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A 529 college savings plan is one of the best tools for funding education, but using the money incorrectly can lead to unexpected taxes and penalties. Whether you’re paying for tuition, books, or other college-related expenses, it’s important to understand how withdrawals work. Making even a small mistake — like using the funds on ineligible expenses or exceeding spending limits — can reduce your savings. Here are key tips to help you avoid 529 withdrawal penalties and make the most of your education funds.

What Is a 529 Plan?

A 529 plan offers a tax-advantaged way to save for a child’s future college expenses. You can make contributions to the 529 account, which can then be invested in a variety of assets (such as stocks, bonds, or mutual funds), and any earnings grow tax-free. You can make withdrawals from a 529 federal income tax-free if the funds are used for qualified education expenses.

If you withdraw money from a 529 and spend it on nonqualified expenses, you’ll pay ordinary income tax on any earnings, plus a 10% penalty. There are some exceptions — such as no penalty if your student receives a scholarship and you withdraw up to that amount from the 529, though you’ll still need to pay tax on the earnings.

💡 Quick Tip: You’ll make no payments on some private student loans for six months after graduation.

What Are Qualified 529 Plan Distributions?

Education expenses that are considered qualified within a 529 plan include:

•   College tuition and fees

•   Room and board (not to exceed the allowance for room and board included in the school’s cost of attendance)

•   Books and supplies

•   Computers and internet

•   K-12 tuition and expenses (up to $10,000 in per year, increasing to $20,000 per year starting on January 1, 2026)

•   Student loan payments (up to $10,000 per beneficiary)

•   Apprenticeship programs registered with the U.S. Department of Labor

What Are Nonqualified 529 Plan Distributions?

Some expenses you’ll encounter when your child goes to college, however, are considered nonqualified distributions. Withdrawing funds from your 529 to cover these expenses can trigger taxes and penalties:

•   Transportation costs

•   Sports expenses or monthly gym dues

•   Electronics and smart phones

•   Health insurance costs

•   Off-campus room and board in excess of what the school housing would cost

•   Costs associated with extracurricular activities

•   Fratnerity/sorority dues

Are Distributions Taxable?

Qualified withdrawals are federal income tax-free (and in some states, state income tax-free) as long as your total withdrawals for the year don’t exceed your child’s higher education expenses.

If distributions are used to cover nonqualified expenses (such as travel to and from college or entertainment expenses), any part of the distribution that is made up of earnings on contributions will be taxed as ordinary income and could also incur a 10% federal penalty.

What Is a 529 Early Withdrawal Penalty?

A 529 withdrawal penalty is an additional 10% federal tax imposed on the earnings portion of a withdrawal from a 529 plan if the funds are used for nonqualified educational expenses. This penalty is levied on top of standard income tax, which is also applied to the earnings. The original contributions to the 529 are made with after-tax dollars and are not subject to the penalty or income tax upon withdrawal.

Keep in mind, however, that there’s no early 529 withdrawal penalty like with retirement accounts. Funds can be withdrawn at any time penalty-free, provided they are used for qualified education expenses. They can also remain in the account indefinitely if not immediately needed, continuing to grow tax-deferred.

Recommended: Benefits of Using a 529 College Savings Plan

Can I Make a Withdrawal From 529 Without Penalty?

Yes, you can make a withdrawal from a 529 without penalty so long as you use the funds for qualified education expenses. In addition, the 10% penalty may be waived in certain situations.

529 Withdrawal Penalty Exceptions

Here are some scenarios where the 10% penalty won’t apply (though taxes still will):

•  The beneficiary dies or becomes disabled.

•  The beneficiary attends a United States military academy

•  The qualified education expenses were only taxed because the student or parents claimed the American Opportunity Tax Credit (AOTC) or Lifetime Learning Credit (LLC).

•  The beneficiary received nontaxable educational assistance, including college scholarships, fellowship grants, veterans’ educational assistance, and employer-provided educational assistance.

What if My Child Doesn’t Go to College?

If you’ve been saving for a child’s college education and they decide not to go to college, there are some other ways you use your 529 funds that won’t trigger taxes and penalties. Here are some options to consider:

Change the Beneficiary

When you open a 529 plan, you designate a beneficiary, which is the person whose education you’re saving for. However, that name isn’t set in stone — you can change the beneficiary at any time.

