Education as those who are:

•   At least 24 years old

•   Married

•   Graduate or professional students

•   Veterans of the U.S. armed forces

•   Active duty members of the armed forces

•   Orphans, those in foster care, or wards of the court

•   People who have legal dependents other than a spouse

•   Emancipated minors

•   Homeless or at risk of becoming homeless

However, non-governmental organizations may have other requirements. Therefore, it’s important to take a look at the qualifications for each individual scholarship.

Recommended: A Guide to Unclaimed Scholarships and Grants

Types of Scholarships for Moms

Nontraditional students interested in receiving financial aid should first submit the Free Application for Federal Student Aid (FAFSA®). Colleges and universities will receive the results of the FAFSA and use that information to inform their aid decisions. The FAFSA is the first step in applying for federal financial aid, including grants, federal student loans, work-study, and other institutional aid. These could help you offset the cost of tuition and other education-related expenses. The FAFSA must be filled out each year the student is enrolled in school.

Other scholarships may require you to apply independent of the FAFSA — that is, the results of the FAFSA may not matter. However, many mom scholarships may require you to prove that you earn a low income. (Low-income thresholds depend on the size of your family and number of children, according to the United States Census Bureau.)

You can tap into many types of scholarships for moms, including single mom scholarships, scholarships for working moms, and other types of scholarships for women going back to college, as outlined below.

Single Mom Scholarships

Yes, organizations offer scholarships for single moms! Take a look:

Soroptimist’s Live Your Dream Award

If you provide the primary financial support for yourself and your dependents, you can qualify for the Soroptimist’s Live Your Dream Award, as long as you show evidence of financial need. You must also enroll or be accepted into a vocational/vocational skills training program or undergraduate degree program and be motivated to achieve your education and career goals.

Applicants must live in one of the following Soroptomist territory countries: Argentina, Bolivia, Brazil, Canada, Chile, Colombia, Ecuador, Guam, Japan, Korea, Mexico, Northern Mariana Islands, Palau, Panama, Paraguay, Peru, Philippines, Taiwan, United States of America, or Venezuela.

Award amount: $1,000 to $10,000
Deadline: Application open from August 1 to November 15

Patsy Takemoto Mink Education Foundation for Low-Income Women and Children Education Support Awards

The Patsy Takemoto Mink Educational Foundation for Low-Income Women and Children
Education Support awards offer college scholarships for single moms to low-income women with children who are pursuing education or training.
​
The criteria for the award state that you must:

•   Be a woman at least 17 years of age.

•   Be a mother with minor children.

•   Pursue your first degree at a post-secondary education level (vocational, associate’s, bachelor’s, master’s, or doctoral degree) — this degree must add to the level of education accomplished (such as a bachelor’s degree after an associate’s degree or an advanced degree after a bachelor’s degree).

•   Pursue a degree or credential at an institution that does not discriminate on the basis of sex/gender, LGBTQ+ status or identity, race or ethnicity, religion, disability, or immigration status.

•   Enrolled in a nonprofit, accredited institution or program in the U.S.

•   Be low-income (earn less than $20,000 total in family income for a family of 2, less than $24,000 for a family of 3, or less than $28,000 for a family of 4).
​
​​Awardees are selected based on financial need, personal circumstances, educational path, vocational and occupational goals, service/activist, and/or civic goals.

Award amount: $5,000
Deadline: Information about the 2024-25 application will appear in May 2024.

Rosenfeld Injury Lawyers LLC Single Mother Scholarship

Rosenfield Injury Lawyers LLC offers two scholarships to single mothers returning to school, one for a single mother who will attend an undergraduate or community college program and another for a single mother who will attend accredited law school.

To qualify, you must write a 500+-word essay about the advantages of returning to school while raising children and how motherhood has prepared you for the challenges of becoming a student. You must also:

•   Submit a copy of your transcript that displays your grade point average (GPA) — unofficial transcripts are accepted.

•   Authorize Rosenfeld Injury Lawyers LLC to post the material on its website and social media channels.

You may use the scholarship money for education-related expenses, including tuition and registration, textbooks, and other fees and supplies.

Award amount: $1,000
Deadline: TBD for the 2024-25 academic year


💡 Quick Tip: Fund your education with a low-rate, no-fee SoFi private student loan that covers all school-certified costs.

Scholarships for Working Moms

If you’re a working mom, you may want to first consider your current job’s scholarship opportunities. Some companies offer scholarships and/or education reimbursement for their employees.

Company foundations usually create scholarship programs for employees, employees’ children or relatives, or the children of deceased or retired employees. While not necessarily just geared toward working moms, they can still provide a major financial benefit of working and going to school. Visit your company’s human resources for more information about scholarships or other educational assistance you can qualify for. Note that some companies allow employees to take advantage of their education benefits right away, but yours may require you to work at your company for a specified length of time.

