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Starting college comes with a lot of choices —- from what classes to take to how you’ll make new friends. One of the biggest decisions you might face is whether or not to join Greek life. Fraternities and sororities have a big presence on many campuses and you’ll probably hear plenty of opinions about them, both good and bad.

So how do you know if “going Greek” is right for you? Like most big decisions, it comes with pros and cons. Greek life can give you instant friendships, leadership opportunities, and even career connections, but it can also be expensive, time consuming, and involve negative aspects like hazing or excessive partying.

Before you rush or pledge, it’s worth weighing the pluses and minuses to see whether joining a fraternity or sorority fits into the kind of college experience you want to create.

What Is Greek Life in College?

Greek life refers to communities of students who often live together, volunteer, network, and build close friendships. These communities consist of sororities for women and fraternities for men.

While each chapter is unique, the main goal of sororities and fraternities is to foster connections, encourage leadership, and give back to the community.

Students who are interested in becoming members must apply and then go through an initiation process. Once accepted, they may live with their sorority or fraternity, usually in a house on campus, and participate in activities like sports, dances, parties, and community service opportunities.

Sorority and fraternity names consist of two or three Greek letters, like Phi Kappa Theta, Sigma Pi, or Delta Zeta. This is a nod to the first U.S. Greek letter society, Phi Beta Kappa, founded in 1776 at the College of William and Mary as a literary, debating, and social club.

Many students only know about sororities and fraternities from pop culture references like “Revenge of the Nerds,” “Animal House,” “Legally Blonde,” and “Old School,” which depict a perennial party. While there is some truth to that stereotype — and fraternities have come under fire for their alcohol use and hazing rituals — Greek life can be much more meaningful and beneficial than these portrayals.

💡 Quick Tip: SoFi offers competitives fixed- or variable-interest rates. So you can get a private student loan that fits your budget.

Upsides of Greek Life

Joining a fraternity or sorority comes with a number of advantages. Here’s a look at some of the perks.

Friends

Starting college can be intimidating, especially if you don’t know many people. Greek life gives you instant community. You’ll be able to bond with members through events, activities, and shared living, and likely build friendships that last long after graduation.

Networking Opportunities

Your chapter isn’t just a social circle, it can also help you develop a professional network. When you’re searching for internships or jobs, these connections can prove to be highly valuable. Plus, if you list your sorority or fraternity on your resume and a recruiter is a Greek life alumnus, that could open up a conversation and help you stand out.

Recommended: Penn State Out-of-State Tuition

Possibly Cheaper Housing

Living in college dorms can be pricey. If you are sharing a house with many members of a sorority or fraternity, you could potentially save money.

You may also save money by having access to a full kitchen, where you can make meals instead of purchasing a meal plan or eating at restaurants all the time.

Development of Leadership Skills

Sororities and fraternities need leaders who will come up with ideas for activities, pilot volunteering efforts, and recruit members.

If you step up and get involved, you’ll have the chance to take on new responsibilities and develop crucial skills that will be valuable when you graduate from college and start to look for jobs.

Volunteering Opportunities

Fraternities and sororities are often focused on philanthropy. From fundraisers to volunteer events, you’ll have plenty of chances to contribute to causes you care about — and that commitment can look great on a resume.

Potential Downsides of Greek Life

Of course, Greek life isn’t all parties and friendships. Here are downsides to weigh:

Cost

You typically need to pay membership dues each year you are a member of a fraternity or sorority, which can range from several hundred to several thousand dollars a semester. Chapter or national fees may also apply. In addition, you may have to chip in for party supplies, buy tickets to formals, and purchase/rent clothing for special events.

Recommended: Ohio State University Cost

Reputation

Greek life’s reputation can be a double-edged sword. While some chapters focus on academics and service, others are known for heavy partying. Hazing and alcohol-related incidents have even led to tragedies on some campuses.

If you do join, it’s important to choose a chapter that aligns with your values and to prioritize your safety and academics.

