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Your mind and body may be ready for a sunny beachside spring break in Cancun, but if you’re living that broke college kid life, you may imagine your spring break looking more like a week at home, scrolling through Instagram and binging Netflix.

However, it is possible to plan a spring break trip on a limited budget. And yes, even a college student’s budget can be stretched for spring break fun! If you’re wondering how to plan a spring break trip without living off instant noodles for the next month, we have some tips to help you get a well-deserved vacation from those long nights spent studying in your dorm room.

Keep reading for some of our best tips on making your spring break trip dreams happen on a budget.

1. Start Planning Early

Waiting until the last minute to plan a trip could mean missing out on cheaper flights, hotels, and even popular ticketed attractions. If you’re going to a hot destination during a peak travel season, which includes spring break for many destinations, then you could blow your travel budget on the flight alone, leaving you without enough money for food and lodging.

2. Make a Budget & Stick to It

Before you even leave for your destination, it’s smart to create a travel budget. What can you reasonably afford to spend on accommodations, transportation, entertainment, meals, and shopping? Having a budget could help you avoid splurging on expensive dinners or overspending at local shops.

Recommended: How to Save for a Vacation: Creating a Travel Fund

3. Find Off-Season Destinations

If Cancun for spring break is too pricey for your college student budget, don’t stress. There are a number of great destinations that are off-season in the spring, ranging from the more rugged Jackson County, North Carolina to the Big Apple.

4. Only Travel as Far as You Can Drive

It’s about the journey, not the destination, right? You can make that (semi) true by taking a road trip with a few friends. On a road trip, you don’t need to follow any set schedule. Since there’s no flight or train to catch, and often no hurry to reach a destination, you can make spontaneous decisions and discover hidden gems along the way.

5. Avoid Tourist Traps

Doing spring break on a budget generally means skipping touristy destinations like Miami, New Orleans, and Cabo. However, there are plenty of cheaper alternatives to these locations that can save you money and that will probably be far less crowded, too.

6. Reach out to Friends & Family

If you have friends or family in another city, reach out and ask if they’d be willing to host you. If they agree, you could get some free lodging and meals out of it. Plus, you’d be connecting with locals who could guide you through the city and give some tips on cool and free stuff to do that you might not have found otherwise.

Recommended: How to Balance the Urge to Travel and the Need to Save

7. Ditch the Plane Ticket

Planes and cars aren’t the only way to land at your tourist destination. You can do spring break on a budget by hopping on an Amtrak train or a Greyhound bus, both of which have destinations all over the country. The best part? You can catch up on some work, sleep, or relaxation while you enjoy the ride.

8. Don’t Forget about Cruises

You could spend a fortune going to just Miami or Los Angeles. Or, you could check out some cheaper cruise options that could potentially take you all over Alaska, the Caribbean islands, or a slew of other destinations for less. There are even cruise options designed specifically for college students.

9. Consider Pitching a Tent

Do you get motion sickness in cars or boats? With camping, your feet will be firmly planted on the ground, and your budget will also likely stay down to earth. You can camp out in many destinations across the U.S. and even abroad, be it under the stars near a national park or near a great fishing hole in the Carolinas.

10. Look For a Deal

Sites like Groupon and LivingSocial offer a number of travel and hotel deals both for individuals and for group travel. Checking out which hotels are offering promotions could help you save when booking accommodations. You can also find deals on attractions near where you’re vacationing, too.

11. Sign Up for a Spring Break Volunteer Experience

Many colleges offer a program called “alternative break,” which allows students to travel and volunteer during their spring break. If your college doesn’t offer any alternative break trips, you can still find some opportunities through organizations like Habitat for Humanity and United Way .

12. Be a Tourist in Your Own State

If airfare is out of the question for your spring break budget, a budget-friendly alternative could be touring your own state. You can take a spring break road trip around your state or even take multiple day trips, the latter of which could allow you to have most of your meals at home with no hotel needed.

13. Fly on Unpopular Days

No, it’s not just your imagination: There are some days that are cheaper to fly on than others. If you’re not tied to a set departure and/or return date, use the flexible date search on a travel or airline site. This can help you find the cheapest travel dates for your trip.