Take a look at the scholarship below, geared specifically for working moms.

Job-Applications.com Working Parent College Scholarship Award

Working parents currently in college or another accredited postsecondary educational institution can qualify for the Job-Applications.com scholarship by meeting specific criteria. You must:

•   Be enrolled as a part-time student who is in an accredited U.S. post-secondary educational institution (college, university, or trade school, or a similarly accredited program).

•   Have a current cumulative grade point average of 3.0 or higher at that institution.

•   Have worked an average of at least 12 hours for each of the previous four weeks during the application process.

•   Be a residential parent of at least one minor child.

•   Be a legal U.S. resident.

•   Be at least 18 years of age or older.

You must also submit a 600- to 1,000-word essay about the keys for balancing parenthood, working, and succeeding in college.

Award amount: $1,000
Deadline: TBD for the 2024-25 academic year

Scholarships for Moms Going Back to College

Moms pursuing graduate work may also need help finding grad school scholarships.

Society of Women Engineers Scholarship Program

Those who identify as a female/woman and who study at a community college, bachelor’s or graduate degree program with the intention of preparing for a career in engineering, engineering technology, or computer science may qualify for the Society of Women Engineers Scholarship Program .

To qualify, you must:

•   Plan to study at an undergraduate/community college or plan to get your master’s or Ph.D. at an ABET-accredited program.

•   Major in engineering, technology, or computing.

•   Must attend full time (though exceptions are made for reentry and nontraditional applicants).

•   Not be fully funded for tuition, fees, books, or the equivalent.

Award amount: $1,000 to $10,000
Deadline: TBD for the 2024-25 academic year

Chrysalis Scholarship

The Chrysalis Scholarship , funded by the Association for Women Geoscientists, helps women who experienced an interruption in their education due to raising children or other life circumstances and need financial help to obtain their graduate degrees in a geoscience-related field thesis or dissertation. The scholarship may cover drafting expenses, child care, defense travel, late-stage research and analyses, and more.

To qualify, you must:

•   Be a graduate student who has had an educational interruption due to life circumstances.

•   Approach the completion of your geoscience degree.

•   Plan to contribute to the geosciences and the larger world community.

Application materials include a letter of application in which you describe your background, career goals, and objectives, how you plan to use the scholarship, and the nature and length of the education interruption. You must provide letters of reference from your thesis/dissertation advisor and another scientist of your choice.

Award amount: $2,000
Deadline: TBD for the 2024-25 academic year


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

Applying for Scholarships for Moms

When you’re applying for scholarships, it’s important to get organized. Make a list of due dates on your calendar and estimate how much time it’ll take you to complete each application. Research scholarships early so you don’t miss out on scholarship opportunities.

Read the eligibility guidelines carefully. Contact the organization sponsoring the scholarship if you have specific questions related to eligibility. Some scholarships may not get many applicants, so if you meet almost all the requirements, ask if you can apply anyway. You might be pleasantly surprised to find that the committee or organization will allow you to apply.

Finally, follow all the instructions. Stick to the word limit for the essay and send supporting materials as requested.

Recommended: What a Merit Scholarship Is and How to Get One

Finding Other College Scholarships for Moms

Put your feelers out for every type of scholarship that might apply to you — they don’t even need to be strictly “mom-related.” If you qualify in another way, such as for your interest in zoology or criminology, keep those options open. Look into the following sources for scholarships, as well:

•   Colleges and universities: Colleges and universities offer many different types of scholarships and grants. Make an appointment with an admission counselor and/or the financial aid office to learn more about scholarships you can apply for at each institution you’re interested in attending.

•   Charity organizations: Look into organizations in your community, such as the local Rotary Club. You just might scoop up a few scholarships based on the organizations you know. Ask around!

•   Professional organizations: What do you plan to major in? Check to see if professional organizations of your chosen industry offer scholarships and grants. It’s also possible to get internships and careers from these professional organizations right out of the gate after graduation.

Recommended: How to Pay for College

Other College Financing Methods

You might need other sources of financial aid to close the cost gap after scholarships for college are factored in. Generally, the first step, as mentioned, is filling out the FAFSA. The FAFSA is completely free and offers other financial aid beyond scholarships, including need-based and non-need-based federal financial aid.

Other options for paying for college include:

•   Federal grants: Students who demonstrate financial need may qualify for federal grants. You do not need to pay these back. For example, you could qualify for a Federal Pell Grant or the Teacher Education Assistance for College and Higher Education (TEACH) Grant. Take a look at the eligibility requirements to determine whether you qualify.

•   Federal student loans: You may qualify for federal student loans through the U.S. Department of Education and through the William D. Ford Federal Direct Loan Program. Direct Unsubsidized Loans are non-need-based, while Direct Subsidized Loans are awarded to students who demonstrate financial need.

