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After four years of hard work in high school, the moment of truth arrives as college acceptance letters begin to roll in. If you’re lucky enough to receive multiple offers, you’ve got a big decision to make.

Most final enrollment choices must be made by May 1st, widely known as College Decision Day. This is the deadline for prospective students who apply “regular decision” to confirm their enrollment and submit a nonrefundable deposit.

Making this choice can be difficult, with a number of factors to consider. Below are seven tips to help you and your family confidently navigate the decision-making process ahead of College Decision Day.

1. Getting Organized

While the hard work of submitting college applications is done, high school seniors still have several important tasks and deadlines to manage to ensure a smooth transition to college.

Here are some deadlines to keep in mind and documents you’ll want to organize leading up to (and just after) Decision Day.

Key Deadlines (for 2026 Entry)

•   FAFSA® submission: The federal deadline to submit the Free Application for Federal Student Aid (FAFSA) for the 2026-2027 academic year is June 30, 2027. However, individual states and colleges have their own FAFSA deadlines, which are often much earlier than the federal deadline. It’s a good idea to submit the FAFSA as early as possible because many grants and scholarships are awarded on a first-come, first-served basis until the funds run out.

•   CSS Profile (if required): The deadline for submission varies by school but typically falls between January 1 and March 31 for regular decision students.

•   College Decision Day: May 1, 2026 is the typical deadline to accept an admission offer and submit a deposit for fall 2026 enrollment.

•   Housing applications: For incoming freshmen, housing applications are often due within a week after the May 1 decision deadline, or around May 8.

•   Scholarship deadlines: Deadlines for scholarship applications occur all year round, but many fall between October and March.

•   Federal aid offer appeals: If your family’s financial situation has changed since you submitted the FAFSA or if you believe your initial application did not accurately reflect your ability to pay, you can appeal your financial aid award. Deadlines vary by school but, ideally, you want to submit it shortly after receiving your aid package.

Staying organized with a calendar or a checklist will help you avoid missing any important deadlines.

Important Paperwork to Keep Track Of

Consider setting up a folder (physical or digital) for all of the following:

•   Acceptance letters for each college you’re considering

•   Financial aid award letters

•   FAFSA submission confirmation

•   CSS Profile submission confirmation (if applicable)

•   Scholarship award letters

•   Communications with admissions/financial aid offices (e.g., emails, notes from calls)

•   Enrollment deposit receipts (once you’ve chosen a school)

•   Housing application confirmations (once you’ve chosen a school)

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

2. Comparing Financial Aid Offers

College can be expensive. Before you commit to a school, you’ll want to compare any financial aid offers you’ve received.

When you receive a financial aid award letter, it will outline how much aid is in grants and scholarships (which you don’t have to repay) versus federal student loans (which you do have to repay). The letter will also typically include the school’s cost of attendance. By subtracting the grant and scholarship amounts on your aid offer from the cost of attendance amount, you can come up with the school’s net cost. This is the amount you will have to pay out of your pocket using savings, earnings from work, and/or student loans.

Looking at the net costs for the colleges you are considering allows you to compare costs apples to apples and see which school best fits your budget.

3. Reserving Your Spot

Once you receive an offer letter, you can respond at any point — you don’t need to wait until College Decision Day. To secure your spot, you’ll usually need to pay an enrollment deposit.

What You Need to Know About Enrollment Deposits

•   This fee is typically nonrefundable.

•   Paying the deposit holds your spot in the incoming class.

•   Deposit amounts typically range from $100 to $1,000, depending on the school.

•   Try to avoid paying deposits to multiple schools (known as “double-depositing ”) just to buy extra time — this is generally frowned upon and can harm other students on waitlists.

4. Mulling Over the Waitlist

Being waitlisted by a college means you are not accepted or rejected, but are on a hold list for potential admission if spots open up after other accepted students decline their offers. You generally won’t hear back about a waitlist decision until after the national May 1 deadline. In some cases, students don’t find out until soon before the fall semester.

If you’re waitlisted, you typically need to accept or reject the waitlist offer. You generally only want to accept a waitlist offer if the school is truly your top choice. Otherwise, it’s a good idea to remove yourself from the list so other students can be considered.

If you accept a waitlist offer, consider how long you’re willing to wait and come up with a backup plan. That typically means putting down an enrollment deposit at another college you have been accepted to by College Decision Day. This ensures you have a place to go if you don’t get off the waitlist, even if you lose the deposit later.

5. When Decision Day Arrives

Ideally, you’ll make your final decision before May 1. Waiting until the last minute offers very little wiggle room if something goes wrong, like a technical glitch.

To accept a college admission offer, you’ll need to use the method specified by the school, which often involves logging into your student portal and paying a nonrefundable enrollment deposit.

You’re not required to formally decline a college acceptance — not accepting by May 1 is considered a rejection. However, it’s more respectful to decline. You can typically do this by logging in to the school’s online system and rejecting the admission offer. The sooner you reject an offer, the sooner the college can offer the spot to another student on the school’s acceptance waitlist.

