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If you’re young and looking to access and build credit, opening a credit card can be a great step. However, you need to be at least 18 years old to open your own account. If you’re under the age of 18, you can’t open your own credit card, but you can be an authorized user on someone else’s account.

Even if you’re old enough to get a credit card, when you’re under the age of 21, you may face additional requirements when applying. Read on for tips on getting a credit card when you’re young and options you might consider to be able to start building your credit.

At What Age Can You Get a Credit Card?

To open your own credit card, you must be at least 18 years old.

However, if you’re between the ages of 18 and 20, you may encounter stricter verification requirements, including showing proof of ability to repay, such as through income, or getting a cosigner. This is due to regulations from the Credit CARD Act of 2009, which is intended to protect young consumers from taking on more debt than they can handle.

After age 21, these regulations won’t apply to you, but card issuers may still review your income as part of your application. It’s also important to pay attention to the terms and conditions of the credit card, such as the APR on a credit card, as you consider your credit card options and apply.

If you’re younger and have a limited credit history, you may only get approved for a card with a higher APR. Do your research before applying to have an idea of what is a good APR on a credit card.

Tips for Getting a Credit Card When You’re Young

Once you understand what a credit card is and how credit cards work, you may see the appeal of a credit card and want to open one. If you’re under the age of 18, the best things you can do to work toward being able to get your own credit card are to start building credit and to learn the basics of financial management.

Start Building Credit

Building credit when you’re young may be hard, especially if you’re under 18 and not yet eligible for your own credit card. One way to do so, however, is by becoming an authorized user on a credit card account.

A responsible parent or guardian can add you as an authorized user for their account, even if you’re still under the age of 18. Being added to the primary cardholder’s credit history can help build your credit.

Learn the Basics of Financial Management

It’s also important for young people to learn the basics of financial management. Learning about things like budgeting, credit card interest, and credit scores before you even own a credit card can help put you on the path to financial success. That way, when you do eventually get your own credit card, you’ll know how to stay on top of credit card minimum payments and avoid debt.

This can also be a good time to familiarize yourself with common financial scams, such as credit card skimmers, so you’ll know what to be aware of when you do get your own card.

How to Get a Credit Card If You Are 18 to 20 Years Old

Many young people between the ages of 18 and 20 are attending college or trade school or working. They may not have a lot of income yet, and their credit history may be limited. Still, first-time cardholders do have options for getting a credit card, which can be an important step toward building their credit history and score.

Secured Credit Cards

One option is secured cards, which are a type of credit card that require the cardholder to make a refundable security deposit. The security deposit typically becomes the amount of the card’s credit limit.

Secured cards are often marketed toward people who want or need to build their credit, so they can be a great choice for young people who are age 20 and under. Once you make the initial minimum security deposit (which usually serves as your credit limit), you can use your secured credit card in the same way that you would use any other credit card. Like any other credit card, your credit card will have a credit card expiration date and a CVV number.

A few points to note:

•   Since your credit limit is often equal to the amount of your security deposit, secured credit cards often don’t have very high credit limits compared to the average credit card limit. However, having a lower credit limit can help prevent young people from overspending.

•   With a secured card, your money is tied up temporarily in the security deposit. While you get your security deposit back when you close or upgrade the account, that’s money you otherwise can’t use in the meantime.

Become an Authorized User

Young cardholders could also become an authorized user, which is someone who’s added to a credit card account with authorization to use that account. The authorized user typically has their own card and can use it to make payments as usual. However, only the primary account holder is held responsible for payments.

The authorized user benefits from this arrangement because the primary cardholder’s account history and activity are reported on the authorized user’s credit report, which can help build their credit history.

Apply for a Student Credit Card

Student credit cards are designed and marketed for students roughly between the ages of 18 and 22 years old. Students generally have different needs than other credit card customers, so it may make sense for them to get a credit card designed specifically for them.

As an added bonus, some students may qualify for credit cards with rewards, such as cashback on categories that students may spend more on, like restaurants and grocery stores.

Consider Credit Builder Credit Cards

There are also some credit cards that are available to applicants with poor credit who are looking to build their credit. Responsible use of a credit card can be a great way to build or improve credit, as your payment history will be reported to all three major consumer credit bureaus. Just keep in mind that these cards can have higher than average credit card interest rates and more fees due to their availability to those with lower credit scores.