14. Sign Up for Price Alerts

One helpful way to ensure you’re getting the best possible deal on your trip is to sign up for price alerts, a free service offered by several travel companies, such as Kayak, Skyscanner, and Google Flights. These sites track prices daily and alert you in real-time when the price changes for a flight, hotel, or rental car you want.

15. Ask for Extra Snacks

If you’re flying to your destination, be sure to grab the airplane snacks. And if you like the snacks, ask for seconds! You may be able to snag a free snack to help tide you over between meals when you land. The worst thing that can happen is that they say no.

16. Consider Airbnbs or Hostels

For those looking for the best tips on how to plan a spring break trip, one not-so-obvious one may be skipping hotels altogether. Staying at an Airbnb or hostel could be a cheaper travel hack than even a budget motel, especially if you don’t plan on spending much time in your room anyway.

17. Use Public Transportation

While Uber may be one of the handiest apps to have while traveling, relying on ridesharing and taxis could end up costing you a small fortune, especially if you’re traveling in a big city. Using public transportation could cost you a fraction of the price of an Uber, plus it will allow you to explore more of your destination as you navigate around subway and bus stations.

18. Bring Your Own Food

Grocery costs may be on the rise, but the cost of dining out can really wreak havoc on your spring break budget. If you want to try the local cuisine, you can typically do so much cheaper by going to a local grocery store and buying premade meals there or, better yet, making your own meals using fresh, local ingredients. This option may only be available if you’re staying at an Airbnb or hotel with a kitchenette, though.

19. Eat Out for Lunch, not Dinner

Eating out for dinner will often cost you far more than eating out for breakfast or lunch. And if you decide to eat out for dinner still, skip the drinks and desserts. These items typically have higher markups than other items on the menu. Plus, when it comes to desserts, the quality (and quantity!) may not be worth it — many restaurants don’t even make the desserts they serve.

20. Ask About Complimentary Hotel Meals

Students looking for spring break trips on a budget won’t want to miss out on this tried-and-true travel budget saver: Before booking your hotel, ask if they have any complimentary meals, such as a continental breakfast. It may not be as fancy or Instagram-worthy as the hottest brunch spot in town, but it will likely be a lot better for your budget.

21. Use The Free Hotel Coffee

Most hotels offer free coffee either in the lobby in the mornings or through small coffee makers in your room. It may not be as fancy as your usual Venti Coconutmilk Latte with two pumps of salted caramel, but it won’t cost you anything.

22. Look out for Free Samples

Looking to score some more free snacks? Add local farmers’ markets to your itinerary. Many markets are full of free samples, so you may even be able to scrounge together a free lunch. You may also be able to score free swag, like t-shirts and reusable bags, from local vendors and businesses, your hotel, or the local visitor’s center.

23. Prioritize Free Activities

Sure, you can spend $50 for a museum ticket. Or, you could search online for some free museums nearby. Many hot spring break destinations offer free walking tours, free museum days, and a plethora of other free activities, such as parks and beaches.

24. Find a Travel Buddy (or Four!)

You’ll find that going on a budget-friendly spring break trip can be a lot easier if you team up with friends. Pooling your college budgets together may even help you to afford nicer accommodations or a more far-flung destination.

25. Cash in Credit Card Rewards…

If you have a rewards or cashback credit card, you may want to save up your points to help fund your epic spring break. Having a travel rewards card can be an easy way to save on travel, especially if you’re able to use that card on purchases before heading out on vacation, which could help you build up even more rewards points.

26. …And Earn More Rewards While Traveling!

Using your rewards credit card on vacation may not help you save for your current trip. But if you rack up more rewards during your trip, you’ll already have a new vacation fund started before you even come back from spring break.

27. Research Student Discounts

Catching a movie or eating out during spring break? Ask about a student discount! You may be able to score some sweet savings even before your vacation, as companies like Expedia often offer student-only travel deals. You can also try StudentUniverse , which helps students get discounts on hotels, airfare, and more.

28. Ask About Membership Discounts

A ton of college discounts exist, but don’t rule out membership discounts you could get from family members. For instance, Costco, Sam’s Club, AAA, and AARP all offer travel discounts to their members. It may be worth asking some relatives about their memberships to save big on your spring break trip.