•   Private student loans: Federal student loans, scholarships, and other funding sources may not fully cover the cost of attendance for students. In that case, students may tap into private student loans. However, private student loans do not have the same benefits or borrower protections as federal student loans (like deferment options or the ability to pursue certain federal loan forgiveness programs). For this reason, private student loans are generally pursued only after all other options have been thoroughly considered.

Recommended: Types of Federal Student Loans

The Takeaway

Scholarships for moms going back to college is one way to help fund your degree. You can find scholarships by asking your college or university about their options, looking into your local community, asking professional organizations in your field, and using an online scholarship search tool. Other options for paying for college include federal student loans, grants, and work-study.

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.

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Photo credit: iStock/Portra

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

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

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.

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

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

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If you’re wondering, “Can I open a bank account in another country?” the answer is typically yes. Whether you are pursuing life as a digital nomad, studying abroad for a semester or two, or traveling with friends or your significant other for a few months, you’re going to need access to funds.

If you keep your American bank account, you’re likely to face a slew of foreign transaction fees, which can really take their toll on your finances.

Fortunately, opening a bank account in a foreign country is totally possible — and totally legal, as long as you’re not doing so for tax evasion purposes. However, it may take a few more steps than opening a domestic account would. Read on to learn the details.

What is Banking Abroad?

Banking abroad is pretty much exactly what it sounds like: It involves opening a bank account in a country that is not your primary or official country of residence or citizenship.

If you’re an American, this means opening a bank account in any other country, whether it’s Canada or Cambodia. Of course, some countries — such as, famously, Switzerland or the Cayman Islands — are specifically known for what are called offshore bank accounts, thanks to incentives such as high levels of financial privacy and serious deposit protections. These features can and have attracted the attention of high-net-worth individuals over the years.

But opening a foreign bank account isn’t reserved only for the ultra-rich. Regular, everyday individuals may benefit from banking abroad in certain circumstances. If you are wondering if you can open a bank account overseas because you’ll be spending the bulk of your time there, you probably can.

Is Banking Abroad Legal?

Banking abroad is legal if you’re doing so for the right reasons.

Most of us associate banking abroad with nefarious activities like money laundering or tax evasion, which are, of course, illegal — and could result in large fines or even imprisonment.

But if you’re living in or earning legitimate wages in a foreign country, opening an account there is totally legitimate. It’s also likely your best bet for avoiding excessive foreign transaction fees. It will also reduce or eliminate the hassle of having to deal with a customer service team based in a very different time zone.

Some people also open offshore bank accounts for investment purposes. If this interests you, it’s worth enlisting the help of a financial professional to ensure you’re staying above-board. Foreign investments or offshore banking for tax purposes can be quite complex.

How to Legally Bank Abroad

In order to legally open a checking account in a foreign country, you’ll usually need to verify quite a lot of personal information for the bank. This is so all the parties involved can confirm you’re banking in a foreign country for legal reasons and not engaging in illicit activities, such as tax evasion or money laundering. You will probably have to share some details with US officials, too.

So what does all that mean for you as someone interested in opening a foreign bank account?

Paperwork — potentially lots of paperwork, though it may not be that complex.

Recommended: Can You Have Multiple Checking Accounts with One Bank?

Requirements to Open a Bank Account Abroad

The specific documentation you’ll need to provide to open a foreign bank account will depend on a lot of factors. Among the variables that may impact exactly what you’ll need to provide: The specific bank you choose, the regulations of the target country, how much money you’re planning to deposit or hold in the account, and more.

Generally speaking, though, you can plan to provide the following:

•   Proof of identification, such as a passport or driver’s license

•   Proof of residence, such as a utility bill

•   Up to a year of bank statements from your current bank account in the US

•   Paystubs or a statement from your employer

•   Documentation relevant to investments or business transactions, such as sales contracts

Keep in mind that these documents may need to be notarized by a third party or sent through the local consulate for the target country in order to be deemed official. The bank will give you explicit instructions on all required documentation and may also ask for a written statement of purpose for opening the account.

Don’t overlook the home team either. The US government is likely to have its own questions about your activities. If the value of your account abroad will be more than $10,000, you’ll need to file a Report of Foreign Bank and Financial Accounts (FBAR).

Note: Interest earned on monies held in foreign savings accounts are usually still taxable here at home. Always consult with a professional if you have questions about your tax liability.

Pros and Cons of Offshore Banking

So, what are the benefits and drawbacks of offshore banking? When does opening a foreign bank account make sense? Take a closer look.

Pros

First, the upsides of opening a bank account in another country.

•   An offshore bank account can help you avoid foreign transaction fees if you’re living or doing business in a foreign country.