If the child you’re investing for decides not to go to college (or gets a significant scholarship), you can change the beneficiary to a younger child, yourself, or even a future grandchild. Alternatively, you can also simply leave the account, let it grow, and change the beneficiary at a later date.

Trade School or Apprenticeships

If your child decides they want to attend a trade school or apprenticeship program rather than go to a traditional college, you can use 529 funds to cover those costs (without paying any taxes or penalties), provided the institution participates in federal student aid programs or is registered with the Department of Labor.

Repay Student Loans

As a result of the Setting Every Community Up for Retirement Enhancement (SECURE) Act of 2019, 529 plan holders can make penalty-free withdrawals to pay off student loan debt (both federal and private) for the designated beneficiary, up to a lifetime maximum of $10,000 per person. You can also change the beneficiary multiple times to help pay down student debt for more than one family member.

Roll the Funds to a Roth IRA

Thanks to SECURE 2.0, passed at the end of 2022, you can make tax- and penalty-free rollovers to a Roth IRA, giving your beneficiary’s retirement savings a substantial head start. However, there are some conditions and limitations to keep in mind:

•  The 529 must have been open for at least 15 years.

•  Contributions made within the last five years aren’t eligible.

•  There is a $35,000 lifetime limit per beneficiary.

•  Rollover amounts are subject to annual Roth IRA contribution limits.

•  The Roth IRA must be in the beneficiary’s name

Other College Financing Options

If you don’t have enough funds in your 529 to fully pay for a child’s college education, there are still many ways to cover the costs. Here are some to explore:

•  Maximize financial aid: The first step is for the student to complete the Free Application for Federal Student Aid (FAFSA®) every year they are in school. The FAFSA determines eligibility for grants, work-study programs, and federal loans. Many schools also use FAFSA data to award their own institutional aid.

•  Research scholarships: Many private organizations, nonprofits, and community groups offer college scholarships. They may be awarded based on merit (such as academic, athletic, or artistic abilities) or financial need. Have your child search local community groups and online databases for various scholarship opportunities.

•  Borrow wisely: Federal student loans are often the best option for borrowing, as they typically offer lower interest rates and more flexible repayment options than private loans. If additional funding is needed, private student loans are an option, but your student may need a cosigner to get approved or secure a better interest rate.

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

The Takeaway

A 529 plan can be an excellent way to save for college, offering tax advantages for qualified educational expenses. However, it’s important to understand what constitutes a qualified withdrawal to avoid penalties and taxes on the earnings. If your child’s plans change, options like changing the beneficiary, using funds for trade schools or apprenticeships, and repaying student loans can help you utilize your savings without incurring penalties. By being aware of the rules and exceptions, you can maximize the benefits of your 529 plan and use your educational savings effectively.

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

FAQ

How do I withdraw from a 529 without paying a penalty?

You can withdraw from a 529 plan without paying a penalty by using the funds for qualified education expenses. These include tuition, fees, room and board (up to the school’s allowance), books, supplies, computers, internet, and K-12 tuition.

The 10% federal penalty may also be waived in specific situations, such as the death or disability of the beneficiary, attendance at a U.S. military academy, or if the beneficiary received nontaxable educational assistance, such as scholarships or fellowship grants, and you withdraw up to that amount. In these cases, however, you may still owe ordinary income tax on the earnings portion of the withdrawal.

What is the 529 loophole?

The “529 loophole” typically refers to the “grandparent loophole.” As a result of changes to the Free Application for Federal Student Aid (FAFSA®) in 2024–2025, studentsno longer need to report distributions from a grandparent-owned 529. As a result, grandparent support won’t impact a student’s eligibility for financial aid. Another popular 529 “loophole” (made possible by the SECURE 2.0 Act) allows unused 529 plan funds to be rolled over into a Roth IRA for the beneficiary, though restrictions and limitations apply.

What are the exceptions to the 529 withdrawal penalty?