29. Avoid Transaction Fees

Transaction fees can be a real budget-killer if you’re traveling abroad. And even if you’re stateside, ATM fees can also put a dent in your spring break savings. So you may want to ask your card issuer about fees and plan accordingly to make sure you have enough cash on hand to avoid them.

30. Use Hotel Toiletries

TSA-approved toiletries can be overpriced, and buying them when you arrive at your destination may also mean overpaying for toiletries that you have loads of at home. The best alternative? Decant your own shampoo and conditioner into smaller bottles you can snag at The Dollar Store. Or, better yet, just use the hotel toiletries. They may not be what you’re used to, but your budget will thank you.

The Takeaway

Wondering how to plan a spring break trip on a budget? It may not be as hard as you think. If you’re willing to try off-peak destinations and hunt for discounts, you can save a ton of cash. Spring break trips on a budget don’t have to be a drag, either. You can still go to popular destinations if you create (and stick to) a spring break travel budget. Using rewards and cashback cards can also help you save on airfare and other travel expenses.

SoFi Travel has teamed up with Expedia to bring even more to your one-stop finance app, helping you book reservations — for flights, hotels, car rentals, and more — all in one place. SoFi Members also have exclusive access to premium savings, with 10% or more off on select hotels. Plus, earn unlimited 3%** cash back rewards when you book with your SoFi Unlimited 2% Credit Card through SoFi Travel.

Wherever you’re going, get there with SoFi Travel.

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Photo credit: iStock/onurdongel

**Terms, and conditions apply: The SoFi Travel Portal is operated by Expedia. To learn more about Expedia, click https://www.expediagroup.com/home/default.aspx.
When you use your SoFi Credit Card to make a purchase on the SoFi Travel Portal, you will earn a number of SoFi Member Rewards points equal to 3% of the total amount you spend on the SoFi Travel Portal. Members can save up to 10% or more on eligible bookings.
Eligibility: You must be a SoFi registered user.
You must agree to SoFi’s privacy consent agreement.
You must book the travel on SoFi’s Travel Portal reached directly through a link on the SoFi website or mobile application. Travel booked directly on Expedia's website or app, or any other site operated or powered by Expedia is not eligible.
You must pay using your SoFi Credit Card.
SoFi Member Rewards: All terms applicable to the use of SoFi Member Rewards apply. To learn more please see: https://www.sofi.com/rewards/ and Terms applicable to Member Rewards.
Additional Terms: Changes to your bookings will affect the Rewards balance for the purchase. Any canceled bookings or fraud will cause Rewards to be rescinded. Rewards can be delayed by up to 7 business days after a transaction posts on Members’ SoFi Credit Card ledger. SoFi reserves the right to withhold Rewards points for suspected fraud, misuse, or suspicious activities.
©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender. NMLS #696891 (Member FDIC), (www.nmlsconsumeraccess.org).

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

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

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

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A high-yield checking account is a secure place to deposit, store, and withdraw money, but with an enhanced interest rate vs. other similar accounts. Typically, money in a checking account doesn’t earn any interest — or maybe a nominal fraction of a percent.

With a high-yield checking account, there’s the potential to turn your regular deposit account into a passive income machine. While it’s unlikely to make you rich, a high-yield checking account can help pad your pockets with a few extra interest dollars, which can add up over time.

However, these accounts can come with certain conditions that may or may not make them the right choice for you. Here’s what you need to know.

How High-Yield Checking Accounts Work

High-yield checking accounts, as their name implies, are checking accounts that offer a high “yield,” or interest rate, on the balance held in the account.

Whereas the national average for an interest-bearing checking account is about 0.07% APY (annual percentage yield) per the FDIC, a high-yield account might offer 3% to 5% APY or even higher — which still might not make you a fortune, but is a significant upgrade and on a par with some savings accounts.

High-yield checking accounts make it possible to create a passive income stream, albeit a small one, just by holding money in your checking account (which you likely already do). A high-yield checking account can augment interest earnings from other financial products you may hold, such as a high-interest savings account or investments like high-yield bonds.

However, there can be account minimums to contend with or potential fees.

Does a High-Yield Checking Account Come With Fees?