6. If You Miss the Deadline

If you miss the May 1 deadline, you risk losing your spot because the college may fill it with someone else. You may also lose your financial aid package. However, you aren’t necessarily out of luck. Your best move is to contact the college admissions department as soon as possible. If you have a valid excuse, they may allow you to still accept their offer. Be sure to explain any emergency, problem, or other issue that kept you from submitting your decision and deposit in time.

7. Financing a College Education

Once you’ve accepted a college offer, you’ll have a clear idea of how much it will cost. As you and your family figure out how you’ll pay for college, student loans may come into play.There are two types available:

Federal Student Loans

Federal student loans are made by the U.S. government and have terms and conditions that are set by law. Federal loans can be subsidized (meaning the government pays the interest while you are in school and during certain other periods) or unsubsidized (you must pay all of the interest that accrues). Subsidized loans are offered to eligible students who demonstrate financial need; unsubsidized loans are available to eligible students regardless of financial need.

Federal student loans generally do not require a credit check and come with relatively low, fixed interest rates.

Federal Student Loans: What’s Changed for 2026

Major changes to federal student loans were enacted by the “One Big Beautiful Bill” Act (OBBBA) in July 2025, primarily affecting new borrowers starting in July 2026. Here’s are some changes that will impact undergraduates:

•  Fewer payment plans: OBBBA will reduce repayment options from the current seven plans down to two new plans. These include:

◦  The standard plan: Borrowers will be assigned a repayment window of between 10 and 25 years, depending on the size of their debt, and will need to make equal monthly payments. This is generally the best choice for those who want to pay off their loans quickly and minimize interest costs.

◦  The Repayment Assistance Plan (RAP): Borrowers who worry they won’t be able to make the fixed monthly payments on the standard plan, can choose the Repayment Assistance Plan (RAP). On RAP, payments range from 1% to 10% of a borrower’s Adjusted Gross Income (AGI), with forgiveness after 30 years of consistent payments.

•  Lower borrowing limits for parents: Parents and caregivers who use parent PLUS loans to help students pay for college will see new loan limits. These loans will be capped at $20,000 a year and, in aggregate, at $65,000 per child.

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

Private Student Loans

Private student loans are offered by private lenders like banks and credit unions to help cover educational and living expenses. They are typically used to bridge the funding gap when federal student aid (including federal student loans) and scholarships do not cover the total cost of attendance.

Unlike federal loans, private student loans are credit-based, meaning a borrower’s credit history is a key factor in approval and interest rates. Many students need a creditworthy cosigner to qualify.

Private lenders often allow borrowing up to the total cost of attendance (minus any financial aid), which can be higher than federal loan limits. However, private loans may have higher interest rates and generally lack the borrower protections available with federal loans, such as income-driven repayment and forgiveness programs.

The Takeaway

Choosing which college to attend is a major decision, and College Decision Day is the critical deadline. By staying organized, diligently comparing financial aid packages, and planning for how you will ultimately finance your education, you can navigate this stressful but exciting time successfully. Taking these preparation steps can help ensure you make the best choice for your academic future and financial well-being.

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

FAQ

What should I consider when comparing financial aid offers in 2026?

When comparing financial aid offers for 2026, the key is to look past the sticker price and focus on the net cost. This is the total cost of attendance (tuition, fees, room, board, and estimated personal expenses) minus any grant and scholarship money you receive. Grants and scholarships are essentially free money that does not need to be repaid, making them the most valuable part of your package. You’ll also want to closely examine the federal student loans offered, noting whether they are subsidized (the government pays the interest while you’re in school) or unsubsidized (you are responsible for all interest). If you’re eligible for work-study, that can also help you cover some of your costs.

What happens if I miss the College Decision Day deadline?

If you miss the College Decision Day deadline, you may lose your spot at your chosen school. Colleges often reallocate unclaimed offers to waitlisted students. Contact the admissions office immediately, as some may offer a short grace period. Missing the deadline can also impact your eligibility for financial aid and housing preferences.

Can I apply for more financial aid after receiving my college acceptance?

Yes, you can generally apply for more financial aid even after you’ve received your college acceptance and initial aid offer. The process is typically called a financial aid appeal. You’ll need to contact the college’s financial aid office to request this review. Generally, your odds of success are better if you can demonstrate a significant change in your family’s financial situation since submitting the FAFSA®, such as a job loss, unexpected medical expenses, or a parent’s divorce. You will need to provide documentation to support your appeal.

How can I appeal my financial aid offer?

To appeal your financial aid offer, contact your college’s financial aid office and ask about their appeal process. Typically, you need to submit a formal letter explaining your financial changes or special circumstances, such as job loss or medical expenses, and include documentation to support your case. Appeals are reviewed individually and may or may not increase your aid.

Are there any new student loan options for 2026?

Federal student loan options are undergoing significant changes for new borrowers starting in July 2026 due to the “One Big Beautiful Bill” Act (OBBBA) enacted in July 2025. For undergraduates, changes include a reduction in repayment plans from seven to two: the Standard Plan (fixed payments over 10-25 years) and the Repayment Assistance Plan, or RAP (payments based on 1%-10% of adjusted gross income, with forgiveness after 30 years). Additionally, new annual and aggregate borrowing limits for Parent PLUS loans have been set at $20,000 and $65,000 per child. Private student loans remain an option, typically used to cover costs beyond what federal aid provides.

