Jul
01
2025

How Much of Your Paycheck Should Go to Savings?

By | Budgeting & Goals, money | Comments Off on How Much of Your Paycheck Should Go to Savings?

Financial experts typically advise people to save at least 10% to 20% of their salary, but recent GOBankingRates research reveals that 34% of Americans aren’t putting a cent of their paycheck into savings. Almost the same percentage saves less than 10% of their earnings.

Whether you are on track with your savings plans or struggling to get started, this guide can help. You’ll learn more about how much of your paycheck you should stash away and toward which goals, plus tactics for prioritizing savings.

Key Points

•   Financial experts recommend saving at least between 10% and 20% of your salary, with 20% being a common figure.

•   The 50/30/20 rule suggests allocating 20% of your take-home income to savings, including retirement, short-term savings, and other goals, such as debt repayment beyond the minimum due.

•   The amount to save from each paycheck depends on factors like goals, current income, and living expenses.

•   Saving for an emergency fund, retirement, and other goals are important savings objectives.

•   Cutting spending, automating savings, and choosing the right savings account can help increase savings.

What Percentage of Your Paycheck Should You Save?

When it comes to what percentage of income to save for future expenses, financial advice can vary depending on where you look. Some experts suggest saving as little as 10% of each paycheck, while others might suggest 30% or more.

For some people who are living paycheck to paycheck, the amount may be lower still. It may be wiser to simply come up with a set amount (say, $25 to $50) to deposit into savings in your bank account.

Rules of Thumb

According to the popular 50/30/20 rule of budgeting, 50% of your take-home income should go to essentials (or needs), 30% to nonessentials (or wants), and 20% to saving for future goals (including debt repayment beyond the minimum).

The right amount for you to save from each paycheck will depend on your income, your fixed expenses, as well as your short- and long-term financial goals.

If, for instance, you are a recent grad living at home for a while and your living expenses are very low, you may be able to save a much higher percentage for the time being.

Or, if you have a sizable credit card balance, you might pump money toward paying that off. In this situation, you might minimize or even pause the amount saved while getting that debt eliminated.

Calculating Percentages From Your Paycheck

To figure out how much to save from each paycheck, you’ll need to consider a few factors. The right amount will depend on your income, your fixed expenses, as well as your short- and long-term financial goals.

•   For example, if the cost of living is high in your state or local area, you may need to spend more than half of your take-home pay on living expenses, making it hard to put 20% of each paycheck into savings.

•   On the other hand, if your goal is to buy a home in two years, you may need to put more than 20% percent of your paycheck into savings in order to have your down payment in that timeline. (Keep reading for tips on how to save more.)

•   If you want to retire early, you may need to put more of your income toward retirement every month than the average worker.

Recommended: 50/30/20 budget calculator

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4 Important Savings Goals to Work Toward

Having a few specific goals in mind can help you determine how much to save from each paycheck as well as motivate you.

Here are some common savings goals that can help you build financial wellness.

1. Emergency Fund

Yes, it can be hard to save money, but one of the most important priorities is to sock away money (even if just a little) regularly into an emergency fund. In SoFi’s April 2024 Banking Survey of 500 U.S. adults, 77% of respondents with a savings account said they use the account to save for emergencies.

Emergency Fund Balances
Source: SoFi’s April 2024 Banking Survey

An emergency fund is a bundle of easily accessible cash that could help you handle a financial curveball, such as a job loss, medical emergency, or big ticket car or home repair. Ideally, an emergency fund will contain enough money to cover your living expenses for three to six months, so you don’t wind up with credit card debt.

•   If you are married with an employed spouse and with no children, for example, you may only need to cover three months’ worth of expenses.

•   If you have kids or you’re single, you may want to have an emergency fund that could cover more than six months’ worth of expenses.

Recommended: Emergency Fund Calculator

2. Paying Off High-Interest Debt

Another important thing you could consider doing with your savings is paying off any high-interest debt (or “bad” debt) you may have. Typically, this is credit card debt, which currently has an average rate of well over 20%.

•   One debt payoff strategy is the debt snowball method. You start by paying off the debt with the smallest balance and put all your extra payments toward that until it’s paid off (while continuing to pay the minimum on your other debts).

You then put extra payments toward the debt with the next highest balance, and so on. This can give you a sense of accomplishment which can help motivate you to continue your aggressive repayment.

•   Another approach is the debt avalanche method, putting all your extra payments toward the debt with the highest interest rate, while paying the minimum on the others.

When that debt is paid off, you then focus on the debt with the next-highest interest rate. This strategy can be the most cost-effective method.

3. Saving for Retirement

Another reason why saving money is important: It can secure your future by providing for your retirement. Exactly how much of your paycheck should go to retirement savings will depend on your age and when you want to retire. Some pointers:

•   If your company offers a 401(k) with matching contributions, it can make sense to put aside at least as much of your paycheck as your company will match (since this is essentially free money).

•   If you don’t have access to a 401(k) or want to contribute beyond that fund, you may want to open a Roth or Traditional IRA. Both types of IRAs have different tax benefits.

•   When you invest in a Roth IRA, the money is taxed at the time of contribution but then in retirement, you can withdraw it tax-free. Contributions made to a traditional IRA might not be taxed at the time they are made but are taxed when they are withdrawn in retirement.

When choosing how much of your paycheck to put into retirement savings, you may want to keep in mind that the IRS sets restrictions on how much you can contribute to your retirement funds each year. IRS retirement guidelines are published and updated regularly.

4. Saving for Other Goals

After establishing plans for debt repayment, an emergency fund, and retirement savings, you may also want to consider working toward your other financial goals, like buying a house, saving for your kids’ future education, or affording a great vacation.

