Aug

2022

How to Buy and Invest in Ethereum

By Samuel Becker | Growing Wealth, invest, Investing | Comments Off

Cryptocurrency may be the new kid on the block in terms of investing, but some cryptos are rapidly gaining value. And while Bitcoin may get the lion’s share of attention among cryptocurrencies, other alternative assets, like Ethereum (ETH), are hot on its heels. For aspiring crypto investors, one of the first questions that comes to mind is how to buy Ethereum.

But before learning how to invest in Ethereum, it’s important to get to know the history, attributes, and other details of this popular cryptocurrency. In this article, we’ll address:

• What Is Ethereum?

• How to Buy Ethereum.

• Buying Ethereum: Important for Investors.

Ethereum 101 Overview

Ethereum is a blockchain-based platform used to make peer-to-peer transactions and build applications. It may be easier to think of Ethereum as an application marketplace, rather than a currency. Ether (ETH) is the platform’s native coin, and it can be bought and sold by investors, like Bitcoin (BTC) and other types of cryptocurrencies on the market; but their underlying technologies and utility are quite different.

What is Ethereum, exactly? A goal of Ethereum is to provide programmers and developers with a platform to build decentralized programs; a way to create computer apps without getting involved with the middlemen who generally want to control access to the apps — like how Google or Apple have control over their respective app stores.

Ethereum’s value stems from key attributes: One, it has intrinsic value — people are willing to pay for it with cash (fiat currency, like the U.S. dollar), for example. And two, it comprises an actual platform with a degree of utility — a claim which many other cryptos cannot make. Today, hundreds, if not thousands, of businesses and industries use ETH as their foundation.

Four Steps to Buying Ethereum

If you want to purchase or invest in Ethereum, it’s not difficult to get started. While Ethereum itself is something of a complicated asset, buying it or investing in it is straightforward — particularly for investors who already have cryptocurrency among their assets. Here is a simplified, step-by-step guide to investing in Ethereum.

1. Get a Crypto Wallet

Anyone serious about investing in Ethereum would need to get a crypto wallet, which lets you store cryptocurrencies safely. Digital assets can be vulnerable to theft, so it’s important to keep your assets safe. Some wallets are made by the coin developers themselves, others are made by a third-party developer.

2. Create an Account on a Crypto Exchange

Investors would also need to create an account on a crypto exchange of their choosing, on which they may buy and sell cryptocurrencies, including Ethereum. Think of a crypto exchange as similar to a stock exchange. Crypto exchanges are either centralized, decentralized, or hybrid. Some investors find centralized exchanges useful because of the third-party oversight that helps transactions go through properly, and allows for exchanging fiat for crypto.

3. Fund Your Account

With a wallet and an exchange account, the next step is to have a medium to exchange for Ethereum. For most people, this simply means funding their account with good old dollars and cents (fiat). The process is similar to funding a brokerage account, so you can buy stocks or bonds. Once you fund an account, the resources will be at hand when you’re ready to trade.

4. Start Buying Ethereum!

With a verified and funded account, investors should be ready to start buying Ethereum with as little as $10. While the specific steps for buying or selling cryptocurrency will depend on the specific exchange, it’s generally similar to buying stocks through a brokerage.

Whatever the exchange, you’re now positioned to start trading or buying Ethereum. And once the trades have settled, remember to withdraw the assets into the aforementioned digital wallet for safekeeping.

Where to Buy Ethereum

You can buy Ethereum on almost every crypto platform; you may even see crypto ATMs, some of which might offer ETH.

The most common place to buy or sell ETH is on a cryptocurrency exchange. Crypto exchanges usually offer convenient ways to deposit and exchange fiat; along with reasonable fees, and a large selection of crypto assets. Some traditional finance (TradFi) brokerages also offer a limited selection of cryptos, along with the more conventional assets, like stocks and bonds. Most brokers and exchanges also have mobile apps to make it easy to trade on the go.

Selling Ethereum

Say you’ve been investing in Ethereum for a time, and the asset has performed well; such that you’re thinking about withdrawing some of your ETH to convert to fiat (USD) to pay for some badly needed home repairs (not all U.S. retailers accept cryptocurrencies as payment for goods and services). Can you do that, and is it difficult? Yes, and no. Selling Ethereum is pretty straightforward, too.

The most common way to cash out your ETH is by using a peer-to-peer crypto exchange, though it’s also possible to sell it to an individual user directly — either someone you know, or via advertising. If you opt to sell directly, it’s wise to keep safety at the forefront: Make sure that the person you’re trading with has the funds available and is ready to commit to the transaction. Double-check your data for any errors: Check the public exchange address, the amount you are selling, what you’re getting in return, the exchange rates, and fees.

Advantages and Disadvantages of Buying Ethereum

In 2022, the only crypto that could potentially exceed Bitcoin in terms of market capitalization and popularity is the second-largest crypto, Ethereum. However, it’s a mistake to think that BTC and ETH are rivals; they are not. Technically, Ethereum is not even a cryptocurrency. Rather, Ethereum is a powerful computer that runs on blockchain technology, on which developers can build all kinds of apps. It’s more accurate and appropriate to think of these two assets as complimentary — each with a critical role to fulfill.