How do recent federal policy changes affect my student loans?

The federal policy changes enacted by the “One Big Beautiful Bill” Act (OBBBA) in July 2025 will significantly affect new federal student loan borrowers starting in July 2026. For undergraduates, the most impactful change is the consolidation of the seven existing repayment plans into just two: the Standard Plan, which assigns fixed monthly payments over a 10- to 25-year period based on debt size, and the Repayment Assistance Plan (RAP), a new income-driven option where payments are set at 1% to 10% of the borrower’s adjusted gross income, leading to forgiveness after 30 years of consistent payments. In addition, parents using Parent PLUS loans to help finance their children’s education will face new limits, with annual borrowing capped at $20,000 and an aggregate limit of $65,000 per child.

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

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

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

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

SOISL-Q425-040

Student loans are considered installment loans, or loans that are repaid through regularly scheduled payments or installments.

Revolving options, like credit cards, let borrowers take out varying amounts of money each month, repay it, and take out more money as they go.

Read on to learn more about student loans, installment loans, and revolving credit — plus how student loans may affect your credit.

What Is Revolving Credit?

Revolving credit is an agreement between a lender and an account holder that allows you to borrow money up to a set maximum amount (or credit limit). The account holder can borrow what they need as they need it (up to their credit limit) and choose to pay off the balance in full or make minimum monthly payments on the account.

As the account holder makes repayments, the amount available to borrow is renewed. Account holders can continue to borrow up to the maximum amount through the term of the agreement. Examples of revolving credit include credit cards and home equity lines of credit (HELOCs).

What Is Installment Credit?

Installment credit is a type of credit that allows a borrower to receive a lump sum loan amount up front, then make fixed payments on the loan over a set period of time. Before the borrower signs an agreement for an installment loan, the lender will decide on the interest rate, fees, and repayment terms, which will determine how much the borrower pays each month.

Common examples of installment loans include federal student loans, private student loans, mortgages, auto loans, and personal loans.

And for borrowers who opt to refinance student loans, those loans are installment loans as well.

Revolving Credit vs Installment Credit

Now that you know student loans are installment and not revolving credit, it’s helpful to understand how these two types of credit compare.

Here’s a high level overview on the differences between installment loans vs. revolving credit.

Revolving Credit

Revolving credit is a more open-ended form of credit obligation. Let’s use the example of a credit card:

1.   The cardholder uses the card to make purchases as they please, pays them off either in-full or partially each month, and continues to make charges on the line of credit.

2.   The amount of money the cardholder spends is their decision (up to their credit limit), and the amount of money they repay each month isn’t set in advance by the lender.

3.   The cardholder can pay off the account balance in full each month, or they can opt to pay the minimum and “revolve” the balance over to the next month (though this will accrue interest on the account).

An important note: To avoid any late fees or potential dings to your credit score, it’s important to pay your monthly revolving bill on time. It’s also wise to keep your balances low, as your credit utilization rate is a major factor in your credit scores.

Installment Credit

Installment credit is less open-ended than revolving credit. Installment credit is a loan that offers a borrower a fixed amount of money over a predetermined period of time. When a borrower signs the loan agreement, they know what the monthly payments will be and how they will need to make payments.

Let’s use the example of a student loan:

1.   The student borrows a specific dollar amount. The lender specifies the interest rate and repayment terms. In the case of federal student loans, interest rates and terms are set by federal law.

2.   The predetermined loan amount is released to the borrower. Typically, the funds are released in a single lump sum payment.

3.   The borrower repays the loan based on the agreed upon terms. Terms will be set by the lender for private student loans, or by law for federal student loans.

An important note: If you only have revolving credit (such as a credit card), taking out an installment loan can diversify your credit mix, which is a factor in determining your credit scores. While an installment loan adds to your total debt, its balance does not factor into your credit utilization ratio (which is specific to revolving credit).

Pros and Cons of Installment Credit

Student loans for undergraduate school, as well as student loans that are refinanced, are considered installment loans, which means they come with a starting balance, are disbursed to the qualifying borrower up front and in full, and are repaid over a set amount of time through a fixed number of payments. There are advantages and disadvantages to taking out an installment loan, and it’s important to be aware of them:

Pros of Installment Credit

Here’s a closer look at two key advantages of installment credit:

Predictable Payments

Installment credit payments are made on a set schedule that’s determined by the lender. This makes them a predictable, long-term strategy for paying off debt, and also makes it easier to factor them into your budget, especially if the installment loan has fixed interest rates.

The monthly payment for an installment loan with a variable interest rate may occasionally change.

Lower Interest Rates

Installment loans often feature lower average interest rates than credit cards or other forms of revolving credit. This can result in significant savings on interest charges over time, especially for large loan amounts.