When you’re saving for a big purchase, you can start by determining how much money you’ll need and when you want to have the money. You can then break that dollar amount down into the amount you need to save each year and each month.

Strategies for Increasing Your Savings Rate

If you want to ramp up your savings, here are a couple of strategies that can pay off.

Automating Your Savings

Also known as paying yourself first, automating your savings involves setting up recurring payments or transfers into an account where the money won’t be spent and can earn interest. You might have a portion of your direct-deposit paycheck go straight into savings, or you could have a set amount whisked from checking into savings every pay day.

Read on for ideas about which kind of account is best for your savings.

Adjusting Your Budget

If you need to save more, take a closer look at your budget. Checking in with your budget is an important way to stay in control of your money. You may see patterns that you can address to maximize your savings. For example, did your wifi provider raise costs or have your property taxes increased year over year?

Once you size up your situation, you can take the right next steps, such as reducing costs (see below), finding a budget that works better for you, or using tech tools, such as money trackers, to manage your money more effectively.

Recommended: How to Make Money From Home

Reducing Your Costs to Save More

You can help ramp up your savings by cutting your spending. Here are some ideas:

•   Review your monthly bills and see if there’s anything you can cut. You might have signed up for a couple of subscriptions and then forgotten about them, or you might see that your restaurant spending is surging lately.

•   Learn how to save on food. You might try planning your meals weekly, so nothing goes to waste; joining a warehouse or wholesale club to lower your grocery bill; and using coupons and discount codes to downsize your food costs.

•   Bundle up: If you get your auto and home (or renters) insurance from one provider, you may save on your premiums.

•   Fight off FOMO spending (fear of missing out). Just because your friends are upgrading to a luxury car or a social media influencer is frolicking on the French Riviera, that doesn’t mean you have to too.

•   Pause, for a day or a month, before making pricey impulse buys to make sure you really and truly want or need them. Try a 30-day spending rule to eliminate impulse buys. It involves waiting 30 days to make an unplanned purchase; the urge to buy may vanish in that time period.

•   Pay in cash. Plastic, whether a credit or debit card, can make it easy to overspend. If you take out the cash you need for the week ahead and use only that to pay for purchases, you may be able to rein in your purchasing.

•   Use budgeting tools to help stay on track. Twenty-three percent of people in SoFi’s survey use budgeting tools offered by their bank, and 20% have knowingly used AI to manage their budget or finances.

Where to Put Your Savings

Once you’ve committed to saving money, you’ll have some options about where to keep it.

High-Yield Savings Account

A high-yield savings account pays a significantly higher interest rate than a standard account. As of mid-2025, the average savings account earned 0.38% interest while some high-yield savings accounts were paying 4.00% or more.

These accounts are often found at online banks vs. traditional ones. Just be sure to read the fine print and make sure you are aware of and comfortable with any account fees or minimums that might be involved. These accounts allow for easy access to your money when needed.

Certificate of Deposit (CD)

A certificate of deposit (CD) is an account in which you commit to keeping your money at the bank for a specific term and you know what rate you will earn. Typically, there is a penalty for early withdrawal. The terms for CDs can range from a few months to several years, so you can pick what works best for you. Longer terms will often have higher interest rates.

Investment Options for Long-Term Savings

Longer-term savings goals, meaning five or 10 years or longer (such as your retirement savings) can involve investing, since you’ll likely have more time to ride out the ups and downs of the markets.

For college savings, you may want to consider opening a 529 savings plan.

Test your understanding of what you just read.

The Takeaway

Many financial experts and budgeting methods recommend putting 20% or more of your salary into savings, but that may not fit your needs. Consider your savings goals, your financial situation, and other factors to find the right figure and the right tactics to help you stash the right amount of cash. Also consider where to keep your savings: A higher rate of interest can help your money grow and work harder for you over time.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with eligible 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 3.30% APY on SoFi Checking and Savings with eligible direct deposit.

FAQ

Is saving 10% of my paycheck enough?

Most financial experts advise saving between 10% and 30% of your salary, with 20% being a common figure. Based on this, 10% is an adequate amount for some, but if you can ramp that up in the future, so much the better.

Is 20% of your salary enough to save?

According to the 50/30/20 budget rule, saving 20% of your salary is a good goal to have; that’s the 20 in the name of the guideline. This amount can then be divided to address different needs, such as saving for the down payment on a house, for your child’s college education, and for retirement. However, for some people, 20% won’t be enough if, say, you have a large family to support.

How much of a $1,000 paycheck should I save?

Typically, financial experts recommend saving between 10% and 30% of your paycheck, with 20% being a good figure to aim for. For $1,000, that would mean between $100 and $300, with $200 being the 20% figure. However, if you are earning a lower salary and money is tight, it would be understandable if you save less until your salary increases.

How much should you save if you don’t have a regular paycheck?

If you don’t have a regular paycheck, it can be especially important during high-earning periods to save at least 20% of your pay. Also aim for at least six to 12 months’ worth of living expenses in your emergency fund. This can be a good cushion during the off-season (if you have a seasonal business) or you lose a steady gig.

How can I save money if I live paycheck to paycheck?

If you’re living paycheck to paycheck, saving is still important. Review your fixed expenses and see what cuts you can make to free up funds for your emergency savings account and other goals. Put in the time to find a budget that works for you, and stash any money windfalls (such as a tax refund or unexpected gift of cash) into your savings. You might also sell your unwanted but still useful items to raise some cash for your savings.