The 10% federal penalty for nonqualified 529 withdrawals can be waived in several situations. These include the death or disability of the beneficiary and the beneficiary attending a U.S. military academy. Also, if the beneficiary received nontaxable educational assistance (such as scholarships, grants, or employer-provided educational assistance) and you withdraw up to that amount, the penalty will not apply. However, in these cases, ordinary income tax on the earnings portion of the withdrawal may still be owed.

Photo credit: iStock/FG Trade

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

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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

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

SOISL-Q425-032

There are many types of scholarships, from academic and athletic to need-based and identity-specific scholarship programs. Recipients typically don’t need to repay the funds they receive in the form of scholarships, which makes this type of funding particularly appealing.

According to Sallie Mae’s annual “How America Pays for College” survey, 60% of U.S. families relied on scholarships to help pay for college in the 2024-25 academic year. The average scholarship award amount was $8,004.

Among those who didn’t tap scholarships, the leading reasons included lack of awareness (34%) and a belief that the student wouldn’t be able to win a scholarship (28%). However, with so many different types of scholarships available, you might find one that can help you pay for school.

1. Academic Scholarships

Academic scholarships, also referred to as merit scholarships, are awarded to students who’ve demonstrated academic excellence or exceptional skill in an area. For example, a merit-based scholarship might be based on an applicant’s cumulative GPA.

This kind of scholarship is provided by two main sources:

Colleges

Many schools offer merit-based scholarships in order to attract competitive applicants. To be considered for one of these awards, often all you have to do is apply to the school. Criteria varies by school, but colleges will often look at high school GPA, standardized test scores, and/or class rank.

Private Organizations

Various organizations, foundations, and companies offer merit-based scholarships to students with strong academic performance, leadership skills, and community involvement. Some programs also consider factors like perseverance or commitment to specific fields.

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

2. Athletic Scholarships

Athletic scholarships are offered to student-athletes by their college. These full- and partial-scholarship programs are offered to a select few students who have shown exceptional skill in their sport.

Typically, when participating in an athletic scholarship you’re expected to maintain satisfactory academic performance to continue receiving funding. Note that fewer than 2% of high school athletes are awarded athletics scholarships for college.

Recommended: Balancing Being a Student Athlete & Academics in College

3. Scholarships for Extracurriculars

Students who participate in extracurricular activities might be able to find scholarship opportunities for their unique interests. For example, scholarships for students who dance, act, draw, or participate in Scouting America (formerly Boy Scouts), Key Club, and more exist.

4. Student Specific Scholarships

There are many types of scholarships that are based on the student’s personal situation or affiliation. Some of these kinds of scholarships include:

Religious Scholarships

These scholarships are generally available to students who are actively involved in a faith-based community, or who are pursuing religion-based college courses.

First-Generation Scholarships

Students who are the first in their family to attend college may qualify for specific scholarships.

Legacy Scholarships

These scholarships are exclusively for students whose parents or close family members are alumni of the same institution.

Identity-Based Scholarships

Identity-based scholarships are designed to provide financial support to students from backgrounds that have been historically underrepresented or marginalized. Here are some examples:

Hispanic Heritage

Students of Hispanic or Latine heritage may be able to qualify for specific heritage-based scholarships like those offered by the Hispanic Scholarship Fund.

African American

Specific scholarships are available for Black students, including programs like the Ron Brown Scholar Program, the 5 Strong Scholarship Foundation, and the Blacks at Microsoft Scholarship.

Women

Scholarships for women are another subset of options.

LGBTQIA+

Numerous national and local organizations offer scholarships specifically for LGBTQIA+ students, recognizing the unique barriers they can face in higher education.

Learning Disabilities

These scholarships are available to select students who have diagnosed learning and attention issues. For example, the National Center for Learning Disabilities offers scholarships.

5. Need-Based Scholarships

Need-based scholarships, also known as grants, are financial aid awards based on a student’s and their family’s demonstrated financial need, rather than on academic, athletic, or other merits. The Free Application for Federal Student Aid (FAFSA®) is the primary application for federal, state, and institutional need-based aid, and it must be completed annually.

Need-based scholarships are also available through nonprofit and community organizations. Using an online scholarship search tool can help you find additional options.

💡 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.

6. Employer Scholarships

Employer scholarships are offered to employees of a company or an employee’s college bound student. Aside from having an affiliation with the employer, students might need to meet other eligibility criteria to be selected for an award.