Get a Cosigner

Another option for young applicants is to get a cosigner for a credit card. Indeed, applicants within the 18 to 20 age range must get a cosigner if they can’t provide proof of employment or income when applying. Also, people in this age may not have much of a credit history, if any, which can be a downside.

A cosigner can be a parent, guardian, or other family member who assumes legal and financial responsibility for the applicant if they are unable to pay off the balance of the card. Ideally, the cosigner should have a decent credit history to improve the chances of the credit card application getting approved. If the cardholder fails to repay a card or falls in debt, it will negatively affect the credit score of both the cardholder and the cosigner, so this is an important responsibility.

Check with your bank or credit card issuer before using a cosigner, since not all banks allow cosigners on credit cards.

The Takeaway

Once you reach the age of 18, you will be able to get a credit card of your own. You can make sure you’re ready for this responsibility by building your credit history, getting down the financial basics, and knowing how to apply for a credit card when the time comes. You’ll have options as a young credit card applicant, from secured credit cards to student credit cards to credit builder cards and more. Learning how to use a credit card responsibly is an important part of your financial life.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Can I get a joint card?

Some card issuers allow cosigners on credit card. If you’re not able to qualify for a credit card on your own, you could also explore becoming an authorized user on someone else’s credit card account.

Does a student credit card affect credit score?

Yes, a student credit card affects your credit score. A student credit card is a regular credit card that’s just designed with students’ unique needs in mind, so it will affect your credit like any other credit card would.

What is the limit on a student credit card?

Credit limits on student credit cards vary by issuer and card. However, credit limits on student cards are often lower than the average credit card limit due to the fact that students generally have more limited credit histories and lower incomes.

Do you need credit for a secured credit card?

Most secured credit cards have less restrictive requirements for an applicant’s credit. In fact, many secured credit cards consider applicants with very poor or limited credit.

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Photo credit: iStock/RgStudio

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

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

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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When life insurance policy types are listed and described, the focus is usually on two of them: term life and whole life policies. There are more types than those two, though, and they’re typically more complex. They include universal life insurance — and, as a subset, indexed universal life insurance, or IUL. This is an advanced type of policy, where interest on the cash value component is linked to a market index.

In this post, we’ll define IUL, explain how it works, share its pros and cons, and more.

Definition of Indexed Universal Life Insurance (IUL)

First, let’s define universal life insurance. Universal life insurance is a permanent policy, which means that it doesn’t have a set term (say, for 10 or 20 years) and it comes with a cash value. A universal life insurance policy allows policyholders to flexibly adjust premiums and death benefits, though this can have an adverse effect on the policy.

Now, what is IUL? Indexed universal life insurance adds another twist to the equation. This is a type of universal life insurance that doesn’t come with a fixed interest rate. Instead, its growth is tied to a market index. (More about the index soon.)


💡 Quick Tip: With life insurance, one size does not fit all. Policies can and should be tailored to fit your specific needs.

How Does IUL Work?

After someone buys an IUL policy, they pay premiums, which is similar to other types of life insurance policy structures. Part of that premium covers the insurance costs that, like with other types of life insurance, are based on the insured’s demographics. Remaining fees paid go towards the cash value of policy. Interest paid is calculated in ways that are based on an index (or indexes).

This may sound similar to investing in the stock market, but there’s a key difference. The part of the premium that goes towards the cash value of the policy doesn’t get directly invested in stocks. Instead, the market index(es) is how the interest rate and amount is determined, with a minimum fixed interest rate usually guaranteed.

IULs typically offer policyholders a choice of indexes and allow them to divide the cash value portions of their premiums between fixed and indexed account options.

Explaining the “Index” Feature

A market index represents a broad portfolio of investments with the use of weighted average mathematics to come up with the index figure, which then plays a central role in the amount of interest paid. The three most commonly used market indexes in the United States are the Dow Jones, the S&P 500 and the Nasdaq Composite.

Note that funds invested for the cash portion of the insurance policy do not need to be invested in the index used to calculate the interest. Many times, insurers invest these dollars in bonds rather than stocks.