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Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning the APY for account holders with Eligible Direct Deposit, we encourage you to check your APY Details page the day after your Eligible Direct Deposit posts to your SoFi account. If your APY is not showing as the APY for account holders with Eligible Direct Deposit, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning the APY for account holders with Eligible Direct Deposit from the date you contact SoFi for the next 31 calendar days. You will also be eligible for the APY for account holders with Eligible Direct Deposit on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

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Jul
01
2025
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10 Top Career Training Programs

By | Building Your Career, Life & Career, Student Loans, student_loan | Comments Off on 10 Top Career Training Programs

When it comes to getting a secure, well-paying job, it’s not always necessary to get a college degree first.

Some students may choose a career training program to learn skills for a specific job, often more quickly and for less money than a four-year college degree. These programs may also be referred to as career certificate programs, usually certifying the students to work in a particular role once the course is completed.

Recent high school graduates or those who have attained their GED can often attend career training programs and get started on their careers after receiving their certificate.

Key Points

•   Career training programs can offer a faster, more cost-effective route to employment than traditional college degrees.

•   On average, career certificate programs cost about $100 per credit hour, and some programs can be completed in less than a year.

•   Accreditation guarantees that training programs meet quality standards and are recognized by employers.

•   High-demand roles like web designers, paralegals, and solar photovoltaic installers earn competitive median salaries.

•   Multiple financing options, such as federal financial aid, scholarships, and private loans, are available for career training.

Why Do People Choose Career Training Programs?

Two big factors in choosing to go through a career training program before or instead of going to college are time and money.

Career training programs typically can be completed in less time than it generally takes to complete an undergraduate degree. Some programs can be finished in as little as four months.

They’re also less expensive, which may mean that students have less student loan debt. On average, a career certificate program may cost around $100 per credit. By comparison, the average annual cost of in-state tuition at a public two-year institution is $4,050, and at a public four-year college, the in-state tuition averages $11,610 a year.

For instance, at Minnesota State University, certificate programs consist of nine to 30 credits, which can be completed in one year or less of full-time study. If these programs cost the average $100 per credit, they would cost between $900 and $3,000. This is fairly affordable compared to the cost of tuition at either a two-year or a four-year institution.

Another reason some people choose a career training program is that they need to, or would like to, start earning money relatively soon after graduating high school. And that way, if they borrowed money to help pay for their certificate program, they can put more money toward student loans to pay them off.

A career training program could be a more direct route to employment than getting an associate or bachelor’s degree for people who are sure about their career path. This could also be a beneficial route for students who want to save money to attend college later in life.

Choosing a Program

The most important thing to look for when choosing a career training program, whether it’s in-person or an online career training program, is accreditation. Accreditation verifies that an institution is meeting a certain level of quality. Usually, a certificate will need to come from an accredited institution for it to be considered legitimate.

Accreditation is done by private agencies, and most programs or institutions will list accreditations on their website.

The most up-to-date accreditation information can be found in the database of postsecondary institutions and programs compiled by the U.S. Department of Education or with the specific accrediting agency’s website.

Once it’s clear that the potential programs are accredited, students can begin to narrow down which one will be best for them. This will be a highly personal choice, but there are a few factors worthy of attention, including cost, course length, and type of instruction (online vs. in-person).

Job search assistance—which might include resume writing workshops, job fairs, or interview prep—is another element that may help set students up for success.

Top-Paying Jobs For Certificate Holders

In addition to career training programs having the potential to save students time and money, people want to know that they’ll be able to make a good living with those jobs. They also want jobs that can help pay off any money borrowed for school.

These are some of the highest paying jobs for those opting to go through a career training program:

1. Web Designer

According to the U.S. Bureau of Labor Statistics, the average annual income for a web developer and digital designer is $95,380, with the educational requirements ranging from a high school diploma to a bachelor’s degree. This job is growing faster than average, so it has a promising future.

2. Paralegals and Legal Assistants

Paralegals and legal assistants make, on average, $61,010 per year. The required education for an entry-level job as a paralegal is a certificate or an associate degree. This job’s growth rate has slowed in the past couple of years, but an average of 37,300 openings are projected each year.

3. Solar Photovoltaic Installer

Solar panel installation is a growing field with decent pay and a lot of projected growth for the future. The median annual pay is $51,860, with only a high school degree or a certificate required to begin working.

4. Licensed Practical and Licensed Vocational Nurses

Training to become a licensed practical or licensed vocational nurse typically takes only one year of full-time study, and the median annual salary is $62,340. This job is growing as fast as average and is in a field that will almost certainly always exist. This could be a good choice for someone who wants to be in the medical field without the time and financial commitment it takes to become a doctor.

5. Medical Records Specialist

Working as a medical records specialist usually only requires a certificate, and sometimes an associate degree. This job has a median annual pay of $50,250 and the potential to work from home.

6. Pharmacy Technician

The median pay for a pharmacy technician is $43,460 per year. This job is growing faster than the average rate and typically requires on-the-job training or a formal training program, most of which last one year. Some longer pharmacy tech training programs culminate in an associate degree.

7. Computer Support Specialist

The role of a computer support specialist can vary widely, which means the educational requirements may also vary. Some jobs in this field may require a bachelor’s degree, but others only require an associate degree or a certificate. The median annual pay for a computer support specialist is $61,550, and the field is growing faster than average.

8. Phlebotomists

Phlebotomists draw blood and may work in hospitals, labs, or doctors’ offices. Professional certification, which can be gained after completing a phlebotomy training program, is the credential generally preferred by employers. This job has a median annual pay of $43,660, and it’s growing faster than average.

9. Medical Assistants

Medical assistants have a median annual pay of $44,200, and the job only requires a certificate or on-the-job training. This job is growing much faster than average.