7. Military Scholarships

There are many types of military scholarships available for service members, veterans, and their families, provided by Reserve Officer Training Corps (ROTC) programs, the Department of Defense, veteran service organizations, and military aid societies.

8. STEM Scholarships

STEM scholarships may be accessible to students who are pursuing a college education in a science, technology, engineering, or math discipline. Some scholarship programs are offered specifically to students who identify with a particular group; for example, STEM scholarships for minority students.

9. Scholarships Based on Major

Regardless of what you’ve chosen as your college major, there may be a scholarship suited for you. These scholarships are provided by government agencies and private organizations that want to encourage students to pursue a particular area of study.

10. No Essay Scholarships

This kind of scholarship explicitly doesn’t include a written essay or personal statement component. You might prefer this type of scholarship if writing isn’t your forte, but there might be another required component in its place, such as a video or other creative submission.

Applying for Scholarships

There are various types of scholarships for college, which means there are just as many different requirements and deadlines to stay on top of. When applying to a scholarship, double check that you meet the basic eligibility criteria as a student.

Depending on the type of scholarship, it might require a minimum GPA, or it might ask for proof that you have financial needs, for example. After confirming that you meet the applicant requirements, review the steps needed to apply.

Some scholarship programs might ask for a personal statement or other academic or creative submissions. Similarly, some might request additional paperwork as part of your application, like a copy of your school transcripts.

Finally, make sure you note each scholarship’s deadline and submit your application on time. The last thing you want is to have done all of the work only to be denied because of a missed deadline.

Alternatives to Scholarships

If scholarships and other forms of financial aid aren’t enough to cover the cost of your education, you may also want to look into different types of student loans.

Federal Student Loans

Federal student loans are available to undergraduate and graduate students, as well as parents of dependent undergrads. They’re funded by the U.S. government, and most federal loans don’t require a credit check. In addition to offering fixed rates, they provide access to income-driven repayment and loan forgiveness programs.

Subsidized loans are federal loans available to undergraduate students with demonstrated financial need (as determined by the FAFSA). With this type of loan, the government pays the interest while you’re enrolled in school at least part-time and during the six-month grace period after you leave school.

Private Student Loans

When scholarships, grants, and federal student loans aren’t enough to cover the total cost of college, a private student loan could help. These loans are funded by private lenders and offer fixed or variable rates at different terms. These loans typically require a credit check or the addition of a creditworthy cosigner. Keep in mind that private student loans aren’t required to offer the same benefits, like income-driven repayment, as federal student loans.

💡 Quick Tip: New to private student loans? Visit the Private Student Loans Glossary to get familiar with key terms you will see during the process.

The Takeaway

Many scholarships are available to help students pay for college, from academic and athletic awards to those based on financial need, field of study, or cultural heritage. If scholarships and other types of financial aid don’t cover all your educational expenses, federal and private student loans can provide additional funding. Carefully research all your options to find the best way to finance your education.

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

FAQ

What are the three most common types of scholarships?

The most common types of scholarships include academic, athletic, and need-based scholarships. Academic scholarships reward students for their grades, test scores, or other academic achievements. Athletic scholarships are given to students who demonstrate exceptional skill in a particular sport. Need-based scholarships are awarded to students who have a demonstrated financial need to help cover college costs.

How many different scholarships are there?

There are millions of scholarships being offered each year. According to Educationdata.org, more than 1.8 million scholarships are awarded annually.

What are competitive scholarships?

Competitive scholarships are awards that typically have a rigorous selection process and a large pool of applicants. These scholarships often require strong academic records, compelling essays, letters of recommendation, and demonstrated leadership or community involvement. They are highly sought after due to their prestige and often substantial award amounts.

Photo credit: iStock/Edwin Tan

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

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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

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

SOISL-Q425-028

If you’re thinking about taking out student loans to pay for college, you’re in good company: More than half of college graduates leave school with debt. Like most loans, student loans charge interest, which is the cost of borrowing money from a lender. Whether you take out federal or private student loans, you’ll end up paying back more than your original borrowed.

Is it worth it?