•   Having a bank account in a foreign country you’re living in can also make it easier to perform basic daily banking tasks without having to navigate overseas phone calls.

•   Offshore banking can have some legitimate tax incentives — though in order to take advantage of these legally, you’ll probably need to consult a tax professional.

Cons

Now, the disadvantages:

•   Opening a foreign bank account can be a relatively arduous process, with a lot of paperwork and verification involved.

•   Foreign banking can have unforeseen taxation consequences — for example, interest earned overseas may still be taxable at home.

•   You may need to file additional paperwork with the IRS if your foreign account will be valued at over $10,000.

Here’s how these pros and cons stack up side by side.

Pros of Opening a Foreign Bank Account	Cons of Opening a Foreign Bank Account
Helps you avoid foreign transaction fees if you’re living or doing business abroad	Complicated process involving a lot of paperwork
Easier to conduct day-to-day banking while abroad	Tax considerations; for instance, interest earned may be taxable in the U.S.
There may be tax benefits to having a foreign account	If your account is worth over $10,000, you likely need to file extra paperwork with the IRS

The Takeaway

The answer to the question, “Can I open a bank account in a foreign country?” is likely to be a big yes. Gathering and submitting the right documentation may take a while, but it can ease your time abroad tremendously. It can help you spend more time reveling in the local culture than wrangling your personal finances.

If you’re looking for an easy-to-use banking alternative here in the US, consider your options to find the right fit.

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 4.60% APY on SoFi Checking and Savings.

FAQ

What countries allow foreigners to open bank accounts?

Most countries will allow foreign nationals to open a bank account on their shores as long as they can provide proof of legal residence in that country (and other necessary documentation). Some countries make it easier than others to open a foreign bank account, however.

Can I open a bank account in another country without being a citizen?

Yes, but you will likely need to provide extra documentation to verify your identity, place of residence, and the legal purpose of the account.

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Photo credit: iStock/MicroStockHub

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

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

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

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

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

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

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.

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

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If you’re wondering, “Can you open a bank account without an ID?” here’s the short answer: No. You must have identification. Not only is this the law, but it would also be negligent if it weren’t a requirement because money is at stake. If accounts are opened without an ID, there’s all kinds of potential for funds to go to or from the wrong individual. That could create a very bad financial situation, as you might guess.

So read on to learn about opening a bank account without ID and your options when you are in this situation.

Can I Open a Bank Account Without an ID?

Some people may wonder why anyone other than a scammer would wonder how to open a bank account without an ID. But unfortunately this kind of situation can happen.

Think of the possibilities: You’ve moved, you’ve lost a vital folder of credentials, or you were robbed — life can throw you all kinds of curveballs. Or maybe you are new to the US and don’t have the required ID papers. But if you lack identification and you need to get a new bank account going, sorry: It’s not happening.

ID Rules for Opening a Bank Account

In the United States, identification is required to open a checking or savings account. Banks must abide by federal regulations that establish guidelines for opening new accounts. (While you cannot open a bank account without ID, you’ll learn more about what qualifies as identification in a moment.)

The US Patriot Act makes a customer identity program, or CIP (also called Know Your Customer), mandatory for all US financial institutions as a terrorism deterrent. Section 326 of this law allows banks to set their own criteria for verifying a new account holder’s identity, but must include at least:

•   Name

•   Address

•   Date of birth

•   Taxpayer identification number.

Not only must banks get the information, they must also verify it.

In terms of what kind of number is needed, a U.S. citizen needs either of these two options:

•   A Social Security number

•   A taxpayer identification number.

Otherwise, the kind of identification needed is:

•   A passport number and country of issuance

•   An alien identification card number

•   A number and country of issuance of any government-issued document that shows nationality or residence and has a photo.

Recommended: Guide to Safety Deposit Boxes

Opening a Bank Account Without an ID

Now, here are the steps you’ll follow to open one or multiple bank accounts, depending on the form of ID you possess.

Understand the Verification Process

Because documents can be fake, the bank must take steps to be sure they are accurate. They can do this by going to sources like the credit reporting agencies or checking the applicant’s references with other financial institutions. In the end, the bank must be confident that you are who you say you are before they will open an account.

Why are these documents so vital? Rules to prevent bank fraud and money laundering make it necessary for you to prove your identity when you apply for a bank account. Put yourself in the bank’s shoes for a minute. They have to adhere to the rules and regulations.

There’s no wiggle room. Imagine the liability issues the bank would face if they failed to properly vet an applicant for a new account and that person commits fraud.

Know the Requirements

Understanding what a bank needs is the first step; making sure you comply comes next. If you know the bank requires a name, address, and Social Security number, for example, be sure you can provide that information, and that the details are correct from any third-party from whom they seek verification.