10. Wind Turbine Technician

The median pay for this job is $62,580 per year, and the only education required is a training certificate through a technical program. This job is growing at a rate much faster than average, which could make it a great choice for students who are ready to start their career shortly after graduating high school.

Paying for a Career Training Program

Just because career training programs are typically less expensive than college doesn’t mean they’ll be easy to pay for. Some programs last longer than others and could end up costing a fair chunk of money. Here are some ways to help cover the costs.

Pay for it. One way to pay for a career training program is to save up the amount of money needed before starting it, especially if the program is short or has a lower cost. Paying in full with cash means no debt to worry about.

Financial aid. Another potential way to pay for a career training program is to apply for federal student financial aid, which may be available to students enrolled in eligible degree or certificate programs and who meet other eligibility requirements. Completing the Free Application for Free Application for Federal Student Aid (FAFSA®) is the first step. After submitting the FAFSA, students will find out if they’re eligible for federal student aid, which could include federal student loans and/or work-study.

Scholarships. Students who aren’t eligible for financial aid or those who can’t cover tuition costs may want to look for scholarships or grants. There may be fewer scholarships available for certificate programs than there are for degree programs, but they’re out there.

The best place to start looking for scholarships is with the school the student is attending. Some schools set up their own scholarships. Alternatively, students can search for scholarships offered by professional organizations in their related fields.

Private student loans. A private student loan may be another option to cover the cost of a career training program.

One of the basics of student loans is that loan terms will vary from lender to lender, and applicants are encouraged to shop around. It also makes sense for students to exhaust all federal student aid options before considering private student loans.

Learn more about how private student loans work with this private student loans guide.

Student loan refinancing. If you took out student loans and the payments are difficult to manage, or you’d like to get a lower interest rate if you qualify, you can look into refinancing student loans.

One of the ways that student loan refinancing works is that you may be able to qualify for more favorable terms or a lower rate, which could help you save money.

Just be aware that when you refinance federal student loans, you lose access to federal protections and programs like income-driven repayment plans and deferment. Be sure you won’t need those benefits if you choose to refinance.

The Takeaway

Students can be under a lot of pressure to go right into a four-year college or university after graduating high school, but career training programs provide an alternative that can also set them up for success, typically in less time and for less money.

There are a number of options to help pay for a certificate training program, including saving up for it, applying for federal student financial aid, looking for scholarships, and taking out a private student loan.

And if you have student loans and you’d like to get a more favorable rate or better terms, consider student loan refinancing. SoFi offers loans with flexible terms and no origination and prepayment fees.

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

FAQ

What is the best type of career training program?

The best type of career training program depends on your personal interests and goals. Some career training programs to consider are those for web designer, paralegal, licensed practical nurse, and wind turbine technician. Each job generally pays well and is typically easy to get certified for.

What is the easiest career certification to get that pays well?

Becoming a solar photovoltaic installer requires only a high school degree or a certificate to begin working. The median annual pay for the job is $51,860, and the field is projected to grow.

How much do career training programs cost?

On average, a career certificate program may cost around $100 per credit. Some programs can be completed in one year or less, which can help keep costs down.

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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.

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 Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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.

SOSLR-Q225-040

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Jun
29
2025
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Four Ways to Upgrade Your Home

By | Budgeting & Goals, Home Ownership, personal_loan | Comments Off on Four Ways to Upgrade Your Home

Updating your home can be done without a full (and expensive) renovation. There are a number of light lift projects that can give your home a whole new look and feel, and even increase its resale value. Exterior upgrades, like fresh paint, a new front door, and better landscaping or outdoor lighting, can add to your home’s curb appeal. Indoor improvements, such as updated lighting fixtures, paint, or wallpaper, can give the interior of your home a more up-to-date, high-end look. Here are four ways you can upgrade your home without breaking the bank.

Key Points

•   Home upgrades, starting at $3,000, can enhance the look and value of a property.

•   Exterior upgrades, like a freshly painted front door, new porch lights, and modern landscaping with pollinator and edible gardens, can add curb appeal.

•   Indoor lighting trends favor bold and textured fixtures.

•   Popular paint colors are dusty pink, cinnamon brown, cool grays, and bright purples, while one wallpapered wall can create a mural effect.

•   Window treatments with natural hues, geometric prints, and layered rods add style and privacy.

Exterior Improvements

A home’s front door is the focal point of the exterior. To upgrade its appearance, you might replace the door, or paint it and add new hardware. Decorating the door with a seasonal wreath or another personalized touch can also add to its charm.

Besides a front door refresh or upgrade, other exterior improvements you might consider include a new mailbox, a new porch light fixture, and perhaps some window boxes with plants and fresh flowers that add a bright contrast to your home’s exterior color.

Front door styles that are currently trending include bold colors (from fire engine red to deep greens and bright blues), natural wood stains, and more glass (such as custom inserts and floor-to-ceiling sidelights).

How you landscape your front yard will depend upon where you live and the climate there. In general, though, modern trends include:

•   Natural landscaping using native plants, creating landscaping that’s eco-friendly and easy to maintain.

•   Pollinator gardens that attract butterflies, bees, and other insects that help pollinate.

•   Edible gardens, including lettuce, peppers, tomatoes, and more. Creativity is key!

Recommended: 15 Ways to Boost Your Curb Appeal for a Winter Open House

Lovely Lighting

Outdoor lighting doesn’t need to be white — filters can add a range of colors. These lights can spotlight key areas of landscaping, highlight where you like to entertain, or look attractive for even more curb appeal while providing illumination.

Size-wise, both tiny and boldly large lights are in vogue and, although lanterns aren’t a new trend, they’re still considered stylish. Updating recessed lighting is another popular home improvement project.