The answer depends on your degree, major, and the type and size of your debt. Read on to learn more about whether the current cost of college is worth it, different ways to pay for school, and when it makes sense to take out student loans.

College Costs Vary By School

It’s no secret that college costs have gone up over the years, causing more students to take on debt as a means to afford a college education. Indeed, student debt has more than doubled over the last two decades. As of August 2025, about 42.5 million U.S. borrowers collectively owed more than $1.8 trillion in federal and private student loans.

But not all schools cost the same amount. In fact, some colleges cost considerably less than others. According to Educationdata.org, the average cost of attendance for a student living on campus at a public four-year in-state college is $27,146 per year. The average cost of attending a private, nonprofit university and living on campus, by contrast, is $58,628 per year.

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

Factoring in Financial Aid

Financial aid is another factor that affects the cost of going to college. Some schools may have a high sticker price but offer a variety of need- and merit-based aid options to students, which can lower the actual cost of attendance.

Colleges and universities will frequently publish what percentage of their students receive financial aid and will sometimes also publish the average award amount. This can be helpful information for students applying to colleges.

When deciding where to apply and attend school, keep in mind that even if the sticker price for College A is higher than College B, the financial aid package at College A may make it a more affordable option in the end.

Not All Majors Have the Same Income Potential

Another consideration when evaluating whether borrowing student loans is worth it is to factor in the earning potential based on your selected major, keeping in mind that not all majors offer the same income potential.

For example, students who graduate with degrees in software engineering earn an average starting salary of $104,863. Other majors, such as dance or drama, generally don’t offer the same earning potential to graduates.

It’s a good idea to do some research on the future income potential for the major and field you hope to pursue. This can be helpful in understanding how much you’d realistically stand to earn and, therefore, how long it may take to pay back student loans. Resources like the Payscale College Salary Report or the Bureau of Labor Statistics are two places to start.

How Much Should I Borrow for College?

A general rule of thumb is that students should limit what they borrow to what their potential career will reasonably allow them to repay. As a rough guideline, you may want to avoid borrowing anything more than you will likely be able to earn in your first year out of college.

Keep in mind that just because your financial aid package may include a certain amount in federal student loans, you are not required to borrow the maximum. Consider reviewing other sources of financial aid like private scholarships and grants, which are essentially “free money” for college. It can also be worth setting up an annual budget with anticipated costs for tuition, fees, room and board, and other expenses so you have an idea of how much you may actually want or need to borrow to pay for school.

College Graduates May Have More Financial Stability

In the long term, a college degree can lead to more financial stability. Research suggests that people with bachelor’s degrees have both a higher median income than those without a college degree and earn more over their lifetimes.

Another factor, based on unemployment rates, is that people with a college degree tend to have greater career stability than those without a college degree.

This isn’t always true, however. As some recent studies suggest, certain career paths that don’t require a degree — such as construction inspectors or cardiovascular technicians — also offer significant earning potential.

Here’s What You Might Consider if You Choose to Take Out Student Loans

There are a number of factors to consider when deciding what type of student loan will best suit your particular needs, so it’s important to do your research beforehand.

Things like whether the loan is federal or private, what the current interest rates are, and how long it will take to pay off the loan could all contribute to how much student loan debt you ultimately find yourself in and are important considerations before taking out a loan.

Federal Loans vs Private Loans

There are two main types of student loans — federal loans and private loans. Federal loans are borrowed directly from the government, whereas private loans are borrowed from private lenders like banks, credit unions, and other financial institutions.

While the two loans serve the same purpose, there are some important distinctions. Because federal loans are made by the government directly, the terms and conditions are set by law. These loans also come with certain perks and protections, such as low fixed interest rates and income-driven repayment, that may not be offered with private loans.

Private loans are less standardized, since the terms and conditions are set by the lenders themselves. For example, some may offer higher interest rates than federal loans, and interest rates may be fixed or variable. It’s important to understand the specific terms and conditions set by a private lender. Since private student loans may lack the borrower protections and benefits offered by federal loans, you generally want to tap financial aid and federal student loans first, then consider filling in any gaps with private student loans.

💡 Quick Tip: New to private student loans? Visit the Private Student Loans Glossary to get familiar with key terms you will see during the process.