Benefits and Drawbacks of IUL Insurance

Like other types of life insurance policies, indexed universal life insurance comes with pros and cons. Here is an overview of the benefits and drawbacks of IUL.

Benefits of IUL Insurance

Benefits include:

•   There’s a death benefit for beneficiaries, as well as the cash value of the policy.

•   Withdrawals can be tax-free up to the amount of premiums paid.

•   Premiums are flexible — you can pay different amounts each month as long as it’s enough to cover fees and doesn’t go beyond an IRS limit.

•   Gains are locked in each year, which means you can’t lose the previous years’ gains. However, if the market is down the following year, it can decrease unless the policy has a built-in floor.

•   Because of the annual reset feature, you never need to make up any losses from prior years.

•   No mandatory distributions exist.

•   You can explore your tax benefits with your accountant or other financial advisor, and they may be significant for your situation.

•   You can borrow against this policy and, if you do, you typically won’t face negative tax consequences.

Recommended: Life Insurance Definitions

Cons of IUL Insurance

Challenges include:

•   An IUL is complicated and, to get the most benefits from this policy, you’ll need to understand how to maximize its value.

•   Although you can pay a minimal premium amount when you want, this can have a negative overall effect on the policy’s cash value.

•   Because the cost for the insurance portion depends on your rating, how much is insured and your age, the cost will go up over the years as you get older.

•   Although the rate is based on an index, policies come with a cap. So, during high index years, you likely won’t realize the full benefit because of this cap. On the flipside, however, many policies also have built-in floors to offset the cap.

•   Fees can take a big chunk out of the policy, causing you to lose much of its value.

•   If you don’t keep the policy in force, you may lose the death benefit (which is true of other types of policies), along with the extra money paid into the premiums.

Alternatives to IUL Insurance

Whether you’re not sold on IUL insurance or simply want to know what your other life insurance options are, here are some of the alternatives to indexed universal life insurance:

•   Adjustable life insurance: This combines aspects of term life insurance with whole life and provides policyholders with the flexibility to adjust the policy’s amount, term premiums and more. Adjustable life policies also come with a cash value component. A key benefit of adjustable life insurance is that you can make adjustments to your policy without the need to cancel the current policy or buy a new one.

•   Variable universal life insurance: Variable universal life is similar to IUL, as it is a permanent life insurance policy that has a cash value and flexible premiums. The investment portion comes with subaccounts and can resemble investing in mutual funds. When the market is doing well, this can benefit the policyholder, but when it’s not, significant losses can occur.

•   Standard universal life insurance: Then, of course, there are universal life insurance policies. These come with a fixed interest rate rather than one tied to an index.

•   Whole life insurance: Additionally, there’s the more basic whole life insurance policy with standard premiums. There is also a guaranteed death benefit and a cash value component.

•   Term life insurance: Then, life insurance at its simplest: term life insurance policies. These don’t come with cash value components or any real bells and whistles. These policies have a term limit (perhaps 10 to 20 years) and are more straightforward and affordable than other options, coming with a death benefit to beneficiaries when the covered individual dies while the policy is paid up and in force.

•   Current assumption whole life insurance: Another type of cash value insurance is called current assumption whole life (CAWL), and it has similarities to universal life insurance policies. Premiums are fixed for a certain period of time and, on predetermined dates, premiums are recalculated (and perhaps the death benefit is, as well). Plus, interest is handled in a way that’s similar to universal life.

Recommended: How to Buy Life Insurance

Is IUL Insurance Right for Me?

By comparing this overview of indexed universal life insurance with, say, term or whole life insurance, you can see that IUL insurance is quite complex. If, though, you’re earning a high income or want to explore long-term investment opportunities, it can make sense to consider whether the tax benefits associated with an IUL would be worthwhile.

For those who do consider moving forward with exploring indexed universal life insurance, it’s important to compare its pros or cons against those of other types of life insurance. Also take the time to research and compare different life insurance policies.


💡 Quick Tip: Term life insurance coverage can range from $100K to $8 million. As your life changes, you can increase or decrease your coverage.

The Takeaway

Although the question of “What is IUL?” is quite short, the answer isn’t. If this type of policy interests you, consider exploring it in more depth to ensure that you’re clear about its complexities.