Cons of Installment Credit

But there are also disadvantages to installment credit. Two key drawbacks include:

Accumulation of Interest

While often lower than credit card rates, interest on an installment loan is paid over the entire life of the loan, which can add up to a significant amount of money over time, particularly for long-term loans.

Prepayment Penalty

Some loans impose prepayment penalties if a borrower pays their loan off early. This isn’t necessarily the case for all installment loans — as mentioned, student loans generally don’t have prepayment penalties. But it’s important to read the fine print in the loan agreement to determine whether a prepayment fee will be triggered if the loan is paid off early.

Recommended: How to Avoid Paying a Prepayment Penalty

How Student Loans Affect Your Credit Score

Student loans, like other loans, are noted on your credit report and they may affect your credit in both positive and negative ways.

On the plus side, making consistent, on-time payments, can help borrowers establish a positive payment history, which is the most significant factor (35%) in a FICO® credit score. Successfully managing an installment loan can also help diversify your credit mix, which can also have a positive impact on your credit profile.

However, failing to make your loan payments can negatively impact your credit. A federal student loan payment is considered delinquent even when your payment is just one day late. After 90 days of missed payments, your loan servicer will report the delinquency to the national credit bureaus. Late payments can stay on your credit report for up to seven years.

(After 270 days of missed payments, your loan will go into default, which can have very serious consequences for your credit and your financial situation in general. If you are having trouble repaying your student loans, reach out to your lender or loan servicer right away to see what your options are.)

If you apply for a private student loan or student loan refinancing, lenders will typically do a hard credit inquiry, which may temporarily lower your credit score. Most federal student loans do not require hard credit inquiries.

Ways to Pay for School

There are a variety of ways to pay for college, including student loans, savings, financial aid, and scholarships. Here’s a closer look at your options:

Federal Student Loans

Federal student loans are installment loans available to students. To apply, students fill out the Free Application for Federal Student Aid (FAFSA®) each year. Federal student loans have fixed interest rates that are set annually by Congress, offer different repayment options, and have some borrower protections and benefits such as deferment and the option to pursue Public Service Loan Forgiveness.

However, there are borrowing limits for federal student loans, and other changes are coming to the federal student loan program as of the summer of 2026, so students may need to review other sources of financing when determining how they’ll pay for college.

Private Student Loans

Private student loans are installment loans you can use to pay for a college education. Private student loans are offered by private lenders. To apply for them, borrowers can browse the offerings of individual lenders like banks, credit unions, and online lenders and decide which private student loan works best for their finances. As a part of the application process, lenders will generally review the applicant’s (or their cosigner’s) credit history and credit score among other factors.

Private student loans can help bridge funding gaps after other sources of financing — such as federal loans, grants, and scholarships — have already been exhausted. This is because private lenders are not required to offer the same borrower protections as federal student loans. If you think private student loans are an option for you, shop around to find competitive terms and interest rates, and be sure to read the terms and fine print closely.

As mentioned, a borrower may choose to refinance private student loans at a later date, especially if they can qualify for more beneficial terms or a lower interest rate. Federal student loans can also be refinanced, but if a borrower chooses this option, they will lose access to federal benefits and protections like federal deferment and forgiveness.

Personal Savings

Using personal savings to pay for college means less debt and more flexibility. Not only that, but it costs significantly more to borrow money to pay for college than it does to use personal savings.

Using personal savings to pay for college means less debt and more flexibility. Using savings also allows you to save money on interest, which can make college less expensive. That said, not everyone has enough savings to cover the full cost of attending college.

Grants

Unlike student loans, which require repayment, grants are a type of financial aid that doesn’t require repayment. Grants are typically based on financial need. Completing the FAFSA will put you in the running for federal, state, and institutional grants.

Recommended: The Differences Between Grants, Scholarships, and Loans

Scholarships

A scholarship is a lump sum of funds that can be used to help a student pay for school. Scholarships usually don’t have to be repaid, and can be need-based or merit-based. You can find out about scholarships through your high school guidance office, college’s financial aid office, or by using an online scholarship search tool.

Work-Study Programs

Federal work-study programs allow students with financial need to work on- or off- campus and earn money through part-time jobs. The program encourages students to do work related to their course of study or community service.

Work-study programs are funded by the federal government. Students may be awarded a certain work-study amount by filling out the FAFSA. Not all schools participate in federal work study, however, so if you are interested in this option, make sure your school offers it.

The Takeaway

Student loans are a common form of installment credit. This means they are dispersed as a lump sum and require making fixed, regular payments over a predetermined period. Unlike revolving credit such as credit cards, student loans offer predictable budgeting and often come with lower interest rates.

Managing student installment loans responsibly can positively impact your credit profile. However, late or missed payments can have serious negative consequences. Understanding the differences between installment and revolving credit, and exploring various funding options for education, can empower you to make informed financial decisions for your academic journey and beyond.

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

FAQ

Is a student loan an installment loan?

Yes, a student loan is an installment loan. This means you receive a lump sum of money up front and repay it over a set period with a predetermined number of regular payments.

Is a student loan a revolving loan?