Time Commitment

Because Greek life involves so many events, and members are expected to participate, joining a sorority or fraternity generally requires a large time commitment.

Spending too much time on Greek life activities and not enough on studying or working at internships could have a negative impact on your future.

Determining Whether or Not to Join Greek Life

Joining a fraternity or a sorority can be a great way to make friends, build leadership skills, and give back to the community. But it’s not for everyone.

If you thrive in a busy, social environment and are willing to commit your time (and money), you may find Greek life incredibly rewarding. On the other hand, if the costs feel overwhelming, or if you’re worried about distractions, you might prefer to find community in other ways — through clubs, sports, or student organizations.

And if finances are a major concern, remember there are a number of ways to pay for college, including grants, scholarships, subsidized and unsubsidized federal student loans, and private student loans.

💡 Quick Tip: It’s a good idea to understand the pros and cons of private student loans and federal student loans before committing to them.

The Takeaway

A sorority or fraternity can provide camaraderie and enduring connections, and enhance a call for service and leadership. It can also be time consuming, expensive, and potentially distract you from your studies.

Ultimately, whether you join comes down to your priorities. For some students, it’s one of the best choices they make in college. For others, it’s not the right fit. The key is figuring out where you want your college experience to take you.

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 pros and cons of Greek life?

Greek life offers community, networking, leadership opportunities, and a strong sense of belonging. Members often benefit from social events, academic support, and lifelong friendships. However, it also comes with downsides such as time commitments, financial costs, and the risk of negative stereotypes surrounding fraternities and sororities. In some cases, hazing and party culture can overshadow the positive aspects. Overall, it’s a highly personal decision.

What are the disadvantages of being a member of a fraternity?

Joining a fraternity can provide a powerful support system through friendships, mentoring, and networking. Many fraternities emphasize leadership, philanthropy, and academic achievement, helping members grow both personally and professionally. The social opportunities can create lasting bonds, while alumni networks often open doors to internships and careers. For students seeking connection and growth, fraternities can offer benefits that can extend well beyond college.

Does Greek life look good on a resume?

Yes, Greek life can be a strong addition to a resume if highlighted correctly. Employers often value the leadership, teamwork, event planning, and organizational skills students develop through fraternity or sorority involvement. Holding officer roles or participating in philanthropy demonstrates responsibility and initiative. However, it’s best to focus on measurable achievements rather than just membership.

About the author

Julia Califano

Julia Califano is an award-winning journalist who covers banking, small business, personal loans, student loans, and other money issues for SoFi. She has over 20 years of experience writing about personal finance and lifestyle topics. Read full bio.

When you fill out the Free Application for Federal Student Aid (FAFSA®) form, one of the first things you’ll need to determine is whether you’re a dependent or independent student. Your dependency status not only impacts the information you need to report on the form, but also the type and amount of aid you may be awarded.

Dependent students must include both their own and their parent’s financial information on the FAFSA. Independent students, on the other hand, only need to report their own finances (and their spouse’s, if married).

Below, we break down what it means to be independent vs. dependent for FAFSA purposes.

The Difference Between Independent and Dependent Students

Your FAFSA dependency status determines whose financial information is considered when calculating your aid eligibility.

What Is an Independent Student?

An independent student is generally defined as someone who is not reliant on their parents for financial support and can therefore file their FAFSA without including their parents’ information.

You’re considered an independent student if you meet at least one of the following criteria:

•  Age 24 or older

•  Married

•  Enrolled in a graduate or professional program

•  A veteran

•  A member of the U.S. armed forces

•  An orphan

•  A ward of the court

•  A current or former foster youth

•  In a legal guardianship (current or past)

•  Have legal dependents other than a spouse

•  An emancipated minor

•  Unaccompanied and homeless or at risk of becoming homeless

💡 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.

What Is a Dependent Student?