SoFi has partnered with Ladder to offer competitive term life insurance policies that are quick to set up and easy to understand. Apply in just minutes and get an instant decision. As your circumstances change, you can update or cancel your policy with no fees and no hassles.

Explore your life insurance options with SoFi Protect.

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Photo credit: iStock/DragonImages

Coverage and pricing is subject to eligibility and underwriting criteria.
Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers- for further details see ladderlife.com. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products.
Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other, Social Finance. Inc. (SoFi) and Social Finance Life Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under Ladder Life™ policies. SoFi is compensated by Ladder for each issued term life policy.
SoFi Agency and its affiliates do not guarantee the services of any insurance company.
All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Third-Party 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.

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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Life insurance policies are available for children and are often marketed as paying out a death benefit if the child were to pass away as well as potentially providing a savings vehicle for the insured.

It’s a lot more comfortable to contemplate these policies funding, say, a child’s education than handling expenses at the time of death. But both are facets of these products. In addition, these policies can help prove a child’s insurability later in life. Let’s take a closer look if this coverage might be right for your family.

What Is Child Life Insurance?

Life insurance for children is similar to a policy for an adult. If premiums are paid regularly, then there’s the guarantee of a death benefit if the child dies. A parent, legal guardian, or grandparent takes out the policy (making them the policyholder). This person can be the beneficiary who would receive the death benefit, if applicable, but they don’t have to be.

Before getting into more detail about policies for children, here’s a brief overview of the two types of life insurance: term and permanent. Each is available for children as well as adults.

Term Life Insurance

As the name implies, term life insurance comes with a pre-determined term, often 10, 20, or 30 years. If the insured person dies within that time frame, then a death benefit is paid out to beneficiaries (people designated to receive those funds). At the end of the term, the policy may be able to be renewed, allowed to lapse, or converted into permanent life insurance. If the insured is still alive at the end of the term (and we hope they are), there is not a refund of the premiums paid. The service was there waiting but wasn’t tapped.

For a child, this would typically be an add-on to a parent’s insurance policy. It would be a death benefit-only policy, but it might be able to be converted into an adult policy when the insured reaches adulthood.


💡 Quick Tip: Term life insurance coverage can range from $100K to $8 million. As your life changes, you can increase or decrease your coverage.

Permanent Life Insurance

Unlike a term policy, permanent life insurance doesn’t expire as long as premiums are paid. Whenever the insured dies, a death benefit is paid. These plans also involve a savings vehicle, in which part of the premiums paid go into a cash account which can later be tapped or borrowed against. Premiums are typically higher than term life insurance (often several multiples of the term life insurance price).

When getting this kind of policy for a child, yes, there’s the death benefit for a worst-case scenario, but there’s also a component that builds a savings account, which is like a gift to the child. When the insured individual reaches adulthood (typically at 18 or 21 years of age, these policies often allow the now-adult to either take the policy’s cash value or continue payments and coverage.

How Does Life Insurance for Children Work?

The adult who plans to take out the policy will fill out an application. There isn’t a medical exam involved like there can be for adults, which streamlines the process.

Life insurance policies for children are often permanent life policies, meaning coverage can last their entire lives if premiums are kept up. Premiums stay the same over the lifetime of the policy, and part of the premium is invested and becomes a cash value that can be withdrawn during the child’s life. These are usually whole life policies, meaning the cash earns a fixed rate of interest.

Check the parameters of a policy that you’re considering buying. Many allow you to buy one for a child who is 17 years old or younger, although some policies won’t go up to age 17. The policyholder commonly transfers the policy to the child when they become adults, but this can be done at any time and some policies automatically transfer into the child’s name at a designated time.

For term life insurance for kids, an option is to add a rider (an optional add-on) to your own term life insurance policy. This can be an affordable option, and one rider may cover all of your children in incremental amounts. The child would be insured to adulthood, at which point the policy would lapse or could be extended by the now-grown child, if they assume paying the premium.

When Does Life Insurance for Kids Make Sense?

Here are four reasons why you might decide to buy life insurance for kids include:

•   Investment purposes

•   Because of health issues or concerns

•   To enhance future insurability

•   In case the worst happens

Here’s more about each.

Investment Purposes

As premiums are paid, the cash value of a whole life policy (a kind of permanent insurance) gradually increases. When your child takes over the life insurance policy, they can surrender — or cancel — it and collect the cash value.