Be sure you review a copy of your credit report to see if there are errors. Also make sure your personal information is accurate with utility companies and any government agencies the bank might seek input from. You’ll then have all your ducks in a row for opening your account.

Have an Identification Number (ITIN, SSN)

There are some numbers that you really need if you’re going to function in society, like an ITIN and SSN.

•   An ITIN, or Individual Taxpayer Identification Number, is a tax processing number only available for certain nonresident and resident aliens, their spouses, and dependents who cannot get a social security number (SSN). It is a 9-digit number, beginning with the number “9.”

To obtain an ITIN, you must complete IRS Form W-7, IRS Application for Individual Taxpayer Identification Number. The Form W-7 requires documentation substantiating foreign/alien status and true identity for each individual.

•   As for a Social Security number, you may well already have one. It’s how our government tracks earnings, and it’s used at many critical “adulting” moments, such as when you apply for a job or a federal loan. If you don’t have one, then you must complete Form SS-5, Application for a Social Security Card.

You’ll also need to submit evidence of your identity, age, and U.S. citizenship or lawful alien status. It can be a wise move to get one ASAP; a Social Security number is how government agencies can identify individuals and businesses in their records to track their financial information.

Have a Proof of Address

This is another key piece of information needed to open a bank account. When it comes to providing evidence of where you live, you have some flexibility. Banks generally will accept things like:

•   A utility or cell phone bill

•   A credit card statement

•   A lease agreement.

If you don’t get your bills mailed to you, you can always print out a statement from your online account.

Do Any Types of Bank Accounts Not Require an ID?

The bottom line is that you will need some form of identification to open a bank account. If you don’t have a driver’s license, passport, or a state-issued identification card (all of which are considered primary ID sources), you will have to work overtime to try to find a bank that has some flexibility in terms of what they will take as identification.

Some institutions will consider you for an account if you have two secondary ID sources. What’s a secondary source, you ask? A bank might take two of the following:

•   A birth certificate

•   A school or college ID card

•   A voter registration card

•   A Medicare card

•   An employment badge with your photo and signature

•   A major credit card

•   A social services (Welfare, etc.) photo card.

In addition, search for options based on your particular circumstances. For instance, if you are an undocumented immigrant from Mexico, you may find that some Hispanic-American-owned credit unions have programs specially designed to help you get a bank account.

Recommended: Guide to Opening a Bank Account as a Non-US Citizen

The Takeaway

Now that you’ve read this, the message has probably gotten through loud and clear: You likely cannot open a bank account without ID.

That said, if you don’t have identification like a driver’s license, passport, or a state government-issued card, it doesn’t necessarily mean you can’t open a bank account. Do your research to find out what institutions require for secondary identification. Two of those may get you in the door and on your way to getting your very own account.

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 4.60% APY on SoFi Checking and Savings.

FAQ

Can I open a bank account without an ID?

You cannot open an account without some form of identification. Banks are required by law to get and verify that you are who you say you are. That said, if you don’t have the most common forms of ID, you may still be able to start an account with some smart substitutions.

How do I get an ITIN?

To obtain an ITIN, you must complete IRS Form W-7, IRS Application for Individual Taxpayer Identification Number. The Form W-7 requires documentation substantiating foreign/alien status and true identity for each individual.

How can I open a bank account without ID proof?

If you don’t have a primary form of ID, like a driver’s license, passport, or state-government issued id card, you will have to find an institution that will accept two secondary forms of identification.

What can I use instead of an ID to open a bank account?

A bank might take two of the following: birth certificate, school or college ID, voter registration card, Medicare card, a major credit card, or a social services card (like Welfare) photo ID.

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Photo credit: iStock/akinbostanci

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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

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

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

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

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

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

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.

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

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A Pell Grant is a type of federal funding that’s awarded to eligible undergraduate students who have exceptional financial need, and is provided to help pay for their education. In general, unlike a loan, Pell Grants usually don’t need to be repaid. The maximum amount that you can receive varies each year, with the 2023-24 school year’s maximum being $7,395.00.

Factors that play a role into what you might receive include your Expected Family Contribution (or EFC), the cost of attending your specific school for your specific program, whether you’ll be attending full-time or part-time, and whether you intend to attend school for the entire academic year.

Applying for a Pell Grant

If you believe you might qualify for the Pell Grant, then step one is the same as for every type of federal funding for students — to fill out the Free Application for Federal Student Aid (FAFSA®). Note that you’ll need to fill out this form every year that you’re attending school to apply for federal aid, including but not limited to the Pell Grant.

If you receive Pell Grant funding, then your school can apply these funds to your school costs or pay you — or use a combination of these two methods.

Pell Grant Eligibility Requirements

In order to qualify for a Pell Grant, you’ll need to meet the grant’s eligibility requirements.