If none of the independent criteria apply, you’re classified as a dependent student. Generally, dependent students are under 24 years old, unmarried, without dependents, and not veterans or active duty members of the U.S. armed forces.

If you are considered a dependent student, your parents’ information will be assessed along with your information to get a full picture of your family’s financial situation. Even if your parents do not intend to contribute to your education costs, their information will be used to determine what aid, if any, you receive. A dependent student is assumed to have the support of their parents.

How FAFSA Determines Your Status

Each year, the FAFSA asks a series of key questions to help students determine their official status. These questions change slightly each year, so be sure to read them carefully.

Here’s a look at the dependency status question on the 2025–26 FAFSA Form:

•  Were you born before Jan. 1, 2002?

•  As of today, are you married? (Answer “No” if you are separated but not divorced.)

•  At the beginning of the 2025–26 school year, will you be working on a master’s or doctorate program (such as an M.A., MBA, M.D., J.D., Ph.D., Ed.D., graduate certificate, etc.)?

•  Are you currently serving on active duty in the U.S. Armed Forces for purposes other than training? (If you are a National Guard or Reserves enlistee, are you on active duty for other than state or training purposes?)

•  Are you a veteran of the U.S. Armed Forces?

•  Do you have children or other people (excluding your spouse) who live with you and who receive more than half of their support from you now and between July 1, 2025, and June 30, 2026?

•  At any time since you turned age 13, were you an orphan (no living biological or adoptive parent)?

•  At any time since you turned age 13, were you a ward of the court?

•  At any time since you turned age 13, were you in foster care?

•  Are you or were you a legally emancipated minor, as determined by a court in your state of residence?

•  Are you or were you in a legal guardianship with someone other than your parent or stepparent, as determined by a court in your state of residence?

•  At any time on or after July 1, 2024, were you unaccompanied and either (1) homeless or (2) self-supporting and at risk of being homeless?

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Dependent Students

If you answered “No” to all of the questions above, you are considered to be a dependent student. This means that your Student Aid Index (SAI) will be based on both your income and your parents’ financial profile. While this may reduce your eligibility for need-based aid, your parents can access Federal Parent PLUS Loans and may qualify for education tax credits when they fill out their federal tax return.

If you are considered a dependent student by the FAFSA but are not in contact with your parents or have left home due to an abusive situation, you may qualify for a dependency override. In this case, you’ll want to fill out the FAFSA and select “Yes” to the “Do unusual circumstances prevent the student from contacting their parents or would contacting their parents pose a risk to the student?” question on the form. You’ll be considered provisionally independent. To complete your application, you’ll need to contact the financial aid office at the college you plan to attend to find out what supporting documentation you’ll need to submit directly to the school.

Independent Students

If you answered “Yes” to one or more of the questions listed above, you are considered to be an independent student. This means you only need to report your own finances (and your spouse’s, if applicable) on the FAFSA form. Being independent could increase your potential for financial aid, as your parents’ income and assets are not considered in the aid calculation.

💡 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.

When Federal Student Aid Falls Short

FAFSA-based aid is a great starting point, but it’s often not enough to cover the full cost of going to college. Here are some other funding options to explore:

•   Scholarships: There are numerous scholarships available through individuals, businesses, nonprofits, community groups, and professional associations. They may be awarded based on merit, financial need, athletics, field of study, religion, ethnicity, or other criteria, and do not need to be repaid. You can find out about scholarships through your high school guidance counselor, your chosen college’s financial aid office, and by using an online scholarship finder. “Start researching scholarships early,”advises Brian Walsh, CFP® and Head of Advice & Planning at SoFi. “Gathering the required documents and information to apply takes time, and early deadlines are common for large awards.”

•   Part-time jobs: Even if you weren’t awarded Federal Work-Study, you can still look for a part-time job on or off campus to help cover costs. Working can provide valuable experience and help reduce the amount you need to borrow. Your school’s career services office may be able to help you find a position. Summer jobs can also help you rack up extra cash to help pay for college.