No, a student loan is not a revolving loan. Revolving loans, like credit cards, allow you to borrow varying amounts up to a set credit limit, repay, and then borrow again. Student loans are installment loans, meaning you receive a lump sum and repay it with fixed, scheduled payments over a set period.

What are the benefits of an installment student loan?

The benefits of an installment student loan include predictable payments, which makes budgeting easier, and often lower interest rates compared to revolving credit. They also allow you to finance a major purchase like an education and can help diversify your credit mix.

Can student loans help build credit?

Yes, student loans can help build credit. Making regular, on-time payments on your student loan demonstrates responsible financial behavior, which contributes positively to your payment history — a major factor in your credit score. Successfully managing an installment loan like a student loan can also help diversify your credit mix, which can further enhance your credit profile.

What’s the difference between federal and private student installment loans?

Federal student loans generally offer lower rates and more borrower protections, such as income-driven repayment and potential for loan forgiveness. Also, they typically do not require a hard credit inquiry. Private student loans, offered by banks and other financial institutions, may have fewer borrower protections and repayment options, and usually require a credit check and potentially a cosigner. Interest rates and terms for federal loans are set by law, while private loan terms depend on the lender and borrower’s creditworthiness.

Photo credit: iStock/SDI Productions

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

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

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

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

SOISL-Q425-031

Uninsured motorist coverage shields you from having to pay for injuries and property damage in accidents that weren’t your fault and were caused by an uninsured driver.

According to the Insurance Research Council, 15.4% of motorists on the road are uninsured. Purchasing uninsured motorist coverage reduces the likelihood that you’ll have to pay out of pocket if you’re involved in an accident caused by one of these irresponsible drivers.

It’s generally a good idea to add uninsured motorist coverage to your auto insurance policy, as it’s fairly inexpensive, usually only costing an extra $5 – $10 a month, per vehicle, for policyholders with clean driving histories. Below, we give you the scoop on the different kinds of uninsured motorist coverage and what these policies entail.

Breaking Down Uninsured Motorist Coverage Variations

There are two main kinds of uninsured motorist coverage. Similar to your standard auto insurance policy’s collision and bodily injury coverage, this kind of policy breaks down into uninsured motorist bodily injury coverage and uninsured motorist property damage coverage.

•   Uninsured motorist bodily injury coverage: Covers your party’s medical expenses and related costs in accidents caused by uninsured drivers.

•   Uninsured motorist property damage coverage: Covers your repair bills and related costs in accidents caused by uninsured drivers.

Bodily injury and property damage coverage for uninsured motorists are sometimes packaged and sold together when you purchase uninsured motorist insurance. However, this isn’t the case with all policies; check with your insurance provider to know for sure. Now, let’s take a closer look at each of these kinds of coverage.

Uninsured Motorist Bodily Injury Coverage (UMBI)

Uninsured motorist bodily injury coverage (UMBI) pays for the cost of medical bills, lost wages, pain and suffering, and funeral costs (though we hope that is never needed) in the event an uninsured driver causes an accident in which you’re the victim.

In some instances, this policy may pay out if you, as a pedestrian or bicyclist, are involved in an accident caused by an uninsured driver. Check with your car insurance provider to confirm whether this might be covered.

UMBI typically does not have a deductible to meet; you would get full reimbursement of the costs.

Uninsured Motorist Property Damage Coverage (UMPD)

Uninsured motorist property damage coverage (UMPD) pays for the cost of repair bills for either your vehicle or property in the event either is involved in an accident caused by an uninsured driver.

Unlike bodily injury coverage, UMPD often requires the payment of a deductible when used. This is usually set by state law and typically is between $100 and $1,000.

Recommended: How Does Car Insurance Work?

Uninsured vs Underinsured Motorist Coverage

Here’s another kind of coverage you should know about: underinsured motorist coverage, which helps cover your costs if you’re involved in an accident where the party at fault has insufficient insurance coverage to pay for your medical costs.

Underinsured motorist coverage differs from uninsured motorist coverage in that it’s designed to cover any shortfalls in your costs due to the underinsured motorist’s inadequate insurance policy. By contrast, uninsured motorist coverage covers your bills due to the uninsured driver’s failure to purchase insurance.

Similar to uninsured motorist coverage, underinsured motorist coverage also comes in bodily injury and property damage variants. Both bodily injury and property damage coverage is usually packaged and sold together, though insurance policies may vary.

Underinsured motorist coverage is sold separately from uninsured motorist coverage, and states can have different coverage requirements for each. Check with your insurance provider to verify whether you need to purchase these separately.

Uninsured Motorist Coverage Limits

Your auto insurance quote will typically break down your uninsured motorist coverage limits into two numbers: a smaller dollar figure followed by a larger dollar figure, separated by a slash. For example, $100,000/$300,000.

This can also be expressed as follows:

•   $100,000 per person

•   $300,000 per accident

These two numbers represent the per person and per accident coverage limits of your uninsured motorist insurance. The per person limit is the maximum your insurance company will pay for any single individual injured in a covered accident. Conversely, the per accident limit is the maximum your insurance company will pay for a covered accident, regardless of how many injured people are in your party.