Understanding Interest Rates

Sometimes people fail to consider the interest rate on the student loan and how it will affect the amount of money they will end up owing.

Interest is calculated as a percentage of the unpaid principal amount (total sum of money borrowed plus any interest that has been capitalized).

Capitalization is when unpaid interest is added to the principal balance of a loan, and interest is calculated using this new, higher amount. You might have interest capitalization if, for example, you decide not to make interest payments on an unsubsidized federal loan or private student loan while you are in school. This unpaid interest will be added to your loan balance and interest will be charged on this new, higher balance.

For all federal student loans, interest rates are set by the government and are fixed, which means they won’t change over the life of the loan. With private student loans, it’s up to the lender to set the rate and terms. Generally, students (or their parent cosigners) who have strong credit qualify for the best rates. If you are interested in borrowing private student loans, it’s a good idea to do some research and shop around so you can find the loan that best meets your needs.

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

How Long Will it Take to Repay Your Loan?

Paying more money sooner can significantly reduce the amount of time it takes you to pay off a loan (as well as lower the cost). But that may not always be a feasible option. It’s important to consider the implications of different kinds of repayment plans when you take out a loan.

Currently, the standard term to repay a federal student loan is 10 years. But you can also choose an extended repayment plan (that gives you up to 25 years to pay off your loans) and one of several income-driven repayment (IDR) plans, which base your monthly payment amount on how much money you make. For those that take out federal student loans on or after July 1, 2026, there will only be two repayment options: the standard repayment plan and an IDR plan called the Repayment Assistance Plan (or RAP). The standard repayment plan will also change, offering borrowers 10- to 25-year repayment terms depending on the amount borrowed.

When choosing your loan term, keep in mind that a longer repayment term will lead to lower payments but a higher overall cost, since you’ll be paying interest for a longer period of time.

The Takeaway

Student loans can help open up doors to higher education for students, but borrowing responsibly is important. When deciding if student loans are worth it for you — and how much you should borrow — you’ll want to consider multiple factors, including your choice of major, future career path and earning potential, and the cost of the school you hope to attend after factoring in financial aid.

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

FAQ

Is it a good idea to take a student loan?

Whether taking out a student loan is a “good” idea depends on your individual circumstances. Student loans can be a valuable tool to pursue higher education, which often leads to increased earning potential and career stability. However, it’s crucial to borrow responsibly. Consider your chosen major’s earning potential, the total cost of your education after financial aid, and your ability to repay the loan. Research different loan types, interest rates, and repayment plans to make an informed decision that aligns with your financial goals.

Is $70,000 in student loans a lot?

Whether $70,000 in student loans is “a lot” depends on your individual circumstances, including your expected income after graduation, your living expenses, and the interest rates and repayment terms of your loans.

For some career paths with high earning potential, $70,000 might be manageable, while for others, it could be a significant burden. It’s generally recommended to keep your total student loan debt below your expected first-year salary to help ensure manageable repayment. You might research the average salaries in your chosen field to determine if this amount of debt is sustainable for you.

How much is a $30,000 student loan per month?

The monthly payment on a $30,000 student loan can vary significantly based on the interest rate and repayment term. For instance, with a 10-year repayment plan and a 5.00% interest rate, your monthly payment would be approximately $318. With a 20-year term and 7.00% interest rate, your monthly payments would be around $232. Keep in mind that longer terms can result in lower monthly payments but more total interest paid.

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If you’re exploring career options, pharmacy might have popped up on your radar — and for good reason. Not only can pharmacists command a good salary, they also have job security, as the pharmaceutical industry is one that won’t vanish any time soon.

That said, how much does a pharmacist make? Is it worth all the trouble of going through pharmacy school to become one? Let’s find out.

What Are Pharmacists?

You’ve likely picked up a prescription or two at a pharmacy, but maybe you didn’t give any thought to the person behind the counter. This individual is your local pharmacist, and it’s their job to prepare and dispense prescription medications.

Pharmacist Job Responsibility Examples

In addition to doling out prescription drugs, pharmacists also consult with patients, provide instructions for how to take medications, and help patients find low-cost medications. Some also give health screenings and immunizations.