They might choose to use it as collateral for a loan. Or they could keep paying for the policy, which will continue to increase the cash value. If this is your primary motivation, you may want to consider whether this goal is better served by another vehicle, such as a 529 savings account for college costs).

Health Issues or Concerns

If a child is born with health issues or your family has a significant, genetically determined health condition, having a life insurance policy may give you more of a sense of security.

Enhance Insurability

When purchasing a life insurance policy for a child, you are ensuring they have some insurance if they have a major health-altering diagnosis during the term of the insurance. There may be the possibility of extending this coverage.

The Worst Happens

Nobody likes to think about losing a child. If this traumatic event does occur, life insurance will help to cover funeral expenses without being subject to income tax. This can help to eliminate the financial worry of funeral costs and allow you to grieve without this concern. The policy may also cover therapy in this worst-case scenario and/or loss of wages if you were to take a leave of absence from work in the aftermath of this situation.

Recommended: Life Insurance Definitions

Benefits of Child Life Insurance

What you’ve just read outlines some of the reasons why it can make sense to buy life insurance for kids. It can serve as an investment vehicle; provide security if health is a concern; boost future insurability, and cover expenses if the worst situation happens.

Here are some other benefits to consider:

•   Life insurance for children tends to be very affordable. The younger a child is when you purchase the policy, the lower the premium.

•   With whole and term life insurance, premiums remain the same, guaranteed, as long as payments continue being made.

•   With a guaranteed insurability rider on the policy, more coverage can be purchased for that child without the need to answer health questions. This is true even when they’re adults depending on the policy type.

•   If the child later accesses the cash value in the policy, they can use the money for their own unique needs — whether that’s for college tuition, a wedding, a car, or house.

Recommended: 8 Popular Types of Life Insurance for Any Age

How Much Is Life Insurance for Children?

Premiums are based upon the amount of the policy and the age of the child when the policy is first taken out. In some cases, this may be as young as birth or 14 days. Price varies based on gender.

Coverage amounts are typically much lower than for a policy that insures an adult. After all, the goal here isn’t to replace the loss of earning power. Instead, the limits usually range from $10,000 to $100,000, but some companies may allow more than $100,000. At the time of writing this post, a child who is four years old or younger can often be insured for a $10,000 policy for under $5 a month, and a $50,000 one for under $20 a month.

Prices increase incrementally as the child ages. By the time that they’re ages 15 to 17, a $10,000 policy may be closer to $8 per month and a $50,000 one about $35 monthly.


💡 Quick Tip: With life insurance, one size does not fit all. Policies can and should be tailored to fit your specific needs.

The Takeaway

Child life insurance allows parents, legal guardians, and grandparents to apply and pay for a policy on behalf of a child. While a child doesn’t have earning power you are seeking to protect, there are benefits to this kind of policy, including creating a savings vehicle for the child. Take a careful look at the insurance options and your family’s financial goals to determine if this is the best path for you.

SoFi has partnered with Ladder to offer competitive term life insurance policies that are quick to set up and easy to understand. Apply in just minutes and get an instant decision. As your circumstances change, you can update or cancel your policy with no fees and no hassles.

Explore your life insurance options with SoFi Protect.

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Photo credit: iStock/FatCamera

Coverage and pricing is subject to eligibility and underwriting criteria.
Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers- for further details see ladderlife.com. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products.
Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other, Social Finance. Inc. (SoFi) and Social Finance Life Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under Ladder Life™ policies. SoFi is compensated by Ladder for each issued term life policy.
SoFi Agency and its affiliates do not guarantee the services of any insurance company.
All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal advice.

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.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

Insurance not available in all states.
Experian is a registered service mark of Experian Personal Insurance Agency, Inc.
Social Finance, Inc. ("SoFi") is compensated by Experian for each customer who purchases a policy through Experian from the site.

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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College study abroad programs offer students an extraordinary chance to explore a new part of the world while earning credit toward a degree. Each year, more than 300,000 American students study, engage in internships, or volunteer abroad for academic credits, according to the U.S. Department of State.

Despite the culturally rich and memorable experience this offers, the cost of studying abroad can be a barrier to many students. On average, study abroad programs cost between $15,000 and $22,000 per semester.