How Uninsured Motorist Coverage Limits Work

If you’re thinking, “But what exactly does that mean?” we hear you. Let’s spell out how this coverage would work using the $100,000/$300,000 example above. If you have a family of five that’s riding in a car that gets hit by an uninsured driver, the maximum amount your insurance company will pay for their cumulative medical bills is $300,000, despite each individual’s coverage limit being $100,000.

If you’re ever involved in an accident caused by an uninsured driver where your costs exceed your coverage limits, in most cases, your health insurance policy will usually kick in to cover the balance. Consult your insurance providers for the specifics on your policies.

Recommended: How Much Auto Insurance Do I Really Need?

How Much Uninsured Motorist Coverage Do I Need?

The answer depends on whether your state requires uninsured motorist coverage. If it does, you must buy at least the state’s minimum (for more details, see below). Typically, this amount will match your liability coverage amounts. If your state does not require this kind of coverage, consider variables like the healthcare costs in your state and how much your vehicle is worth. Generally, uninsured motorist coverage is fairly affordable and is a worthy investment for some peace of mind.

According to the Insurance Research Council, more than one in seven drivers on the road are uninsured. This figure is even higher in states like Mississippi, where over 28% of drivers on the road are estimated to be uninsured.

Based on those figures, residents of higher-risk states may be well served by purchasing uninsured motorist coverage. Conversely, it might not be as high of a priority for residents of lower-risk states, like Maine and Utah, where 5.7% and 6.2% of drivers respectively are estimated to be uninsured.

Now, let’s circle back to the states that do require this kind of policy. The table below lists the regulations regarding the minimum required uninsured and underinsured motorist coverage for each state.

Recommended: What Does Liability Auto Insurance Typically Cover?

Uninsured/Underinsured Motorist Coverage Requirements by State

Let’s take a look at the guidelines in every state, so you can see how much coverage may be required where you live. In each category, the amount shown is per person/per accident. When there is not a figure in an area of the chart, that means the insurance isn’t required.

^*New Hampshire does not require drivers to purchase auto insurance, but drivers who do choose to purchase auto insurance must have at least the minimum uninsured/underinsured motorist coverage amounts listed. ** In January 2026, New Jersey’s minimum limits for uninsured/underinsured motorist coverage will increase to $35,000/$70,0000.

Recommended: 5 Steps to Switching Your Car Insurance

How Much Does Uninsured Motorist Coverage Cost?

Depending on how much uninsured motorist coverage you choose to purchase and your personal driving habits, your costs could be as little as $5 to $10 per month. This figure also tends to vary widely based on the overall percentage of uninsured motorists in your area, according to national insurance data.

Insurance premiums vary widely across drivers, states, and even insurance providers, so make sure you check around for a personalized quote.


💡 Quick Tip: Saving money on your fixed costs isn’t always easy. One exception is auto insurance. Shopping around for a better deal really can pay off.

The Takeaway

The prospect of being in an accident caused by an uninsured driver is a real concern, given the number of these motorists on the road. Adding uninsured motorist coverage to your auto insurance policy may be a good idea. In some states, it may even be required by law. For a relatively low cost, you can protect yourself from the possibility of being left with bills because another driver didn’t have enough insurance. The right package of car insurance policies is one way to protect yourself from unexpected circumstances.

When you’re ready to shop for auto insurance, SoFi can help. Our online auto insurance comparison tool lets you see quotes from a network of top insurance providers within minutes, saving you time and hassle.

Photo credit: iStock/RyanJLane

Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
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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.

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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The office of Federal Student Aid provides over 9.9 million college students with more than $120 billion in grant, work-study, and student loan funds each year to help pay for college or career school. However, there are situations where students can lose their financial aid.

Students will want to consider how their grades affect financial aid to avoid having federal college aid taken away. Generally, you’ll need to make satisfactory academic progress (SAP) each term to continue receiving federal financial aid, but you may be able to regain lost aid by filing a financial aid appeal.

If you’ve received aid through private scholarships or grants, you may need to meet their minimum requirements to remain eligible for gift aid. Private lenders may also have minimum GPA requirements, but these vary by lender.

Types of Financial Aid

There are many types of financial aid available to college students from the federal government, states, schools, and private sources. This funding can be used to cover most higher education costs, such as tuition and fees, room and board, and books.

Sallie Mae’s 2025 “How America Pays for College” survey found that while parent income and savings covered nearly 50% of college costs during the 2024–25 academic year, families still heavily relied on financial aid and federal loans to cover the other half.

Grants & Scholarships

College grants and scholarships are a form of financial aid that can help make college more affordable because they don’t usually need to be repaid. The U.S. Department of Education, colleges, and universities award an estimated $256.7 billion in grant and scholarship money to students each year. The Sallie Mae survey found that scholarships and grants covered approximately 27% of school costs for families in 2024-25.

The biggest differences between college grants and scholarships are where the funds come from, eligibility requirements, and the application process. Grants are typically given based on financial need while most scholarships are merit-based. Scholarships may be awarded to students based on their academic or athletic achievements, extracurricular activities, fields of study, and more.