Income

Pell Grants are awarded to individuals who exhibit exceptional financial need. There are no official income limits for the Pell Grant. Instead, award amounts are determined by your Expected Family Contribution, the program cost of attendance, and your status as a full- or part-time student.

Academic Achievement

Renewal of the Pell Grant each year is based on the student making satisfactory academic progress. The specific policy for academic progress will be outlined by your school, but it generally includes things like a minimum GPA and the number of class credits you need to complete in order to make progress toward your degree.

Completing FAFSA

To apply for the Pell Grant, you’ll need to fill out the FAFSA. In order to continue receiving the Pell Grant, you’ll need to fill out the FAFSA each year you are enrolled in school.

Recommended: FAFSA Guide

Being an Undergraduate Student

Pell Grants are generally only awarded to undergraduate students. Though, there may be some exceptions for students enrolled in post-baccalaureate teacher certification programs.

Maintaining Eligibility for a Pell Grant

To maintain your eligibility for a Pell Grant, you’ll need to stay enrolled in your undergraduate program. Additional Pell Grant requirements, among others, include that you need to either be a U.S. citizen or an eligible non-citizen.

You’ll also need to have a valid Social Security number and must be enrolled or accepted for enrollment in an eligible educational program.

This program is available to qualifying students for 12 semesters.


💡 Quick Tip: Fund your education with a low-rate, no-fee SoFi private student loan that covers all school-certified costs.

Loans vs Scholarships vs Grants

Before taking a deeper dive into federal Pell Grant eligibility, it can help to delve into the differences between student loans, scholarships, and grants.

Recommended: The Differences Between Grants, Scholarships, and Loans

Student Loans

Student loans are borrowed funds that need to be repaid, typically with interest. There are both federal student loans that the government offers, and private ones offered by financial institutions.

Federal Student Loans

Federal student loans are offered to students based on data included in the FAFSA. Some federal student loans are unsubsidized, while others are subsidized. With an unsubsidized loan, the interest begins accumulating as soon as funds are dispersed. So, while you’re in school, even if you aren’t making payments yet, interest is accruing.

With a subsidized loan, though, the government will pay your interest until you graduate or drop below half-time status.

You usually need to start paying back federal loans after the grace period, which is six months after you graduate or your enrollment drops below half-time.

Private Student Loans

Private student loans are usually used after federal student loan options have been exhausted. They may have a fixed or variable interest rate, and do not come with the same borrower protections as federal student loans. Different lenders may have different terms and rates and they’ll likely evaluate a potential borrower’s credit score and history, among other factors, to make their lending decision.

Recommended: Private vs Federal Student Loans

Scholarships

There are thousands of scholarships available to help students finance their college education. Some are based on financial need, others on merit, and sometimes both. The beauty of scholarships is that, unlike loans, they usually don’t need to be repaid. It can take some time to find the right scholarships for your situation.

Your high school counselor or college advisor may be able to help, and there are scholarship databases that you can search. Scholarships come with different requirements and different deadlines, so it typically helps to start early.

Grants

Like scholarships, grants typically don’t need to be paid back. They can be obtained from a variety of sources, including state governments, the federal government, your university, and private/non-profit organizations.

To receive a grant, you often need to meet financial criteria, and this kind of funding is usually based on financial need. And, this brings us full circle to a popular type of grant for college students today: the federal Pell Grant.

How Do Pell Grants Work?

To become eligible, you must fill out the FAFSA. If it’s determined you’re an undergraduate student with exceptional financial need — and you haven’t yet earned a bachelor’s degree (or a graduate or professional one) — then you may qualify for this grant funding.

Because each school that participates in the federal Pell Grant program receives enough funding annually to pay the full amount of Pell Grants to eligible students, if you’re eligible, you’ll receive the full amount you qualify for — and, if you qualify for other student aid, this does not have an impact on your Pell Grant eligibility.

Understanding Expected Family Contribution

As mentioned earlier, your Expected Family Contribution (EFC) plays a role in what you’ll be awarded. This is an index used by college financial aid departments that allows them to calculate how much financial aid you’re eligible to receive if you attended their school. The financial aid departments make these calculations based upon information provided in your FAFSA.

Sometimes, students qualify for 150% of scheduled Pell Grants, and you might hear this referred to as “year-round Pell.” That’s because, sometimes, you can also receive Pell Grant funding during the summer semester. If this interests you, you’ll need to talk to your school’s financial aid department about the requirements for this type of Pell Grant.

Additional Pell Grant Funding for Military Service in Afghanistan or Iraq

Students may be eligible for more funding if their parent or guardian was a:

•   member of the U.S. military who died as a result of service performed in Iraq and/or Afghanistan, post 9/11

•   public safety officer who died in active service in the line of duty

Eligibility requirements also include that, at the time of this death, you were younger than 24 years old or were enrolled in college or a career school on at least a part-time basis. If you qualify and are eligible for a Pell Grant, then your eligibility will be calculated as if you had an EFC of zero. If you’re attending less than full-time, then payments will be adjusted accordingly.