Benefits of Buying Ethereum

• Coming upgrades could resolve old issues: Ethereum has been working toward switching from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism, which is slated to finish in fall 2022. Industry watchers believe that this initiative — called the Ethereum merge, or Ethereum 2.0 — could reduce ETH’s energy consumption by more than 99% of its current levels. In addition, the new upgrades could potentially make Ethereum more affordable for users to mint and develop products, as right now the service fees (gas) to use ETH are notoriously high.

• ETH is highly liquid: One of the main reasons people are attracted to Ethereum is that it’s among the more liquid cryptocurrencies. You may exchange it quickly and easily.

• A volatility play: Although the concept of volatility mostly presents a challenge for investors, a savvy and nimble trader could in fact turn a volatile Ethereum marketplace into a net positive event. How? By identifying patterns in the volatility, then customizing strategies to profit from them.

Risks of Buying Ethereum

• Too-high expectations: The risks of buying ETH are similar to those of buying any other crypto. That said, each crypto can carry unique risks, endemic to that coin only. Moreover, some benefits can also be interpreted as risks, as is the case with the Ethereum merge cited above. Investors and the entire crypto/blockchain sector alike have high hopes for Ethereum 2.0 and eagerly anticipate the merge. As with any new tech, there’s a risk that it could go awry; might not achieve its hoped-for results, could prove more expensive than projected, or might not happen at all.

• An evolving industry: The crypto and blockchain sectors are still new, and they’re changing all the time. In the midst of this, the Securities and Exchange Commission (SEC) and other governing agencies are trying to catch up by drafting regulations for these sectors on the fly. We don’t know what will happen to the crypto sector in the future; nor how many of today’s crypto platforms and exchanges would even be around in the next decade.

• More volatility: By now, you’re probably used to hearing the term volatility used synonymously with the crypto market. It’s a perfect example of how, as cited above, in different hands an asset can just as easily become a liability.

Ethereum: Investing Reminders

Remember that cryptocurrencies, and blockchain assets like Ethereum, are inherently risky investments. The rule of thumb here is the time-worn mantra not to invest more money than you’re prepared to lose. And, especially when the asset class, itself, presents a market risk. If you don’t have much of a stomach for wild fluctuations in value, then that’s something to consider before buying Ethereum.

Other Key Considerations

• Largely unregulated: Ethereum exists in the same gray area as other cryptos when it comes to cryptocurrency regulations. Some exchanges are as regulated as they can be, considering that defining rules for cryptocurrency is a work in progress; while other exchanges are still primarily unregulated.

• Possibility of theft: Other risks to consider include the possibility of theft and other prevalent crypto scams.

• What about crypto forks?: Forks are complicated. In brief, there are hard and soft forks. If a blockchain experiences a fork, it means that there’s been a change in its protocol. Effectively, the network creates a new “chain,” and all users must upgrade to the latest software and new protocols. Essentially a change in rules, forks can happen at any time, and could cause some problems for Ethereum users who are caught unaware.

Ethereum and the Internal Revenue Service (IRS)

Finally, as discussed above, it’s crucial to remember that you could owe taxes on your Ethereum holdings. As with writing government regulations for cryptocurrencies, creating tax laws for our newest asset class, is an ongoing enterprise that will continue to grow and change along with the blockchain and crypto sector.

💡 Recommended: Crypto Tax Guide 2022

FAQ

Has Ethereum typically been a profitable investment?

Historically, yes. Priced at $0.311 per share at its inception in 2015, ether (ETH) rose to its highest price of around $4,800 in late 2021. Ether’s return on investment (ROI) is almost 300% annualized, which means that early investors in ETH have nearly quadrupled their investment every year since the summer of 2014.

Ethereum has been profitable over time, but of course past performance is no guarantee of future results. And because of crypto’s extreme volatility, and ETH’s imminent transition to a PoS network, some experts are hesitant to speculate about ETH’s forward results.

Other experts think that Ethereum’s impending upgrade to a proof-of-stake network could make ETH even more appealing to investors, and sustainable for widespread use. On the heels of the merge (discussed earlier), some contend that Ethereum could grow in value by as much as 400% in 2022.

Can you buy just 1 ETH or even $1 of ETH, or do you need to buy more?

Yes, it’s possible to buy just one ETH. Buy as much or as little as you want. You can even buy a portion of an ETH in what are called fractional shares.

Is Ethereum likely to surpass Bitcoin?

The short answer is that nobody can know this answer precisely. Some experts, not dissuaded, have weighed in with 2022 ETH price forecasts that range from $4,000, $8,000, to more than $12,000 per share if the transition to Ethereum 2.0 is successful.

Another thing to keep in mind is that Ethereum and Bitcoin are not, as far as we know, rivals. They are completely different systems, whose needs are symbiotic. Bitcoin is the cryptocurrency, and Ethereum is the blockchain that cryptocurrencies, among other products, are built on.

As often happens in the capital markets, everyone — i.e., industry professionals, investors, crypto enthusiasts, and corporations — is waiting to see how everyone else will respond to the changes afoot at Ethereum.