•   Federal student loans: If you need to borrow money, it’s a good idea to exhaust all federal student loan options before turning to private loans. Federal loans often have lower fixed interest rates and offer benefits (like income-driven repayment and borrower protections) that may not be available with private loans. You’ll need to complete the FAFSA to be eligible for federal student loans.

•   Private student loans: If you still have a funding gap after exploring federal loans, private student loans can help cover the difference. These loans are offered by banks, credit unions, and other financial institutions. They are credit-based, so you may need a cosigner, especially if you have limited credit history. It’s a good idea to compare offers from different lenders, considering interest rates, fees, and repayment terms.

Recommended: Ohio State University Cost

The Takeaway

Understanding whether you’re considered a dependent or independent student for FAFSA purposes is critical because it directly affects how much financial aid you may qualify for. Dependent students will need to include their parents’ financial information, while independent students report only their own (and their spouse’s, if applicable).

If federal aid alone isn’t enough, you can also look into scholarships, part-time work, and responsible borrowing options to help cover the cost of your education. The more you understand your status and options, the better prepared you’ll be to create a solid financial plan for college.

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 better for a college student to file independent or dependent?

For the FAFSA®, you’re generally better off being classified as independent. As an independent student, you do not need to report your parents’ income and assets on the form, which could lead to more aid. However, you need to meet specific criteria, such as being over age 24, being in graduate school, being married, having dependents, or being a veteran. If you don’t meet any of these criteria, you’ll be considered a dependent student and must provide your parents’ financial information on the FAFSA.

Who qualifies as a dependent student?

For FAFSA® purposes, a student is typically considered a dependent if they are under age 24, unmarried, without dependents, and not veterans or currently serving in the U.S. military.

At what age are you considered an independent student?

In terms of financial aid, a student automatically becomes independent at age 24. Before then, students can qualify as independent only under certain circumstances, such as being married, having dependents of their own, serving in the military, being a veteran, or being an emancipated minor. If none of these special circumstances apply, a student is considered dependent until their 24th birthday, even if they live on their own and cover their own expenses.

About the author

Jacqueline DeMarco

Jacqueline DeMarco is a freelance writer who specializes in financial topics. Her first job out of college was in the financial industry, and it was there she gained a passion for helping others understand tricky financial topics. Read full bio.

Grad PLUS loans are federal student loans for graduate and professional students. Although Grad PLUS loans have higher interest rates and fees than some other types of federal student loans, they also have a major benefit — virtually no borrowing limits. You can borrow up to the full cost of attendance of your school, minus any other financial aid you’ve already received.

Read on for more on how Grad PLUS loans work, including their eligibility requirements, interest rates, and repayment options.

What Are Grad PLUS Loans?

If you’re planning to attend a graduate or professional program, a Grad PLUS loan (also known as a Direct PLUS loan) could help cover costs. Issued by the Department of Education, Grad PLUS loans are student loans designed for graduate and professional students.

PLUS loans are not the only federal loans available to you as a graduate student — you can also borrow federal Direct Unsubsidized loans. Direct Unsubsidized loans have lower interest rates and fees than PLUS loans, but they come with borrowing limits.

If you’ve hit your limit and need additional funding, a Grad PLUS loan could cover the gap. As mentioned above, you can borrow up to the full cost of attendance of your program, minus any other financial aid you’ve already gotten. This flexibility can be helpful for students who are attending pricey programs.

Recommended: How Do Student Loans Work? Guide to Student Loans

What Can Grad PLUS Loans Be Used for?

Grad PLUS loans can be used for tuition, fees and other education-related expenses. These expenses include,

•   Housing

•   Food

•   Textbooks

•   Computers and other supplies

•   Study abroad expenses

•   Transportation

•   Childcare costs

A Grad PLUS loan will first be disbursed to your financial aid office, which will apply the funds toward tuition, fees, room and board, and any other school charges. The financial aid office will then send any remaining funds to you.