Keep in mind, a pharmacist often needs to be outgoing, since their work involves speaking with patients throughout the day. If that’s not your personality, you may want to look into jobs for introverts.

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How Much Is a Starting Pharmacist Salary?

As with most professions, pharmacists tend to earn more money as they gain more experience. But what is a good entry-level salary for pharmacists?

An entry-level pharmacist generally earns, on average, about $61 per hour. That’s $126,701 per year.

Of course, how much you can actually earn depends on where you live, what your duties are, and whether you work for an independent pharmacy or a chain. It can also help to research the highest-paying jobs by state.

Recommended: Is a $100,000 Salary Good?

What Is the Average Salary for a Pharmacist?

Now that you’ve seen what starting salaries are for pharmacists, let’s address the next question: How much money does a more experienced pharmacist make?

Generally speaking, pharmacists are usually paid by the hour. As of 2024, the mean wage for a pharmacist in the US is $65.97 per hour, according to the Bureau of Labor Statistics. That adds up to $137,210 per year.

What Is the Average Pharmacist Salary by State for 2024?

The amount you make will depend on where you live, among other factors. Here’s a look at the mean annual pharmacist salaries by state, according to May 2024 data from the Bureau of Labor Statistics.

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Pharmacist Job Considerations for Pay & Benefits

Where you live is one factor that can determine how much you earn as a pharmacist. Your on-the-job responsibilities may also play a role. For example, there are different job titles, and each has its own set of responsibilities, requirements, and salary ranges. Examples include:

•  Staff pharmacist

•  Pharmacy specialist

•  Clinical pharmacist

•  Pharmacy manager

•  Director of pharmacy

Some pharmacists may have roles and responsibilities beyond filling prescriptions, such as offering immunizations and health screenings. Some may be in charge of hiring and managing other employees. Some may work in traditional pharmacies, while others may work for companies focusing on chemotherapy, nuclear pharmacy, or long-term care.

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Pros and Cons of Pharmacist Salary

While being a pharmacist can be a rewarding job, there are potential drawbacks to keep in mind. Let’s look at some pros and cons.

Pros of Being a Pharmacist

Naturally, the competitive pay pharmacists often earn may be one reason to consider this career path. Because many pharmacists get paid by the hour, they’ll be compensated fairly for their time even if they work more than 40 hours a week.

Another perk is that you may have a flexible schedule that allows you to work part-time or during certain hours. There could even be opportunities to work remotely, which may be useful if you’re working in a rural area.

You might also be able to open your own pharmacy instead of working for someone else. This brings freedom and flexibility to you as a business owner.

Finally, you’ll be a valuable member of your community, since it’s your job to help people on their path to wellness.

Cons of Becoming a Pharmacist

If becoming a pharmacist was easy, everyone would do it! For starters, you’ll need to have about six years of education after high school. And the cost of pharmacy school can range anywhere from $34,000 to $43,000 a year for an in-state public college, or up to $92,000 a year for a private school.

Depending on your financial situation, this could require you to tap into savings or take out student loans. (Creating a budget while you’re in school or just starting out can help you keep track of where your money is going. A money tracker app can help make the job easier.)

Another possible drawback? Some pharmacies may not guarantee a certain number of hours a week, and in that case, being paid hourly may not come with the big paycheck you’d expect.

Also keep in mind that on the other hand, some pharmacists work long hours, which can have a negative impact on your health and mental wellbeing.

💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.

The Takeaway

If you’re looking for a rewarding and potentially lucrative job, becoming a pharmacist might fit the bill. You’ll help your local community get healthier, and depending on where you live and your level of experience, you could earn a good salary, too.

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With SoFi, you can keep tabs on how your money comes and goes.

FAQ

What is the highest pharmacist salary?

The state where pharmacists tend to earn the most is California. The mean annual income of a pharmacist there is $162,110.

Is it hard to be hired as a pharmacist?

Becoming a pharmacist requires six years of education after high school. The workload is challenging, and pharmacies looking to hire generally have high expectations of applicants.

What is a pharmacist’s salary in NY?

The mean annual salary for a pharmacist in New York is $136,020, according to the Bureau of Labor Statistics. However, salaries can vary considerably by region, experience, and level of responsibility.

Photo credit: iStock/ADragan

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

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