Read on to learn more about the costs involved in spending a semester or year abroad, how financial aid can help, plus other ways to make studying abroad more affordable.

Average Cost of Study Abroad Programs

The cost of studying abroad depends on two main factors — where you go and whether you enroll directly through your host university or use a third-party provider.

Generally, enrolling in a third-party study abroad program is more expensive. It provides you with more hand-holding and guidance in the pre-planning stages and while you’re living and studying overseas.

Average study abroad costs through a third-party provider can range anywhere from $15,000 to $22,000 per semester depending on location. These programs usually include housing and sometimes meals. Depending on the country, the cost of tuition could be significantly lower if you directly enroll in a foreign university.

If your home school has its own study abroad program, the tuition may be the same as it is stateside, though they may tack on some extra fees.

The cost of studying abroad goes beyond tuition, however. You will need to budget for other expenses like housing (if it’s not included), meals, airfare, transportation, entertainment, and books and supplies.


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

What the Cost to Study Abroad Covers

Here’s a breakdown of some of the key costs involved in studying abroad.

Getting There

You’ll need a round-trip plane ticket to get to and from your study abroad program, which can cost anywhere from several hundreds to thousands of dollars, depending on what part of the world you travel to. On top of your flight costs, you’ll need a passport. A new U.S. passport costs $165 and can take up to 10 weeks to process.

Many countries also require American students to get a travel visa in advance when visiting the country for studies. Costs vary widely by country. A student visa from Australia costs around $450, while one from South Africa runs about $36. Some countries, like Germany, don’t require U.S. visitors to get a student visa for studying abroad.

Recommended: 11 Ways to Make College More Affordable

Tuition and Living Costs

Typically, the price of a study abroad program will include tuition and fees at your host school, as well as some form of housing. If you directly enroll in a foreign university, you’ll need to pay tuition and housing separately. Either way, food is generally an additional expense.

Here are some examples of how much it can cost to study and live abroad:

In you go to Italy:

•   Average cost of a semester (including housing) through a third-party provider: $17,000-$21,300

•   Average cost of a semester (without housing) through direct enrollment: $1,500-$6,000

•   Average monthly cost of living (including rent): $1,200-$1,700

If you go to Costa Rica:

•   Average cost of a semester (without housing) through direct enrollment: $1,500-$3,000

•   Average cost of a semester (including housing) through a third-party provider: $8,500-$11,500

•   Average monthly cost of living (including rent): $1,100-$1,400

Recommended: How to Budget as a College Student

Local Transportation

Transportation expenses likely aren’t covered in the cost of your program. You might decide to take public transportation and purchase a metro pass, or rely on rideshare services. Either way, you’ll likely encounter some form of transportation cost while you’re abroad.

You may also want to take excursions to other cities or countries during time away. So it’s a good idea to factor in some extra funds for airfare/train tickets, food, and lodging for nearby travel. Keep in mind that financial aid won’t cover voluntary travel expenses beyond the cost of your initial round-trip flight.

Recommended: What to Do When Financial Aid Isn’t Enough

Insurance

Many U.S. universities require students studying abroad to enroll in a health emergency insurance plan to make sure they have adequate coverage for medical issues and emergencies. At New York University, for example, students studying abroad must be covered under the NYU sponsored Study Away health insurance plan, which costs around $72 per month.

Other Fees

Your home school may charge you a study abroad administrative fee. At Washington State University, for example, this fee runs around $300 for one semester abroad (for in-state students). At the University of Iowa, it runs around $1,140 for one semester abroad (for in-state students). You can check with your school’s education abroad office to see how much you might be charged.

In addition, the study abroad program you choose may come with optional costs, like class field trips, short excursions, or cooking classes with a local chef.

Recommended: How to Work Abroad After College

How to Pay for Study Abroad

If you’re worried about the high cost of studying abroad, there is good news: Much of your existing financial aid can likely be used for study abroad costs. Here’s a look at how to find funding for study abroad.

Grants and Scholarships

To find out what financial aid you qualify for, you’ll want to fill out the Free Application for Federal Student Aid (FAFSA). In addition to FAFSA-based scholarships and grants, there are many scholarships targeted specifically at students studying abroad, which you can uncover using a scholarship search engine. Third-party companies that facilitate study abroad programs also often have their own scholarships.