Recommended: What Can You Use Student Loans For?

Who Is Eligible for Grad PLUS Loans?

To be eligible for a Grad PLUS loan, you must be a graduate or professional student enrolled at least half-time at an eligible school. What’s more, your program must lead to a graduate or professional degree or certificate.

You’ll also need to meet the eligibility requirements for federal financial aid (more on this below), as well as submit the Free Application for Federal Student Aid (FAFSA®).

Typical Grad PLUS Loan Requirements

Besides being enrolled in an eligible graduate or professional program, you need to meet a few other requirements to take out a Grad PLUS loan:

Meet the Requirements for Federal Student Aid

Since Grad PLUS loans are part of the federal student aid program, you must be eligible for federal aid to borrow one. Here are some of the criteria:

•   Be a U.S. citizen or eligible noncitizen

•   Have a valid Social Security number (with some exceptions)

•   Have a high school diploma, General Educational Development (GED) certificate or other recognized equivalent

•   Maintain satisfactory academic progress while in school

•   Not already be in default on a federal student loan or owe money on a federal grant

If you’re a non-U.S. citizen or have an intellectual disability or criminal conviction, additional requirements might apply.

Submit the FAFSA

You’ll need to submit the FAFSA before you can borrow a Grad PLUS loan. After applying to grad school, you can submit this form, free of charge, on the Federal Student Aid website or by mail. Since the FAFSA only applies to a single academic year, you’ll need to submit it every year you’re in school and want to receive financial aid.

Complete the Grad PLUS Loan Application

Along with submitting the FAFSA, you’ll also need to fill out a separate application for the Grad PLUS loan. You can find and submit the GRAD Plus loan application on the Federal Student Aid website, though some schools have separate processes. Your financial aid office can advise you on the steps you need to take.

If your application is approved, you’ll need to agree to the terms of the loan by signing a Master Promissory Note. If you haven’t borrowed a Grad PLUS loan before, you’ll also be required to complete student loan entrance counseling.

Not Have Adverse Credit History (or Apply With an Endorser)

While you don’t need outstanding credit to qualify for a Grad PLUS loan, you can’t have adverse credit. According to the Department of Education, you have adverse credit if one of the following applies to you:

•   You have accounts with a total balance greater than $2,085 that are 90 or more days delinquent

•   You’ve experienced a default, bankruptcy, repossession, foreclosure, wage garnishment, or tax lien in the past five years

•   You’ve had a charge-off or write-off of a federal student loan in the past five years

If you have adverse credit, you have two options:

•   Appeal the decision due to extenuating circumstances. For example, you could provide documentation showing that you paid off a delinquent debt on your credit report.

•   Apply with an endorser who does not have adverse credit. Your endorser will be responsible for repaying the loan if you fall behind on payments.

💡 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.

Grad PLUS Loans Interest Rates

Grad PLUS loans come with fixed interest rates that will remain the same over the life of your loan. They also have a disbursement fee, which is a percentage of your loan amount that gets deducted from your loan.

Congress sets rates and fees on federal student loans periodically. These are the current Grad PLUS loan interest rates and fees:

Repaying Your Grad PLUS Loans

Grad PLUS loans are eligible for a variety of federal repayment plans:

•   Standard repayment plan, which involves fixed monthly payments over 10 years.

•   Income-driven repayment, including Pay As You Earn (PAYE), Income-Based Repayment (IBR), and Income-Contingent Repayment (ICR). These plans adjust your monthly student loan payments to a percentage of your discretionary income while extending your loan terms to 20 or 25 years. If you’ve made on-time payments but still have a balance at the end of your term, it may be forgiven on the IBR plan only, as of late March 2025. (Forgiveness on the other IDR plans is currently paused.) The amount forgiven may be considered taxable income by the IRS.

•   Extended repayment, which extends your repayment term to 25 years and lets you pay a fixed or graduated amount.