Although some high-yield checking accounts come with monthly maintenance fees that could easily eclipse whatever interest you stand to earn, these fees can commonly be waived so long as you maintain a certain minimum monthly balance or meet other requirements. These may include making a certain number of debit card transactions or receiving a certain threshold in direct-deposit income each month.

These days, there are even some free high-yield checking accounts — usually offered through online banks — but the level of interest you’ll earn may depend on your ability to meet the same kind of transaction minimums we just mentioned. (If you don’t meet the requirements, you might not earn any interest at all.)

So, in short, while you might not have to pay for your high-yield checking account, you’ll likely need to perform the basic minimum monthly transaction requirements in order to glean the full benefits of the account.

Top 3 Pros of a High-Yield Checking Account

High-yield checking accounts can be very beneficial — here’s how.

1. More Earnings

These accounts offer an opportunity for interest earnings simply by holding a checking account. In some cases, the interest rate may rival that of certain kinds of savings accounts.

2. Motivation to Keep More in Your Account

These high-yield checking accounts can incentivize account holders to keep a higher minimum balance due to interest-earning requirements — which can help you generate a cash cushion.

3. Availability

These accounts are becoming increasingly available, especially thanks to the proliferation of online-only banks. You likely don’t need to invest much time and energy in research when looking for one.

Cons of a High-Yield Checking Account

On the other side of the coin (pun totally intended), high-yield checking accounts can have their drawbacks.

Transaction Requirements

These high-yield accounts may come with transaction requirements to secure interest earnings. If the account holder doesn’t meet them, little or no interest will be earned. These obligations might suit your money style, or they might prove to be a major hassle.

Modest Interest (If We’re Honest)

Many interest-bearing accounts generate just a fraction of a percentage in interest. Even the highest-yield checking accounts currently only offer about 5.00% APY. Yes, every little bit helps but this certainly isn’t enough money to retire on.

Additional Fees

In some cases, high-yield checking accounts may come with fees. Waiving them may require holding a significant minimum monthly balance — which can be challenging for individuals and families living paycheck to paycheck.

Here, you can review the pros and cons again in table format:

Pros of High-Yield Checking Accounts	Cons of High-Yield Checking Accounts
Potential to earn interest on checking, which normally offers little or no earning potential	May have many monthly transaction minimums to meet in order to qualify for interest earnings
Can incentivize account holders to keep more money in their accounts	May have fees that can only be waived by maintaining a significant minimum monthly balance or meeting minimum transaction requirements
Are increasingly available — and increasingly fee-free — from online banks	Even the best high-yield checking accounts typically offer far less than the average return on stocks and bonds (though when FDIC-insured, these checking accounts can be a safer investment vehicle)

Recommended: What Is a Certificate of Deposit (CD)?

Is a High-Interest Checking Account Worth It?

Whether or not a high-interest checking account is worth it will probably depend on a couple of key factors.

•   First of all, how high is the interest rate? If it’s just a fraction of a percentage above the norm, it may not be worth it. But if it’s a multiple of the standard rate, it might be a good way for your money to make money.

•   Next, what fees or minimum requirements are involved? If your money would make $10 more in interest per year in a high-yield account but you need to tie up funds that could be working harder elsewhere, then it’s probably not a money-wise move.

Factors to Look For in a High-Yield Checking Account

If you’re shopping for a high-yield checking account, consider these factors:

Interest Rate

Of course, you will likely want to shop around and see what are the highest rates available for a checking account. Currently, the highest rates are 5.00% or slightly higher.

Minimum Balance

With this kind of checking account, you may be required to make a specific size of deposit to open the account. You may also need to keep a certain balance in order to earn the high interest rate or to avoid fees. If that’s the case, make sure you can meet that number.

Fees

In addition, when opening a checking account, be sure you understand what fees might be charged. These can include maintenance, overdraft, ATM, and foreign transaction fees, among others. You’ll probably want to avoid being charged fees so that they don’t eat away at the interest you are earning. Online banks may be more likely to waive such fees.

How to Qualify for High-Yield Checking Accounts

In order to qualify for a high-yield checking account — and actually get the benefits — you’ll need to be able to fulfill whatever that account specifies as far as transaction requirements or minimum opening deposits.