After a period of all-white being a hot trend for interior lighting, table lamps and hanging lighting fixtures are appearing more often as dark neutrals in brown, black, or gray. They can be used to update the white, cream, or gray choices in a home.

Paying attention to texture in lighting fixtures can add interest and variety. Materials can range from wood to wicker and rattan, and can be crafted in contemporary shapes to avoid an overly rustic look. Also still trending are geometrically designed lighting fixtures, from simple to more complex shapes.

Painting and Wallpapering

Painting rooms in a home can transform their appearance. What colors are trending? Currently, homeowners are favoring dusty pink, cinnamon brown, cool grays, and bright purples. However, unless you’re planning to sell some time soon, personal taste is what matters most when picking paint colors.

Wallpaper trends also run the gamut, including those with a texture and colors often inspired by landscapes. In this style of wallpaper, expect to see some blues, greens and neutral shades. Some people like to have one pictorial wallpaper wall, which looks like a mural in a room.

Wow Factor on Windows

In-style curtains often have hues found in nature, from green to ochre, and can also feature flowers, landscapes, and more. Geometric prints or two-tone materials may also appeal to some people. Velvet can be used to create a more intimate space.

Consider using double or triple curtain rods to add layers of window coverings. Then you can add a layer that filters light and enhances privacy, while also selecting curtains with the appearance you enjoy. Many designers recommend placing your curtain rod close to ceiling height vs. at the top of the window for a more dramatic and chic effect.

Recommended: How Much Does It Cost to Replace Windows?

Costs of a House Upgrade

The type of house upgrades listed here might be considered low-cost or low-end renovations, and can cost as little as $3,000 for a 1,250 to 1,600 square foot home. If, once momentum gets going, the low-end house upgrade turns into a middle-end one, the average cost could be closer to $5,200, according to the home improvement site Angi.

Another cost-related factor is where the home is located. Pricing in urban areas might be twice as high as in rural areas, depending on the area’s cost of living.

Plus, upgrades in older homes may take more time and attention to complete. If the home is officially considered to be historic, there may be guidelines about what changes can be made.

Recommended: Renovation vs. Remodel: What’s the Difference?

Financing a House Upgrade

Here are some options for financing a home upgrade.

•   Sometimes, homeowners are able to pay for these upgrades out of pocket. This can be true when the costs are relatively small or when money has been saved for the costs of the renovation. This can be the smart choice when possible: no debt, no interest to pay.

A downside to paying for home upgrades with cash may be that the homeowner empties a savings account or cuts corners on the renovations to avoid needing to borrow funds. Or, if, say, a big medical bill pops up and the emergency fund was used to renovate, then high-interest credit cards might need to be used to pay that debt.

•   You might consider a home equity line of credit (HELOC) to finance a house upgrade. This type of loan allows you to borrow against the equity in the home to pay for renovations. How much is available to borrow will depend upon how much equity is available and the loan-to-value ratio (LTV) that a lender permits. For example, if a lender has an 80% LTV ratio, that means the institution would:

◦   Appraise the home (e.g., $250,000).

◦   Calculate 80% of that ($200,000).

◦   Subtract current mortgage balances (e.g., $125,000).

◦   Consider what’s left over ($200,000-$125,000 = $75,000) to be equity in the home.

The lender would also consider the financial profile of the borrower when reviewing the loan application. HELOCs often have a low initial interest rate and, usually, the homeowner can choose to pay interest only during the draw period. However, there may be upfront fees and the rate is often variable with high lifetime caps.

•   Another option might be a home improvement loan, which is an unsecured personal loan and not attached to the home’s equity. Funding can usually be granted more quickly with fewer, or sometimes no, fees. This may be a good option for people who don’t have enough equity in their homes for their project or who don’t want to use their home as collateral.

Recommended: How to Apply for a Personal Loan

The Takeaway

There are a number of ways you can upgrade your home that don’t involve tearing down walls or putting on an $150,000 addition. Lower-cost upgrades, ranging from $3,000 to $50,000 or more, may still require spending more cash than you have just sitting in the bank, however. Plus, you may not want to deplete your savings in order to upgrade your home. A personal loan could be a good option.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. See your rate in minutes.


SoFi’s Personal Loan was named a NerdWallet 2026 winner for Best Personal Loan for Large Loan Amounts.

FAQ

How do you update your home?

A good plan for updating your home can be to start with changes that can shift the mood of a room. This includes paint and/or wallpaper, carpets and rugs, window treatments, and lighting, among other features.

How to update a home without renovation?

To update a home without a major renovation, make changes to surfaces, such as repainting in a different color, swapping in new curtains or blinds, and adding fresh rugs or refinishing the floors.

How much do home updates cost?

The price of home updates can range considerably depending on the cost of living in your area, how much you DIY vs. calling in professionals, and your taste level and the changes you actually make. A small update can start at $3,000, but prices in the five figures can be common.

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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 .

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.

²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.
You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.
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How Much Do I Owe in Student Loans?

By | Debt Payoff, Student Loans, student_loan | No Comments

If you already have a semester or two of college under your belt, you might be asking yourself, “How much do I owe in student loans?” It’s hard to keep track of your student loan balance, especially if you haven’t started repayment yet.

The amount might startle you. According to the Education Data Initiative, the average student loan balance, including federal and private student loans, is $41,618. The sooner you find out your student loan amounts, the sooner you can make a plan to pay them off.

The sooner you find out your student loan amounts, the sooner you could make a plan to pay them off. Here’s how to check your student loan balance.

Key Points

•   Check federal loan balances at StudentAid.gov using your FSA ID.

•   Private loan balances must be verified through each lender or by reviewing your credit report.

•   Knowing your total balance helps you create a payoff strategy, such as using income-driven repayment plans or Public Service Loan Forgiveness.