•   Graduated repayment, which lowers your student loan payments in the beginning and increases them every two years. You’ll pay off your loan over 10 years, and your final payments won’t be more than three times greater than your initial payments.

Grad PLUS loans are also eligible for certain federal forgiveness programs, such as Public Service Loan Forgiveness.

Other Options to Pay for Grad School

Grad PLUS loans aren’t the only way to pay for graduate school. Here are some alternative options:

Direct Unsubsidized Loans

You can borrow up to $20,500 per year in Direct Unsubsidized loans as a graduate student with an aggregate loan limit of $138,500, including any loans you borrowed as an undergraduate.

Here are the interest rate and disbursement fee for graduate students:

Grants and Scholarships

Besides student loans, you can also pursue grants and scholarships for graduate school. You can find grants and scholarships from a variety of sources, including the Department of Education, your state, your school, or a private organization. By earning grants and scholarships, you might not need to borrow as much in student loans.

Private Student Loans

You can also explore your options for private graduate student loans from banks, online lenders, or credit unions. Some lenders offer interest rates that start lower than Graduate PLUS loan interest rates and don’t charge an origination fee.

Although private student loans aren’t eligible for federal repayment plans or programs, some lenders offer flexible repayment options or deferment if you need to pause payments. But, because private student loans aren’t required to offer the same borrower benefits as federal student loans, they are generally borrowed as a last resort option after all other sources of financing have been exhausted.

The Takeaway

If you’re looking for ways to pay for graduate school, a Grad PLUS loan could help. You can use this flexible loan to cover your school’s cost of attendance, as well as choose from a variety of federal repayment plans when it comes time to pay it back.

Alternative options to paying for school include federal Direct Unsubsidized loans, scholarships and grants, and private student loans.

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 kind of loan is Grad PLUS?

The Grad PLUS loan is a federal student loan issued by the Department of Education. It is designed specifically for graduate and professional students.

Is there a max on Grad PLUS loans?

There is virtually no limit on the amount you can borrow with a Grad PLUS loan. You can borrow up to your school’s cost of attendance, minus any other financial aid you’ve already received.

Can Grad PLUS loans be used for living expenses?

Yes, you can use Grad PLUS loans to cover your living expenses while at school. You must use your loan for education-related expenses, which can include housing, food, supplies, transportation, and other costs related to attending school.

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).

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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.

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SOISL-Q225-007

Whether it’s protecting personal belongings from fire or theft or serving as a source of liability insurance if a guest gets hurt inside the home, renters insurance can provide plenty of benefits for the tenant.

But can a landlord require renters insurance? The short answer is yes. Let’s take a closer look at the nuances of this coverage and why a landlord might want to make it mandatory.

Can a Landlord Require Renters Insurance in All States?

In most states, the answer is yes, they can require renters insurance. (Oklahoma may currently be an exception.) What’s more, landlords can usually determine a minimum policy amount that their renters must carry. When that happens, the landlord will likely be more concerned about the amount of the liability coverage a tenant has, because that can have a financial impact on the landlord if, say, damage from a fire or an overflowing bathtub occurs. They may be less concerned about the amount of personal property coverage that a tenant has in their renters insurance policy.

It’s important to note that while landlords are generally allowed to require tenants to have renters insurance, there are no states that require renters insurance. However, this could change, so check your state’s laws.

To get a good understanding of what a landlord requires for the apartment you want to lease, be sure to read the lease language carefully. It may contain a clause, for example, that requires a new tenant to provide proof of renters insurance within a certain period of time. If more clarity is needed, ask the landlord for an explanation before signing the lease.

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Reasons Why Landlords Require Renters Insurance

Mandating renters insurance can be part of a landlord’s tenant screening process, just like checking a renter’s credit scores may be. Buying and maintaining a policy could be a sign that they’ll be able to consistently pay the rent and are willing to take responsibility for the rented space and their belongings.