In addition, if your banking history is marked by overdrafts and other negative factors, this may be reported by ChexSystems, which is kind of like a credit score bureau but for banking. If you have many negative factors (unpaid fees, say, or many overdrafts), you may not be able to qualify for a high-yield checking account — or other types of deposit accounts, either. (If your ChexSystems report contains errors, you can always dispute false information with ChexSystems online.)

How to Open a High-Yield Checking Account

Now that you know what it is, you may wonder how to open a high-yield checking account. The process is similar to opening any other type of account. You’ll be asked to provide:

•   Basic personal information, such as your name and address

•   Proof of address (such as a utility bill)

•   Government-issued photo ID

•   Your Social Security number or other taxpayer identification number

In addition, your chosen bank may also require a certain minimum opening deposit, which you’ll need to provide to activate the account. The bank will offer specific details as far as what documentation is required and how to deliver it.

High-Yield Checking Accounts vs High-Yield Savings Accounts

If you are comparing high-interest checking and high-yield savings accounts, you will likely want to consider the following points:

•   A high-interest checking account does generate money on your deposit, but it may come with minimum transaction or balance requirements. These could be difficult for some people to meet.

•   A high-interest savings account can offer good earning power, but the number of transactions you are allowed could be limited. Although Regulation D, which limits savings accounts to six transactions a month, was largely suspended since the pandemic, some financial institutions may still apply this rule and charge fees if you conduct more transfers.

Depending on your needs, one of these may be a better option than the other. Also, it is likely to be easier to find a solid interest rate with a high-yield savings account than with the checking variety. In other words, many high-interest checking accounts don’t offer all that much earning power.

Opening a Checking and Savings Account With SoFi

A high-yield checking account is a great way to augment whatever passive income you might earn from savings accounts, investments, and other holdings. Some interest is better than none, after all — every little bit of interest earned counts.

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

Is a high-yield checking account worth it?

This all depends on whether or not you can meet any minimum monthly transaction requirements. If you can fairly easily do so, a high-yield checking account is an easy way to earn passive income just by keeping an active bank account. But if you can’t, you might not earn any interest at all — or even pay additional fees for the account.

What is the difference between a high-yield checking and savings account?

A high-yield checking account is designed to be the hub of your financial life and typically doesn’t have any limits on the number of transactions you may make; savings accounts may restrict this. However, this kind of checking account likely pays less interest than a high-yield savings account, which may do a better job of helping you generate passive income.

Can you withdraw money from a high-yield savings account?

Yes, you can withdraw money from a high-yield savings account. However, there may be restrictions on how many transactions you can make per month. Going over that number could result in fees or the account being converted to a checking account.

What bank has the highest checking interest rate?

Currently, some of the banks offering the highest checking interest rates are Axos Bank, Presidential Bank, Heritage Bank, and Quontic Bank.

Can you ever lose your money with a high-yield savings account?

A high-yield savings account is typically a very safe place to keep your money, especially if it’s FDIC- or NCUA-insured. The risk of losing money is extremely low.

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Photo credit: iStock/MicroStockHub

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.

Our account fee policy is subject to change at any time.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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

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College tuition inflation since 1980 has been rising. In fact, widely cited statistics have consistently shown college tuition rising faster than inflation.

It’s no secret: College tuition is on the rise, and it has been for years. According to the most recent data from the National Center for Education Statistics, during the 2021-2022 academic year, tuition and fees costs at undergraduate institutions were:

•   $9,700 at public institutions

•   $17,800 at private for-profit institutions

•   $38,800 at private nonprofit institutions

Between 2008-2009 and 2018-2019, costs rose 28% at public institutions and 19% at private nonprofit institutions. However, the costs for private for-profit institutions have reduced 6% in 2018-2019 compared to 2008-2009.

In comparison, public institutions cost $9,100 in 2010-2011, private for-profit was $19,400, and nonprofit institutions cost $34,000 in the same year, according to NCES , a subagency of the U.S. Department of Education.

Why has college tuition outpaced inflation, anyway? We’ll walk you through a complete guide to understanding college tuition vs inflation and the reasons college tuition has outpaced inflation over time.

What Is the College Tuition Inflation Rate?

First of all, inflation refers to a decrease in how much individuals can purchase with their money, based on increases in the prices of goods and services. According to Macrotrends, the general U.S. inflation rate for 2022 was 8%. Inflation peaked at 13.55% in 1980, at its highest levels since 1960.