Federal Student Loans

Federal student loans (which may be subsidized or unsubsidized) can be used to pay for study abroad expenses, provided the school you’re attending abroad is eligible to participate in the Direct Loan program.

Federal study abroad loans for U.S. students can be used to pay tuition and fees, room and board, and other eligible expenses. Any leftover funds are disbursed to you, which you could use for travel to your destination country or basic living expenses. However, federal loans may not cover all the costs of studying overseas.


💡 Quick Tip: Federal student loans carry an origination or processing fee (1.057% for Direct Subsidized and Unsubsidized loans first disbursed from Oct. 1, 2020, through Oct. 1, 2024). The fee is subtracted from your loan amount, which is why the amount disbursed is less than the amount you borrowed. That said, some private student loan lenders don’t charge an origination fee.

Private Student Loans

If you max out the amount you can borrow in federal loans, you can turn to private student loans to finance the remaining costs. Approval for private student loans typically hinges on your credit history. You may need a cosigner for approval if you haven’t established a credit history or your credit score is lower than the minimum score the lender requires.

Private student loans offer more borrowing power than you can get with the U.S. government, but don’t offer the same protections (like income-based repayment plans). Rates are also typically higher.

Affordable Study Abroad Programs to Check Out

Here a sampling of study abroad programs that often offer affordable prices:

•   CIS Abroad (worldwide programs)

•   World Endeavors (worldwide programs)

•   International Studies Abroad (ISA) (worldwide programs)

•   Maximo Nivel (programs in Central and South America)

The Takeaway

Spending a summer, semester, or full year abroad can significantly enhance your college experience. But it can also significantly increase the cost, coming in at upwards of $15,000 per semester. Fortunately, there are funding options available to help students manage the cost of study abroad, including scholarships, grants, and 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.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

What’s the cheapest country to study abroad in?

Some of the cheapest locales to study abroad in include:

•   Kyrgyzstan

•   Malaysia

•   Central Asia

•   Hungary

•   Poland

•   Kenya

•   Brazil

•   Mexico

•   South Africa

•   Portugal

Does FAFSA cover study abroad?

Yes. If you qualify for student aid through the Free Application for Federal Student Aid (FAFSA), your awarded aid funds can typically be used toward study abroad costs. The school you attend while studying abroad must participate in federal aid programs, however, and your FAFSA aid might not cover the entire cost of studying in another country.

Is a year too long to study abroad?

Not necessarily. How long you should study abroad is a personal preference and based on your budget. The latest 2023 Open Doors U.S. Study Abroad Survey found that 49% of study abroad students go for the summer term, 30% go for one semester, 2.4% go for one year.

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Photo credit: iStock/wsfurlan

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.

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

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

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Applying early decision to your top-choice college can give you an admissions advantage. But you’ll want to keep in mind that this comes with a binding agreement — if you get accepted, you are obligated to attend that school.

There are some acceptable reasons for backing out of an early decision offer, like a change in your financial or personal circumstances. But if you simply have a change of heart, you will likely face negative consequences, such as losing any deposits and potential reputation issues with other schools.

Before applying to a college early decision, you’ll want to make sure you understand the commitment you’re making. Read on to find out if early decision is legally binding and how you can get out of early decision without facing penalties.

What Is Early Decision?

Early decision is a college application process in which students apply to their preferred college early in their senior year of high school, typically by November 1 or November 15, depending on the school.

When you apply early decision, you are agreeing that, if accepted, you will attend that school the following fall. As a result, you should not apply to multiple schools under early decision — if you are caught, it can result in one or both schools revoking your acceptance letters.

Colleges let early decision applicants know if they were accepted or not in mid to late December, giving students enough time to apply to other schools should they get rejected. Typical college application deadlines are in early January to mid-February.


💡 Quick Tip: Make no payments on SoFi private student loans for six months after graduation.

Why Apply for Early Decision?

One of the benefits of applying to college early decision is being able to find out whether or not you’ve been accepted to the school at the top of your list early in the application cycle. If you get in, you can then take a deep breath and relax and not worry about the usual Senior year checklist.