•   Making extra payments or using debt payoff methods like the debt avalanche can speed up repayment.

•   Refinancing may reduce interest or monthly payments, but eliminates federal loan benefits.

How to Find Out How Much You Owe in Federal Student Loans

Federal student loans typically come in two types: unsubsidized loans and subsidized loans. If you’re a graduate student, you might also have a Graduate PLUS federal student loan. So then, how to check a student loan balance? Fortunately, information on all your federal student loans can be found in one spot. You can look up your balance on the Federal Student Aid (FSA) website.

To check your student loan balance, simply log into your account at StudentAid.gov with your FSA ID and password. There, you’ll find your current student loan balance, the interest that has accrued on your account, payment status, and your loan servicer. If your loan servicer has changed, that information will be there as well.

How to Find Out How Much You Owe in Private Student Loans

There’s no one central website to check your balance for private student loans. One method to figure out how much you owe in private loans would be to contact each loan servicer individually.

If your loans have new servicers and you’re having trouble tracking them down, call your original lenders and ask who the new servicers are. Your school’s financial aid office should also have this information.

Another way to find your loan servicers is to check your credit report. You can get a free copy of your credit report from the three main credit bureaus (Equifax, Experian, and TransUnion) and also from AnnualCreditReport.com.

Your report will list your student loans, the loan servicers, and how much you borrowed. From there you can call each server to find out how much you currently owe. Keep in mind, private student loan providers set their own terms, including loan term length, interest rates, and repayment plans.

It might be a good idea to organize your private student loans and determine when the repayment phase kicks in for each, as it could be different from the federal student loan repayment plan.

Keeping Student Loan Debt Manageable

If this is your first time looking up how much you owe in student loans, you might be feeling major sticker shock. Take a deep breath. Keeping track of student loans can be a big undertaking, so don’t panic.

One way to help manage your student loan debt while you’re in college is to get a part-time job. You could look for opportunities to become a paid tutor, intern, or residence assistant. If working part-time during school isn’t possible, you could plan on getting a full-time job in the summer and live off the savings throughout the school year.

In addition to picking up paying jobs, you could also explore scholarships. These help pay for your education and you don’t have to pay them back. All it takes is some dedicated time looking for the right match. You could check with your university and any organizations you’re involved with to see if you can help fund your tuition this way.

Paying Off Your Student Loans

Once you’ve learned how to check your student loan balance and then determine how much you owe, it’s time to develop a master plan to pay your loans off. This is important, especially since the average monthly student loan payment is $536, according to EducationData.org, which is no small change.

These are some of the ways you could pay off what you owe.

Using a Government Repayment Plan

If you have federal student loans, you’ll likely repay your loans using a government repayment plan. This includes income-driven repayment plans where the minimum payment is based upon factors like your discretionary income and family size, and the repayment term can be stretched out to 25 years in some cases.

One downside of these options is that they typically increase the total amount you pay back when compared to the standard 10-year repayment plan.

You could also look into Public Service Loan Forgiveness (PSLF), as long as you meet the requirements. To qualify, you must work for a government agency or certain types of nonprofit organizations.

Making an Extra Payment Each Month

If you want to pay off your student loans more quickly, there are a few ways to go about it. First, you could make extra payments. You want to make sure the bulk of your extra payment goes toward your principal, not the interest, so it might make sense to contact your servicers or lenders to let them know if you want to do that.

It will be helpful to see all of your expenses and income together to determine how much extra cash you can put toward your loans. Drawing up a budget can help you determine how much extra money you can put toward your student loan balance.

DIY Student Loan Debt Payoff Ideas

You could organize your student loan debt by either the highest interest rate or by the lowest total outstanding balance. These methods are commonly referred to as the debt avalanche and debt snowball, respectively.

Paying off the debt with the highest interest rate could help save you money in the long run, whereas paying off the smallest loan balance could give you a quick win.

Once you select a method, you might want to make sure you’re actually making a dent in the balance. One way to do that is to regularly check your balances and see what kind of progress you’ve made. If that method isn’t decreasing your student loan debt as quickly as you’d like, you could switch to a different one.

Refinancing Your Student Loans

Alternatively, you may want to work on ways to reduce your student loan payments. In that case, you could explore student loan refinancing.

When you refinance with a private lender, you replace your old loans with a new private loan, ideally one with a lower interest rate and better terms. Using a student loan refinance calculator can help you figure out how much you might save by doing this.

Once you know the potential savings involved, consider this critical question: Should you refinance your student loans? If it could save you money, refinancing might be worth pursuing. However, it’s important to know that if you refinance federal student loans, they will no longer be eligible for federal deferment or forbearance, loan forgiveness programs, or income-driven repayment. If you’re certain you won’t need access to these programs, refinancing may make sense.

Still not sure? This student loan refinancing guide is full of useful information that could help you decide whether refinancing is the right choice.

SoFi Student Loan Refinancing

If you decide to move ahead, student loan refinancing with SoFi could help lower your monthly payments, shorten your student loan term, or save you money on interest. You can choose flexible terms, and there are no origination or prepayment fees. Plus, you can prequalify and get your rate in minutes.

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

FAQ

How do I find out how much I owe in student loans?

To find out how much you owe in federal student loan debt, log into your account at StudentAid.gov. There, you’ll find your loan amount, the amount of interest that has accrued, and your loan servicer information, among other things. You can contact your loan servicer directly if you have additional questions about your loans.

Do student loans go away after seven years?

No, student loans don’t go away after seven years. There is no student loan forgiveness or cancellation program that is seven years. However, if you default on your federal student loans after 270 days of missed payments, the default goes on your credit report where it remains for approximately seven years. But even once the default status is removed from your credit report, it is still your responsibility to repay your loans in full.