Each college has its own tuition rate increase per year, so to get an accurate measure of an individual college’s tuition inflation rate, you can use the Bureau of Labor Statistics (BLS) inflation rate calculator to calculate the current inflation of college tuition rate for each institution based on previous tuition costs.

Ultimately, the average cost of tuition has increased nearly 180% over the past 20 years, even after accounting for inflation.

How Does Inflation Affect College Tuition?

When the cost of goods goes up, colleges and universities offset the increased cost of operating by increasing tuition costs.

The Higher Education Price Index (HEPI), which measures the price changes of items that allow universities to stay afloat, doesn’t align exactly with the Consumer Price Index, which refers to what consumers pay for goods.

It can be difficult to make an apples-to-apples comparison between rising tuition at colleges and universities and changes in inflation because the HEPI is affected by more than just the cost of goods. For example, administrators, professors, financial aid professionals, admission counselors, and others also require salary increases on top of the miscellaneous expenses associated with keeping college and university facilities running.

Why Is the Cost of College Rising?

There are other reasons that cause tuition, room, board, and fees to increase from year to year. In the next section, let’s explore the reasons that it becomes more expensive to run a school. We’ll discuss state funding availability, demand, and financial aid.

Less State Funding

Declining state funding has influenced tuition costs at state universities as health care and pensions increase for state employees.

As a direct result of the last two economic recessions, education appropriations remain 6% and 14.6% below 2008 and 2001 levels, respectively, according to the 2022 State Higher Education Finance (SHEF) report produced by the State Higher Education Executive Officers Association (SHEEO).

However, state funding for financial aid has increased steadily for two decades. State and local funding reached $100 billion for higher education for the first time in fiscal 2019.

More Demand

As demand rises, costs increase as well. More than five million more students attended U.S. colleges in 2017 than in 2000, though between fall 2010 and fall 2021, total undergraduate enrollment decreased by 15% (from 18.1 million to 15.4 million students), according to the most recent data from NCES.

Despite recent statistics, it’s still evident that the demand for higher education has continued to increase over the past few decades. The dependence on a highly skilled workforce and growing wage differences between college and high school graduates means more students choose to attend college and drive up the demand for higher education. Higher education prices must increase in response to a growing student population.

More Federal Aid

The 1987 Bennett hypothesis (named after President Ronald Reagan’s secretary of education, William Bennett), stated that colleges will raise tuition when financial aid increases, especially subsidized federal loans that offer low interest rates. In other words, the theory was that colleges can raise prices because federal financial aid will cover the excess costs and students can offset the cost increase with federal student loans.

Is the Bennett hypothesis still a worry today?

The New York Federal Reserve compiled a 2015 study that supports that finding. It found that student credit expansion of the past fifteen years has risen with college and university tuition.

Why Has College Tuition Outpaced Inflation?

It’s not easy to pinpoint one single reason for the rise in college tuition — you might be quick to blame governments that face deep deficits and cannot subsidize the full costs of higher education. However, the truth is that the costs of outpaced inflation are multifaceted.

Colleges often attempt to raise tuition to appear competitive with similar institutions, increasing costs across the board. University presidents also face enrollment demands and increases in HEPI also inflate budgets. That’s why high school students, together with their families, may want to carefully plan for the costs of attending a particular institution.

Some options for students who are looking into financing their education might include finding work during the summer, applying for financial aid, or looking into payment tuition plans.

College Tuition Inflation Since 1985

According to data from the NCES, since 1985 the average college tuition at all institutions has increased nearly $20,000 from $4,885 to $24,623 during the 2018-2019 school year. That number is even higher when considering the cost of attending a four-year institution, which in 1985 was $5,504 and during the 2018-2019 school year increased to $28,123

College Tuition vs Inflation

The increase in college tuition and fees have outpaced the rise of inflation for decades. According to Forbes, the cost of attending a four-year college or university during the 2021-2022 school year was increasing at double the rate of inflation. The cost of attending a two-year community college is increasing a third faster than the rate of inflation.

However, in light of the COVID-19 pandemic, this has changed slightly. From the 2020-2021 school year and the 2021-2022 school year, tuition and fees increased by about 0.6% on average, while overall prices in the U.S. increased by 3.2%, according to Bloomberg based on data from the BLS.