What Sorts of Expenses Can the Pell Grant Be Used For?

The Pell Grant can be used to cover qualified education-related expenses, including:

Tuition

Pell Grant funds can be used to pay for the cost of tuition.

Educational Expenses

You can use your Pell Grant to pay for other education-related expenses, such as the cost of books, lab fees, or other supplies like a graphic calculator or other expenses related to your course of study.

Living Expenses

It’s also possible to use the Pell Grant to pay for living expenses. This could cover room and board at your college or university. Or, if you live off-campus, this could cover the cost of rent.

Is There Ever a Reason Not to Take a Pell Grant?

Because the Pell Grant does not typically need to be repaid, it is a desirable type of financial aid. If you expect to earn a larger award in the future — for example if you plan on transferring to a more expensive institution or anticipate your EFC to be less — you may consider declining your award in the hopes of qualifying for a larger award in future years.

When You Still Need More Money

The FAFSA, which is required to qualify for the Pell Grant, is also required for other forms of financial aid. In your financial aid award, you’ll also be able to review any scholarships, grants, work-study, or federal student loans you may have qualified for.

Generally, scholarships, grants, and work-study are relied on before student loans. Then federal student loans, particularly Direct Subsidized Loans which, as mentioned, do not accrue interest until after a student graduates or drops below half-time enrollment.

Private Scholarships

Thoroughly investigate scholarship opportunities, as well as grants. To increase your chances of successfully receiving these kinds of funding, it can really help to carefully prepare to apply for them. Materials you will likely need include transcripts, personal references, and a personal statement.

You can ask a trusted adult, whether that’s a teacher, parent, or guidance counselor, to read over what you’ve written. And, although some of the scholarship or grant amounts might at first look small, multiple smaller awards can really add up.

Part-Time Job

If you don’t qualify for or can’t find a work-study job, you can still seek employment on your own. Colleges often provide job boards that list opportunities for employment, either on or off campus.

You can also check job sites that aren’t connected with the college, and ask guidance counselors, professors, and friends and family for leads.

No matter how you find a job, having one can help you to earn money for college while also helping you to build a resume that could prove valuable as you look for full-time employment after graduation.

Private Student Loans

You can fill in the gap between what you can obtain with federal student loans, scholarships, and grants with private student loans. These loans differ from federal loans in many ways, with federal ones having fairly static criteria, including fixed interest rates, multiple plans for repayment, and options for loan forgiveness.

Private loans, as mentioned, are offered by financial institutions, such as banks and online lenders. To request funds, you fill out an application, just like you might for a car loan, a mortgage, or a personal loan. To qualify, the lender will typically review your income and your credit score — and those of your cosigner, should you need one — among other financial factors.

Private lenders set their own criteria for loan approvals, as well as their own terms. Private student loans can come with multiple benefits and, in many cases, they can provide the funding that would ultimately make a difference between being able to pay tuition — or not.

There are also downsides to borrowing private student loans. They don’t have the loan forgiveness programs that are available with federal student loans, or income-driven repayment plans. This means that private student loans are generally considered only after all other options have been evaluated.

If private loans may make sense for you, shop around to compare lenders and find the option that is best for you. To help determine what your payments might be with private loan funding, you can use this student loan calculator to get an idea.

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

The Takeaway

Pell Grants are awarded to students who exhibit exceptional financial need. Pell Grants do not typically need to be repaid and the amount awarded to each student may vary based on their personal financial circumstances. The maximum award for the 2023-24 school year is $7,395.00.

Other options for paying for college include federal student loans, scholarships, work-study, and grants.

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

What disqualifies you from getting a Pell Grant?

The Pell Grant is awarded to undergraduate students who demonstrate exceptional financial aid. To determine this, factors like your family’s Expected Family Contribution (EFC) and the cost of your school will be evaluated. Students who don’t demonstrate exceptional financial need generally won’t qualify for a Pell Grant.

Individuals who are incarcerated are also not eligible to receive a Pell Grant.

Will you ever need to pay back a Pell Grant?

In most cases, you won’t be required to repay a Pell Grant. In certain situations, a student may need to repay all or a portion of their grant — such as if they dropped out of school or dropped from full-time to part-time enrollment.

Is there a minimum GPA required for a Pell Grant? Does it have to be maintained for your whole degree?

In order to maintain eligibility for a Pell Grant, you’ll need to make satisfactory academic progress toward your degree. The specific requirements will be outlined by your school, but may include a minimum GPA.

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

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

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

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

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Most of us simply don’t have the cash on hand to pay for college or graduate school out of our pockets. For the 2023-24 school year, the College Board estimates it costs $41,540 on average annually to attend a private non-profit four year university and $11,260 for in-state students at a public four-year school.