Is $40,000 in student loans a lot?

While $40,000 is a lot of money, in terms of student loan debt, it’s about average. According to the Education Data Initiative, the average student loan borrower owes $41,618 in federal and private student loans.

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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

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

SoFi 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.


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.

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 Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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

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Are Student Loans Tax Deductible? What You Should Know About the Student Loan Interest Deduction

How the Student Loan Interest Deduction Works & Who Qualifies

By | Budgeting & Goals, Fresh Out of School, Student Loans, student_loan | No Comments

If you paid interest on your qualified student loans in the previous tax year, you might be eligible for the student loan tax deduction, which allows borrowers to deduct up to $2,500 in interest paid.

Here are some important things to know about the student loan interest deduction and whether you qualify.

Key Points

•   Borrowers can deduct up to $2,500 in student loan interest annually.

•   Eligibility requires being legally obligated to pay interest on a qualified student loan and not filing as married separately.

•   Income limits for full deduction are based on a borrower’s modified adjusted gross income (MAGI), and MAGI limits are typically changed annually.

•   Form 1098-E reports student loan interest a borrower paid over the year and is required for claiming the student loan interest deduction.

•   Other education-related tax benefits include 529 Plans, the American Opportunity Tax Credit, and the Lifetime Learning Credit.

How the Student Loan Tax Deduction Works

With the student loan tax deduction, a borrower can deduct a certain amount of interest they paid on their student loans during the prior tax year.

The interest applies to qualified student loans that were used for tuition and fees; room and board; coursework-related fees like books, supplies, and equipment, and other necessary expenses such as transportation.

So how much student loan interest can you deduct? If you qualify for the full deduction, you can deduct student loan interest up to $2,500 or the total amount of interest you paid on your student loans, whichever is lower. (You don’t need to itemize in order to get the deduction.)

Who Qualifies for the Student Loan Interest Deduction?

To be eligible to deduct student loan interest, individuals must meet the following requirements:

•   You paid interest on a qualified student loan (a loan for you, your spouse, or a dependent) during the tax year.

•   Your modified adjusted gross income (MAGI) is less than a specified amount that is set annually.

•   Your filing status is anything except married filing separately.

•   Neither you nor your spouse can be claimed as a dependent on someone else’s return.

•   You are legally required to pay the interest on a student loan.

The student loans in question can be federal or private student loans, as well as refinanced student loans.

What Are the Income Requirements for the Student Loan Tax Deduction?

The income requirements for the student loan tax deduction depend on your MAGI and your tax-filing status. The eligible MAGI ranges are typically recalculated annually.

For tax year 2024 (filing in 2025), the student loan interest deduction is worth up to $2,500 for a single filer, head of household, or qualifying widow/widower with a MAGI of $80,000 or less.

For those who exceed a MAGI of $80,000, the deduction begins to phase out. Once their MAGI reaches $95,000 or more, they are no longer able to claim the deduction.

For married couples filing jointly, the phaseout begins with a MAGI of more than $165,000, and eligibility ends at $195,000.

If you have questions about your eligibility, consider consulting a tax professional to make sure you can take advantage of the deduction.

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Other Tax Deductions for Students

In addition to the student loan interest rate deduction, there are other tax breaks that may be available to you if you’re a student, saving for college or paying for certain education expenses for yourself, a spouse, or a dependent. Here are three other tax benefits to consider:

529 Plans

A 529 college savings plan is a tax-advantaged plan that allows you to save for qualified education expenses — like tuition, lab fees, and textbooks — for yourself or your children. In 2025, you can contribute up to $19,000 per year without triggering gift taxes, and other family members can contribute to the fund, as well.

Savings can be invested and grow tax free inside the account. And while the federal government doesn’t offer any tax deductions, some states provide tax benefits like deductions from state income tax. Withdrawals must be used to cover qualified expenses; otherwise you will face income taxes and a 10% penalty.

American Opportunity Tax Credit

The American Opportunity Tax Credit (AOTC) helps offset $2,500 in qualified education expenses per student per year for the first four years of higher education. Unlike a tax deduction, tax credits reduce your tax bill on a dollar-for-dollar basis. And if the credit brings your taxes to zero, 40% of whatever remains of the credit amount can be refunded to you, up to $1,000.

To be eligible for the AOTC, you must be getting a degree or another form of recognized education credential. And at the beginning of the tax year, you must be enrolled in school at least half time for one academic period, and you cannot have finished your first four years of higher education at the beginning of the tax year.

Lifetime Learning Credit

The Lifetime Learning Credit (LLC) helps pick up where the AOTC leaves off. While the AOTC only lasts for four years, the LLC helps offset the expense of graduate school and other continuing educational opportunities. The credit can help pay for undergraduate and graduate programs, as well as professional degree courses that help you improve your job skills. The credit is worth $2,000 per tax return, and there is no limit to the number of years you can claim it. Unlike the AOTC, it is not a refundable tax credit.

To be eligible, you, a dependent, or someone else must pay qualified education expenses for higher education or pay for the expenses of an eligible student and an eligible educational institution. The eligible student must be yourself, your spouse or a dependent that you have listed on your tax return.

Look for Form 1098-E

If you’re wondering how to get the student loan interest deduction, keep an eye out for Form 1098-E, which you will need to file with your tax return. It will be sent out by your loan servicer or lender if you paid at least $600 in interest on your student loans for the tax year in question.

On Form 1098-E, your loan provider reports information on the interest you paid on your student loans throughout the year. The form goes out to student loan borrowers when the tax year ends, typically by mid-February. You can also check for the form on your loan servicer’s website and download a copy.