The Takeaway

College tuition has increased dramatically — increasing by nearly 180% in the past 20 years. The reasons for such an rise in tuition can be attributed to a variety of factors including less state funding, an increase in demand, and even an increase in the amount of federal aid awarded.

Despite the seeming downsides to inflation and college costs, SoFi can offer some major perks to help you pay for school with our private student loans. Note because private student loans don’t offer the same benefits as federal student loans (like income-driven repayment options), private student loans are generally considered only after students have carefully reviewed all other sources of funding and financial aid.

But, if private student loans seem like an option, you can check your rates and apply in minutes and easily add a cosigner if you so choose.^* Borrowers can choose from four flexible repayment options and there are no fees.

Get a quote for a private student loan in just a few minutes.

Photo credit: iStock/TARIK KIZILKAYA

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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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If you’re applying to business school and want to earn an MBA, you likely understand the importance of doing well on the Graduate Management Admission Test, or GMAT™. Strong scores may help you get into your dream program.

The three digit number that qualifies as a good score can depend on how competitive the program you’re applying to is. In general, a 660 or higher is considered a good GMAT score, but in some cases, over 700 may be needed.

In addition, schools take a look at your unique background when evaluating your application to help them build a well-rounded student body. As a result, what qualifies as a strong score varies by school and by applicant. Take a closer look here: Learn more about the GMAT, scores, and applying to business school.

How Is The GMAT Scored?

So if you’re deciding whether getting an MBA is worth it, you’re probably curious what score you’d need to be accepted.

Before considering what is a good GMAT score, know that the possible range is from 200 to 800. On average, test takers score 582, and half of all GMAT takers score between 400 and 660, according to the Graduate Management Admission Council™ (GMAC), which administers the exam.

Generally speaking, a good GMAT score is in the 660 to 800 range. For more competitive programs, you may want to aim for a score over 700. What is the highest GMAT score — a perfect 800 — is difficult to achieve, but can potentially counteract other weak points in a student’s application.

After taking the GMAT, students will receive a score report, which will feature five different numbers:

•   Total score

•   Quantitative score

•   Verbal score

•   Integrated reasoning score

•   Analytical writing assessment.

Of those five the three that are most important are usually the total, quantitative, and verbal scores.

Here’s a breakdown of how each is calculated, according to The Princeton Review®:

Section	Score Range	How the Score Is Calculated
Total	200 to 800	This score is reported in increments of 10 and is calculated based on performance in the verbal and quantitative reasoning sections.
Quantitative	0 to 60	Based on the number of questions you answered, how many you answered correctly, and how difficult the questions you got right are. Reported in increments of one.
Verbal	0 to 60	Based on the number of questions you answered, how many you answered correctly, and how difficult the questions you got right are. Reported in increments of one.
Integrated Reasoning	1 to 8	Based on the number of questions you answered correctly, and reported in increments of one.
Analytical Writing Assessment	0 to 6	Based on an average of two scores assigned by two readers, and reported in increments of 0.5 points.

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How to Figure Out Your GMAT Range

As mentioned above, the full GMAT range goes from 200 to 800. Though a score of 700 or more puts you in more competitive standing, what functions as a good score is relative. In other words, a good score for you is the one that helps you get into the program of your choice and advance your career goals.

•   Students interested in attending a top B-school will generally need a high score. For example, 2025 incoming full-time MBA students at Stanford University had average GMAT scores of 738.

•   However, if you’re interested in a less competitive program, you may be just fine with a score in the 500 to 600 range.

Here’s another way to look at it: What is a high GMAT score for someone applying to a less competitive B-school may be seen as low to someone applying to a top-tier program.

Before taking the GMAT, think about your career goals. What type of program do you want to attend to achieve your business objectives? Does the MBA program’s affordability factor into your decision-making process? Do you have the potential time and money required to train up to earn a truly lofty GMAT score?

•   For example, someone aiming to be CEO of a Fortune 500 company, may want to attend a top-rated school.

•   Those planning to lead a smaller business or even start their own enterprise might pursue a less competitive program.

To figure out just how competitive your scores need to be, research the programs you’re interested in. Some schools will post the average GMAT score of their students, which can help you see what you likely need.