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

Federal Work-Study

Federal Work-Study is a form of financial aid that offers students funds via part-time employment on campus. Several factors determine whether a student is eligible to participate in the Federal Work-Study program, including their family’s income and the student’s enrollment status at the school.

As with other forms of federal financial aid, a student’s grades affect their eligibility. Students are expected to make SAP, which is a school’s standard for satisfactory academic progress toward a degree or certificate.

Student Loans

Student loans can either come from the federal government or private lenders. To qualify for a federal student loan, students must demonstrate financial need, fill out the Free Application for Federal Student Aid (FAFSA®), be enrolled in an eligible degree or certificate program at least half-time, and maintain SAP.

Another option is to take out a private student loan; however, this is generally only considered after all other options have been exhausted. Private student loans may be more expensive than federal student loans and don’t offer the same borrower protections, such as access to income-driven repayment and forgiveness programs. Private lenders can set their own terms and repayment plans so you should read the loan terms closely before making any borrowing decisions.

Recommended: How to Pay for College

How Grades May Affect Financial Aid

If you find yourself struggling in school, you may be wondering how grades affect financial aid.

State and federal financial aid, such as grants, loans, and work-study, require students to maintain satisfactory academic progress while working toward a degree. Academic performance is evaluated based on each school’s individual policy.

Your school’s policy will tell you what grade point average (GPA) or equivalent you must maintain, the minimum number of credit hours you need, the required pace of course completion, maximum time frame allowed, and more.

As far as how grades affect financial aid, federal regulations state that students must maintain a 2.0 cumulative GPA, or a grade of “C”, on a 4.0 scale. Additionally, students must complete at least 67% of cumulative credits attempted, and progress through their undergraduate program no longer than 150% of the published length of the educational program.

Private scholarships and grants may have their own academic requirements. Dropping below the minimum requirements could result in termination of the scholarship or grant money for the following term but typically does not require repayment. If you receive a scholarship or grant, make sure you read the fine print to see if your grades affect your financial aid.


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

Do Grades Affect Private Student Loans?

Typically, no. However, each lender has different eligibility criteria for student borrowers. Similar to other types of loans, private student loans are given based on factors including your (or you cosigner’s) finances and credit history and, depending on the lender, there may or may not be a GPA requirement. Private lenders usually care more about your ability to repay the loan than your grades, but again, each lender is different.

If you’re interested in a private student loan, check with the lender to see if there are any student loan GPA requirements before making your decision.

Recommended: I Didn’t Get Enough Financial Aid: Now What?

Regaining Lost Financial Aid Due to Low Grades

Have you lost financial aid due to low grades? You may still be able to get it back. Losing financial aid due to low grades means you aren’t satisfying your school’s SAP requirements.

Visit a Financial Aid Office

One of the first things to do after losing financial aid due to low grades is to visit your school’s financial aid office to discuss your options. Your financial aid office can help you formulate a plan to improve your grades so that your financial aid can be reinstated.

Make sure to ask about the requirements for the financial aid that you are or were receiving and find out if you’re able to file a financial aid appeal.

File a Financial Aid Appeal

You can file a financial aid appeal, or an SAP appeal, if your school allows it and if the poor performance was due to circumstances outside of your control. There must be a link between poor performance and the special circumstance. Some acceptable situations include:

•   Death of a relative

•   Severe personal injury or illness

•   Other special circumstances determined by the school

If you can prove your lower grade directly correlates to one of these situations, then it may be possible for you to regain your financial aid. Check your college’s website for directions and for more information on filing a SAP appeal.

The Takeaway

Your grades do affect your financial aid and federal student loans. Generally, if your cumulative GPA dips below a 2.0, you will no longer be considered to be in good academic standing. However, if your low grades are due to extenuating circumstances, you can try to appeal. Other forms of financial aid, like private grants and scholarships, may also have their own set of academic requirements.

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

FAQ

Can financial aid be taken away for bad grades?

It’s possible. You must remain in good academic standing to keep any type of state or federal financial aid, such as grants, loans, and work-study. Private scholarships and grants may also have their own set of requirements to keep any gift aid.

While private lenders typically don’t have any student loan GPA requirements, each lender is different.

Do you get more financial aid if you get good grades?

Most federal financial aid programs do not take your grades into consideration when determining how much financial aid to give. However, bad grades can hurt your federal financial aid availability.

Good grades are even more important to recipients of merit scholarships and some grants but there are scholarships that do not take grades or GPA into consideration.

Will my FAFSA be affected if I fail a class?

As long as you meet your school’s definition of Satisfactory Academic Progress (SAP), one failed class won’t affect your financial aid package.

Photo credit: iStock/harunhalici

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

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

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

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SOISL-Q425-033

Not all wills are alike. There are actually four main kinds and one of them may be right for you. Sure, writing a will can be an easy task to put off until “someday.” But what if the worst were to happen before “someday?” That could mean a complicated and emotionally draining legal process for your loved ones. Creating a will not only can provide peace of mind for your loved ones after you die — it can also provide peace of mind for you right now.