That means you might need to take out student loans to fund your education.To make sure you’re not in danger of defaulting on your loans or paying too much, you might want to understand some basics of student loans.

When you take out student loans, they’re either private or federal — meaning they either come from a private lender, like a bank, or are backed by the federal government.

Federal student loans are either subsidized or unsubsidized Direct Loans. There are also Federal Direct PLUS loans for parents or graduate and professional students. Interest rates for federal loans are set by Congress and stay fixed for the life of the loan. Federal student loans come with certain protections for repayment.

But what are the differences in the types of federal loans? When you’re weighing your options, you might want to understand some of the differences between a Federal Direct Unsubsidized Loan vs. a Direct Subsidized Loan vs. a private student loan, so you can evaluate all of your options.

What Is a Federal Direct Unsubsidized Loan?

The federal government offers two umbrellas of Direct Loans: unsubsidized and subsidized. When you take out a loan, the principal amount of the loan begins to accrue interest as soon as the loan is disbursed (when the loan is paid out to you). That interest has to be paid or it is added onto the loan amount.

Subsidized Federal Student Loans

On a Federal Direct Subsidized Loan, the federal government (specifically, the US Department of Education) pays the interest while you’re in school, during the six-month grace period after you graduate, and if you temporarily defer the loans. On a Federal Direct Unsubsidized Loan, you are responsible for paying all of the interest on the loan from the moment it starts accruing.

Since the interest is paid for you while you are in school on a subsidized loan, it doesn’t accrue. So the amount you owe after the post-graduation grace period is the same as the amount you originally borrowed.

Unsubsidized Federal Student Loans

On a Federal Direct Unsubsidized Loan, the interest accumulates even while you’re in school and during the grace period — even though you aren’t required to make any payments while in school.

The interest is then capitalized, meaning it gets added to the total principal amount of your loan. That amount in turn accrues interest, and you end up owing more when you graduate than you originally borrowed.

Of course, you can make interest payments on your unsubsidized loan while you’re in school to save yourself money in the long run. However, you’re not required to start paying off the loan (principal plus interest) until six months after leaving school.

For the 2023-2024 school year, the interest rate on Direct Subsidized or Unsubsidized Loans for undergraduates is 5.50%, the rate on Direct Unsubsidized Loans for graduate and professional students is 7.05%, and the rate on Direct PLUS Loans for graduate students, professional students, and parents is 8.05%. The interest rates on federal student loans are fixed and are set annually by Congress.

Origination fees for unsubsidized and subsidized loans is set at 5.50% for the 2023-2024 academic year.

How Do You Apply for a Federal Direct Unsubsidized Loan?

The first step to finding out what kind of financial aid you qualify for, including Federal Direct Unsubsidized Loans and Subsidized Loans, is to fill out the Free Application for Federal Student Aid (FAFSA®).

Your school will then use your FAFSA to present you with a financial aid package, which may include Federal Direct Unsubsidized and Subsidized Loans and other forms of financial aid like scholarships, grants, or eligibility for the work-study program.

The financial aid and loans you’re eligible for is determined by your financial need, the cost of school, and things like your year in school and if you’re a dependent or not.

Who Qualifies for Federal Direct Unsubsidized Loans?

Federal Direct Subsidized Loans are awarded based on financial need. However, Federal Direct Unsubsidized Loans are not based on financial need.

To receive either type of loan, you must be enrolled in school at least half-time and enrolled at a school that participates in the Federal Direct Loan program. And while subsidized loans are only available to undergraduates, unsubsidized loans are available to undergrads, grad students, and professional degree students.

Pros and Cons of a Federal Unsubsidized Direct Loan

There are pros and cons to taking out federal unsubsidized direct loans.

Pros

•   Both undergraduates and graduate students qualify for Federal Direct Unsubsidized Loans.

•   Borrowers don’t have to prove financial need to receive an unsubsidized loan.

•   The loan limit is higher than on subsidized loans.

•   Federal Direct Loans, compared to private loans, come with income-based repayment plan options and certain protections in case of default.

Cons

•   Federal Direct Unsubsidized Loans put all the responsibility for the interest on you (as opposed to subsidized loans). Interest accrues while students are in school and is then capitalized, or added to the total loan amount.

•   There are limits on the loan amounts.

Recommended: Should I Refinance My Federal Loans?

The Takeaway

Federal Direct Unsubsidized Loans are available to undergraduate and graduate students and are not awarded based on financial need. Unlike subsidized loans, the government does not cover the interest that accrues while students are enrolled in school. Unsubsidized federal loans are eligible for federal benefits like income-driven repayment plans or Public Service Loan Forgiveness.

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.

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

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

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

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

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