It may also help to reach out to school admissions, alumni, and current students to find out what factors have a big impact on admissions.

Recommended: How Soon Can You Refinance Student Loans?

Researching Average Scores

When thinking about test scores, it’s possible to get too narrowly focused on that one number. Schools are looking at a student’s complete application to determine whether they’ll be a good fit.

However, you can certainly get a better idea of the types of students your target schools are admitting by researching average GMAT scores.

The easiest way to do this is to log on to the school’s MBA class profile web page, which may give you all sorts of information. You’ll likely find everything from the average GMAT test score to the number of applicants versus the number of enrolled students to demographic information.

Keep this in mind: The total score isn’t the only thing that schools look at, and the weight given to each of the five scoring sections on the test may vary from school to school.

For example, an MBA program with a focus in data science might zero in on your quantitative score more than other programs. Reach out to school admissions offices to find out if they give special weight to a particular score section.

Knowing the average scores of your target program can help you understand how competitive your score needs to be.


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How to Prepare for the GMAT

As you prepare for the GMAT — and to achieve your target score — it can be a smart move to give yourself a good amount of time to study. You may want to begin the process as much as six months in advance of taking the test. Common test prep advice suggests that it may take 100 to 120 hours or more of studying and taking practice tests to adequately prepare.

Keep in mind, you may be in school or working at the same time, researching graduate school scholarships, and living daily life. You don’t want to be stuck cramming for this test.

Set up a study schedule. Start by setting up a calendar on which you schedule study dates and times to take practice tests. Resist the urge to procrastinate.

Review the material for each section of the test at a time. You can access free practice tests online that give you an insight into the format and the types of questions you’ll be asked. Don’t get overwhelmed by trying to digest all sections at once.

Practice tests can help you identify areas that may require extra studying. They can also help you practice pacing. The GMAT is a timed exam, and time management is critical to finishing.

Recommended: Tips to Lower Your Student Loan Payments

Unofficial Scores: To Accept or Cancel?

When you complete your test, you’ll typically be shown your unofficial score right away and given a chance to accept it or cancel. You’ll only have two minutes to make the decision once you’re finished. You may, for example, cancel your score if you don’t meet a preset target.

It can also help to familiarize yourself with the application policy at your target(s) school. Some schools prefer to see every GMAT score, while others only request the top score.

Even if you accept your score (you’ll get your official score in about 20 days), you still have 72 hours to cancel it online if you change your mind. What’s more, if you cancel your score, you can study areas where you were weak and retake the test after 16 days.

If you feel as if you could use guidance as you navigate the test-taking and application process, some aspiring business students choose to hire an MBA application consultant.

What Business Schools Look At In Addition to the GMAT

A GMAT score that is on par with a program’s enrolled students can help demonstrate you are prepared for the academic rigors of the program. What’s a good GMAT score will, as noted above, vary depending on the school you want to attend.

That said, business schools look at other factors as well, including:

•   Gender

•   Demographics

•   Your resume.

In particular, they may be looking for signals that students have what it takes to become good managers and business leaders. They may examine previous accomplishments, quantifiable achievements, and progression in a chosen career path.

But what about paying for grad school? That can impact which schools you may decide to apply to and which offer you accept. There are a variety of programs, from in-person to online, as well as courses of study designed for people who are already out in the work world and holding down a job.

As you consider all this, you will likely want to pay attention to the price tag. Especially if you will be in school full-time and not earning any money, it’s wise to consider the true cost of an MBA degree.

As you think about how to pay for an MBA, you may want to investigate any scholarships and grants you might qualify for.

The Takeaway

When applying to a business school, it’s critical to understand average GMAT scores, so you have a target to help you focus your studies and prepare for the test. The average score is currently 582, but what’s a good GMAT score may be 660 or even 700 or above, depending on the program to which you are applying.

If you are accepted to a business school program, you may need to take out student loans to pay for your education. After graduating, some students may refinance their student loans, which can help them secure lower payments, but if you refinance for an extended term, you may pay more interest over the life of the loan. Also, refinancing federal loans means they’ll no longer qualify for federal benefits or protections, so it may not always make sense to refinance.

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

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

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If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.

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

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

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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