Requiring this type of coverage could also lower a landlord’s overall liability. Let’s say a tenant doesn’t have an insurance policy, and some of their belongings are stolen. That tenant may decide to sue the landlord to get the money to replace those items.

Similarly, if a tenant or their guest is injured on the property, they may choose to bring the landlord to court to help cover medical bills. It’s also possible that, if someone gets injured in a rented space and doesn’t have renters insurance, the hospital caring for the injured party might sue the landlord. Even if the landlord’s policy covers the hospital bill, this could result in higher insurance premiums for the landlord.

Here’s a related possibility: Suppose there’s a fire in an apartment complex and, because of smoke damage, tenants need to temporarily find other places to live. Tenants without renters insurance may not be able to pay for temporary lodgings and may attempt to get those funds from the landlord. In some states, the landlord may in fact need to provide relocation benefits for tenants who don’t have their own coverage. So, requiring a policy can shift part of the financial burden from the landlord to the affected tenants.

Continuing with the fire scenario, let’s say it’s one that was accidentally set by a tenant, and it damaged several parts of the building. Let’s also say that the landlord’s insurance policy will cover the costs, minus the deductible on the landlord’s policy. That can help to cover cleanup and remodeling expenses but the deductible can be significant — and the tenant’s renters insurance may cover the dollar amount of that deductible. This reduces the landlord’s out-of-pocket expenses, which can be a real plus for that landlord.

Recommended: What Does Renters Insurance Cover?

Proof of Insurance

If a landlord requires renters insurance, they may ask for proof of existence. Perhaps they’ll want to see a statement from an insurance company or a copy of the policy itself, though they may also simply take a tenant’s word for it.

Sometimes, a landlord will want to be listed on the policy as an “additional interest.” When that happens, the landlord will be notified if the policy coverage lapses because of non-payment or because the tenant cancels the policy.

Note that naming someone as an “additional interest” is different from naming them as an “additional insured.” The second term refers to people who are also covered by a tenant’s policy, perhaps a roommate or partner.

Securing a Policy

When deciding what policy to buy, it’s important to factor in the value of personal belongings that need to be covered and what is affordable. Different insurance companies offer different coverages at differing price ranges. After determining the value of personal belongings and budgetary constraints, it may be time to compare policies and see which ones fit in your budget.

The National Association of Insurance Commissioners (NAIC) says the average renters insurance policy costs between $15 to $30 per month. Compare that to the cost of replacing personal belongings, which would typically be much higher. And that’s not even factoring in the benefits of having liability coverage and additional living cost coverage, such as temporary lodging if you need to leave the rented space.

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Actual Cash Value Versus Replacement Costs

Some policies pay out the actual cash value of lost or damaged belongings, while others cover the full costs of replacing what was lost or damaged.

Let’s say that a three-year-old laptop was stolen from a tenant’s apartment. If that person’s policy uses cash value when reimbursing the tenant, the amount would be what the laptop originally cost minus any depreciation that took place over that three-year period. If the policy is a replacement cost one, then the tenant would be reimbursed what it would cost to get a similar laptop today.

Review the policy’s deductible. This is the amount that the policyholder is responsible for before insurance coverage applies. Typical deductibles fall around $500 or $2,000, although they may be higher. Some policies may offer deductibles that are a percentage of the policy’s coverage amount.

The Takeaway

Renters insurance can provide peace of mind to tenants in the event their property is stolen or damaged. It can also help lower a landlord’s overall liability and financial burden. Though there’s no federal law mandating renters insurance, landlords in most states are able to require tenants to have it. Before signing on the dotted line, double-check the lease agreement to confirm whether you need to purchase a policy. A typical renters insurance policy costs around $15 to $30 per month, but coverage and cost may vary.

Looking to protect your belongings? SoFi has partnered with Lemonade to offer renters insurance. Policies are easy to understand and apply for, with instant quotes available. Prices start at just $5 per month.

Photo credit: iStock/staticnak1983

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