Applying early decision also signifies your commitment to a specific college or university, which may give you a leg up in getting in. Indeed, colleges often have a higher acceptance rate for early decision applicants than for regular decision applicants. For example, Duke University accepted 16.4% of early decision applicants for the class of 2027, while regular applications experienced a 4.8% acceptance rate.

That said, early decision isn’t for everyone. If you’re not sure where you want to go to college, it’s probably not wise to apply early decision. If how to pay for college is a chief concern, keep in mind that you will not be able to compare financial aid packages from other schools if you apply early decision.

How Does Early Decision Compare to Other Admission Deadlines?

Early decision is just one of several college admission deadlines, each with its own pros and cons. Here’s a look at how early decision compares to other admission deadlines.

Early Action

Unlike early decision, early action is non-binding. Students must adhere to the same application deadline as early decision (November 1 or 15), but there’s no obligation to enroll if you’re accepted. Early action applicants can expect a response from the school by mid-December and don’t need to make a decision until May 1. You can apply to more than one school early action, since it’s non-binding.

Regular Decision

Regular decision is the standard application process with a later deadline, typically some time between early January and mid-February. It is non-binding, and students can apply to multiple colleges. Admission decisions for regular decision applicants are usually released in mid-March to early April and require a response by May 1.

Rolling Admissions

Colleges with rolling admission allow you to submit your application within a wide time frame, usually six months or so, and review applications as they come in. Typically, they will then send out admission decisions within four to six weeks, accepting students until all open slots for the incoming class have been filled. Schools with rolling admission generally start accepting applications around September 1 and continue well into the spring semester.

Is There a Penalty for Backing Out of Early Decision?

Early decision isn’t a legal contract, but backing out of an early decision agreement typically has consequences. If a college admits a student under an early decision plan, the expectation is that the student will enroll for the upcoming fall semester and withdraw any early action or regular decision applications from other schools.

Some schools actually require a deposit with your early decision application. If you back out of your agreement, you likely won’t get this money back.

Colleges also communicate with each other. If your early decision school lets other schools know you reneged on your agreement, it could have a negative impact on your applications to schools you are interested in attending.

There are exceptions, however. If you back out of an early decision agreement for a valid reason, you can likely get off the hook without any negative repercussions. For example, you may be able to break your agreement without issue if you receive a financial aid package that’s different from what you anticipated, making it difficult for you to afford the cost of attendance.

Colleges also understand if extenuating circumstances prevent a student from honoring their commitment, including an illness or death in the family that leads a student to defer enrolling for a semester or year.


💡 Quick Tip: Would-be borrowers will want to understand the different types of student loans that are available: private student loans, federal Direct Subsidized and Unsubsidized loans, Direct PLUS loans, and more.

What to Do if You Can No Longer Attend Your Early Decision School

If you find you have to back out of an early decision offer, you’ll want to get in contact with the college’s admissions department as quickly as possible. The sooner you let them know, the more likely they will be to work with you. They can let you know what your next steps should be. Without a good excuse, however, it is likely any deposits or payments you’ve made so far won’t be refunded.

If your reason for backing out is insufficient financing, you may want to discuss this with the college’s financial aid office. Some schools may be willing to reevaluate a student’s financial aid package if there has been a substantial change in the family’s financial situation.

If you stick with your withdrawal decision, you’ll next need to apply to other colleges, assuming you are still planning to go to college in the fall. Most colleges have an application deadline in January, so if you made the decision to back out of early decision sooner rather than later, you likely still have time.

Keep in mind that if you reneged on your early decision application without a valid reason, the school may share this information with other colleges. As a result, you may want to cast a wide net, including plenty of safety schools.

Recommended: 5 Ways to Start Preparing For College

The Takeaway

Applying to a college early decision requires making a commitment. However, the early decision agreement you (and your parents) sign is not legally binding. In other words, the college can’t force you to pay tuition and come to their school.

If you back out of your early decision agreement for a valid reason, such as not getting the financial aid offer you were expecting or unforeseen change in your circumstances, you may be able to get out of the contract without any negative consequences.

If, on the other hand, you back out simply because you changed your mind, you could potentially lose money (if the school required a deposit with your application) and the school may share this negative information about you with other colleges, doing harm to your reputation.

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

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

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Photo credit: iStock/Eva-Katalin

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.

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

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

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