The simple definition of a will is a document that states your final wishes. This alone was sufficient a century ago, when many people had limited property to pass down. But in the modern era, when “property” encompasses everything from the contents of your long-forgotten storage unit to the crypto you decided to buy on a whim, a simple will may not encompass your complex life.

Not only that, but a will is a document that only takes effect after you die. But what if you were medically unable to make decisions? Modern end-of-life documents encompass your wishes if you were medically or otherwise unable to make decisions on your own. Among these documents is one that also has the world “will” in its name.

4 Kinds of Wills

As you begin estate planning, you’ll likely come across four common types of wills. These are:

•   A simple will

•   A joint will

•   A testamentary trust will

•   A living will

Let’s look at each type of will more closely.

What Is a Simple Will?

A simple will may be the type of will that pops into your mind when you hear the word “will.” This will can:

•   State how you want your property bequeathed upon death

•   Provide guardianship specifications for minors

Upon death, a simple will is likely to go through a legal process known as probate to divide assets. Sometimes, in the case of high-net-worth individuals, probate can be expensive. (For those with complex situations and a positive net worth, a trust can help handle those what-ifs. It can transfer assets out of your estate and into the trust, which can be advantageous in terms of taxes.)

However, in many situations, a simple will can provide peace of mind for people in good health. Later, these individuals may want to take on more complex estate planning, but a will provides a good foundation when it comes to making sure guardians are named and property is divided according to your wishes.

A simple will can be created through online templates, and the cost can be zero dollars to several hundred dollars. More expensive online options may come with support from an attorney who can help answer questions. Once created, a will then needs to be made legal according to state laws. This may include signing the will in front of witnesses. You may also want to have it notarized. Having a hard copy of the will, as well as people who know how to access it in case of your death, can ensure the will is found in a timely manner.

Recommended: How to Make a Will: 7 Steps

What Is a Joint Will?

A joint will functions in much the same way as a simple will, except it is a will created by two people, usually who are married to each other. It merges their wishes into a single legal document. In many cases, this kind of will dictates that property will be left entirely to the surviving partner. Here’s the catch, though: Upon death, property will be distributed in the manner dictated by the will. The surviving person does not have the ability or authority to make changes to what the will says once the initial spouse has died.

This can sound streamlined, especially if couples were planning to leave everything to each other anyway. But this type of will can cause headaches. For example, if the surviving spouse has more children or gets remarried, it can be almost impossible to provide for additional people not named in the initial, joint will.

There could be problems even if the surviving spouse does not remarry. For example, if the marital home is considered an asset to be given to the couple’s children upon the death of both of the will’s creators, it may be impossible for the surviving spouse to sell a home to downsize.

One alternative that may suit married couples is to create two individual wills. This may provide a greater degree of flexibility and better achieve the desired effect without ruling out all of life’s what-ifs.

What Is a Testamentary Trust Will?

A testamentary trust will is usually part of big-picture estate planning. It is a document that creates a trust that goes into effect when you die. This trust can outline how certain types of property will be divided. A testamentary trust can have certain stipulations (for example, someone only inherits X piece of property when they reach Y age). This can also be used for people with minors or dependents to help ensure that wishes are followed.

What’s more, a testamentary trust can also help provide for pets. Because a pet can’t own property, naming your “fur baby” within a will can set up a legal headache. But a testamentary trust can ensure that your pet will be provided for according to your wishes.

It’s worth noting that a testamentary trust will go through the probate process, and it may not have the same tax benefits for recipients as other types of trusts. Weighing the pros and cons of different trust options can be helpful before settling on the best one for your situation.

What Is a Living Will?

This is a hard topic to think about, but what if you were in an accident and were knocked unconscious? What if you were undergoing treatment for a serious medical condition and couldn’t fully grasp the options offered to you? There’s a way to put a trusted relative or friend in the decision-making role. A living will, which is also known as an advance directive, specifies your wishes if you were medically incapacitated or unable to make or communicate decisions about your medical care. It also stipulates who your healthcare proxy, also known as a medical power of attorney, would be to make medical decisions on your behalf.

If you are creating a living will, you may also want to create a power of attorney document. This designates a person — who may or may not be the same person as your healthcare proxy — who has the right to make financial decisions on your behalf. Having a living will can cover unexpected situations that may occur before death and can be an integral part of end of life planning.

Recommended: How to Write a Will Online: 8 Steps

The Takeaway

While end of life planning can be a challenging or sad endeavor, it’s an important step in making sure your assets are directed where you want them to go and that other important wishes are executed as you want. There are four main types of wills to help you legally record your plans; more than one may suit your needs. And you can decide to use online services or work in person with an attorney.

In either case, making a will can give you peace of mind right now — and help smooth things along for your loved ones in the future during a difficult time.

When you want to make things easier on your loved ones in the future, SoFi can help. We partnered with Trust & Will, the leading online estate planning platform, to give our members 20% off their trust, will, or guardianship. The forms are fast, secure, and easy to use.

Create a complete and customized estate plan in as little as 15 minutes.

Photo credit: iStock/LaylaBird

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