Note that you won’t receive this student loan tax form if you paid less than $600 in interest on your loan during the tax year.

Calculating Your Student Loan Interest Deduction

To figure out how much of a student loan interest deduction you can claim, start with your MAGI. If your MAGI is in the range to qualify for the full deduction, you’ll be eligible for $2,500 or the amount you paid in interest on your student loans during the tax year, whichever amount is less. (As you are calculating your MAGI, if you’re wondering, do student loans count as income, no, they do not.)

However, if your MAGI falls into the range where student interest deduction is reduced (which is more than $80,000 for single filers and $165,000 for joint filers in 2024), you can generally follow the instructions on the student loan interest deduction worksheet in Schedule 1 of Form 1040 to figure out the amount of your deduction when filing your federal income taxes. Then you can enter the calculated interest amount on Schedule 1 of the 1040 under “Adjustments to Income.”

One thing to note: For loans made before September 1, 2004, loan origination fees and/or capitalized interest may not be included in the amount of interest Form 1098-E says you paid. In this case, Box 2 on the form will be checked. If that applies to you, to calculate the full value of the interest deduction, start with the amount of interest the form says you paid, and then add any interest you paid on qualified origination fees and capitalized interest. Just make sure these amounts don’t add up to more than the total you paid on your student loan principal.

You can consult IRS Publication 970 for more information about how to do this, or consult a tax professional.

Common Mistakes to Avoid

Taking the student loan interest deduction can be somewhat complicated because there are a number of requirements involved. These are some common mistakes to watch out for.

•   Misreporting your income. Be sure to calculate your modified adjusted gross income (MAGI) correctly. It’s critical to use the right MAGI when determining if you are eligible for the student loan interest deduction and how much you can claim.

•   Deducting too much. The deduction is capped at $2,500 a year, no matter how much you paid in interest.

•   Deducting interest paid by someone else. If another person made some of your student loan payments for you — your parents, say — you cannot deduct the interest they paid. You can only deduct the interest you paid.

•   Failing to take the deduction. If you are eligible for the student loan interest deduction, be sure to take it. It can sometimes be easy to overlook this deduction in the hustle to get your tax information together.

Strategies to Reduce Student Loan Payments and Interest

Tax credits and deductions are one way to help cover some of the cost of school. Finding ways to lower your student loan payments is another cost-saving measure. Here are a few potential ways to do that.

•   Put money toward student loans by making additional payments to pay down your principal. Doing this may help reduce the amount of interest you owe over the life of the loan. Just make sure your loan does not have any prepayment penalties.

•   Make interest-only payments while you’re still in school on loans for which interest accrues, such as unsubsidized federal loans.

•   Find out if your loan provider offers discounts if you set up automatic payment. Federal Direct Loan holders may be eligible for a 0.25% discount when they sign up for automatic payments, for example.

•   Consider refinancing student loans. When you refinance, you replace your current student loan with a new loan that ideally has a lower interest rate or more favorable terms.

While there are advantages of refinancing student loans, such as possibly lowering your monthly payments, there are disadvantages as well. One major caveat: If you refinance federal loans, they are no longer eligible for federal benefits or protections. Also, you may pay more interest over the life of the loan if you refinance with an extended term. Weigh the options to decide if refinancing is right for you.

The Takeaway

Qualified student loan borrowers can take a student loan interest deduction of up to $2,500 annually. This applies to federal and private student loans as well as refinanced student loans.

You should get a form 1098-E from your loan servicer if you paid at least $600 in interest on your qualified student loans. Before you file for the deduction, make sure you qualify for it, and then figure out whether you are eligible for a full or partial deduction, based on your MAGI.

Whether you qualify for the student loan interest deduction or not, there are a number of ways to lower your monthly student loan payments, including putting additional payments toward your loan principal, signing up for automatic payments, and refinancing your student loans.

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.

FAQ

How much student loan interest can I deduct?

The amount of student loan interest you can deduct is the lesser of up to $2,500 annually or the amount of interest you paid on your student loans. However, to qualify for the full deduction in 2024, you must have a MAGI of $80,000 or less if you are a single filer, or $165,000 or less if you are filing jointly. You will be eligible for a partial deduction if your MAGI is less than $95,000 for single filers and less than $195,000 for joint filers. Keep in mind that the MAGI limits typically change yearly.

Do I need to itemize my deductions to claim the student loan interest deduction?

No, you do not need to itemize your deduction to claim the student loan interest deduction. The deduction is considered an adjustment to your income, according to the IRS, so there is no need to itemize. You can simply report the amount on Form 1040 when you file your taxes, and include a copy of your Form 1098-E, which shows the student loan interest you paid for the tax year.

Can parents deduct student loan interest if they pay for their child’s loans?

Parents who pay for their child’s student loans can deduct student loan interest only if they are legally obligated to repay the loan — meaning that the loan is in their name or they are a cosigner of the loan. However, if the loan is in the child’s name only, parents cannot take the deduction, even if they paid for their child’s loans. The rules can be confusing, so parents may want to consult a tax professional.

What happens if I refinance my student loans?

Refinanced student loans are eligible for the student loan tax deduction as long as the refinanced loan was used for qualified education expenses and your MAGI falls within the set limits.

Are private student loans eligible for the student loan interest deduction?

Yes, private student loans are eligible for the student loan tax deduction, as are federal loans and refinanced loans. As long as you paid interest on a qualified student loan, your MAGI is less than the specified limit for the year, your filing status is anything except married and filing separately, and you (or your spouse if applicable) can’t be claimed as a dependent on someone else’s return, you are eligible for the deduction as a private student loan borrower.

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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.


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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.

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