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.

Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.

Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

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SoFi Invest may waive all, or part of any of these fees, permanently or for a period of time, at its sole discretion for any reason. Fees are subject to change at any time. The current fee schedule will always be available in your Account Documents section of SoFi Invest.

This article is not intended to be legal advice. Please consult an attorney for advice.

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SOIN0622025

Jun

2022

Grad Plus Loan: What is it & How it Works?

Grad PLUS Loan: What Is It and How Does It Work?

By Melissa Brock | Going to College, Student Loans, student_loan | Comments Off

When a federal Direct PLUS Loan is made to a graduate or professional student, it’s commonly called a grad PLUS loan. A grad PLUS loan can help you pay for graduate school costs that aren’t covered by other types of financial aid.

Grad PLUS loans allow you to borrow up to the full cost of attendance from the U.S. Department of Education as long as you’re enrolled at least half-time at a school that participates in the Direct Loan Program, you don’t have an adverse credit history, and you meet the eligibility requirements for federal financial aid.

Here’s what to know about grad PLUS loans as well as other options that can help you pay for graduate or professional school.

What Is a Graduate PLUS Loan?

A graduate PLUS loan is a federal Direct PLUS Loan that’s made to a graduate or professional student. When a Direct PLUS Loan is made to a parent of an undergraduate student, it’s called a parent PLUS loan.

Unlike other types of federal student loans, Direct PLUS Loans take your credit history into account. You may still be able to qualify for a grad PLUS loan if you have an adverse credit history, but you’ll have to meet additional eligibility requirements, such as having an endorser on your loan.

Another way PLUS Loans differ from other federal loans: You can borrow up to the full cost of school attendance and use the money to pay for tuition, room, board, and fees. Grad PLUS loans are not based on financial need (the way Direct Subsidized Loans for undergraduate student loans are), which means students can apply for one regardless of income level.

Keep in mind that PLUS Loans have some of the highest interest rates of all federal loans. For this reason, it’s a good idea to start by considering a Direct Unsubsidized Loan, another federal student loan.

You can borrow up to $20,500 per year with a Direct Unsubsidized Loan and the interest rate for graduate students is 5.28% for loans disbursed on or after July 1, 2021, and before July 1, 2022. You’ll pay more in interest for a Direct PLUS Loan — a fixed 6.28% interest rate for loans disbursed on or after July 1, 2021, and before July 1, 2022).

How Do Grad PLUS Loans Work?

If you’re approved for a grad PLUS loan, the maximum amount of your student loan will be the cost of attendance minus any other financial aid you receive, such as scholarships, grants, or fellowships. Your school will apply the funds to cover fees such as tuition, room and board, and any other school charges. If there are funds left over, you can use them for other educational expenses, such as books for classes.

You’ll also pay an origination fee with graduate PLUS loan, which covers the U.S. Department of Education’s cost of issuing your loan. The loan fee for the 2021 to 2022 academic year is 4.228% (higher than the 1.057% origination fee on a federal Direct Unsubsidized Loan); this amount will be deducted from the funds you receive.

With a federal grad PLUS loan, you won’t have to make any loan payments if you are enrolled at least half-time in school and for six months after graduation, but interest will begin to accrue as soon as the loan is issued.

You can opt to pay the interest while you’re in school or allow the interest to be capitalized and added to the principal balance of your loan. You’ll likely have between 10 and 25 years to repay your loan, depending on the loan repayment plan that you choose.

Requirements for a Direct Grad PLUS Loan

In order to get a grad PLUS loan you must be enrolled at least half-time at an eligible university or program that participates in the federal student loan program (known as the William D. Ford Direct Loan Program), have a good credit history, and meet the general eligibility requirements for federal student aid.

Again, to be eligible for a Direct PLUS Loan, you must not have an adverse credit history. If you do, you may still be able to receive a grad PLUS loan if you have an endorser on your loan (someone who agrees to be responsible for your loan and pay it if you’re not able to) who doesn’t have an adverse credit history. Another option is to explain the extenuating circumstances for your adverse credit history to the U.S. Department of Education. Both of these options require PLUS credit counseling.

Applying for a Federal Grad PLUS Loan

Before applying for a grad PLUS loan, you’ll need to fill out the Free Application for Federal Student Aid (FAFSA) form on the Federal Student Aid website. And while most schools require you to fill out the grad PLUS loan application on the Student Aid site, some schools have different application processes, so check with your school’s financial aid office before you begin.

You’ll undergo a credit check to verify that you don’t have an adverse credit history. You may also need to undergo credit counseling if this is your first PLUS loan. If approved, you’ll sign a Master Promissory Note (MPN) agreeing to repay the loan according to its terms, along with interest and fees.

What Does a Graduate PLUS Loan Cover?

While a graduate PLUS loan can only be used to cover education expenses, those expenses can include:

• Tuition

• Room and board (including off-campus housing)

• Fees

• Other expenses required by the school

As mentioned earlier, the maximum amount of a graduate PLUS loan amount is based on the costs of your school for that academic year.

Pros and Cons of Graduate PLUS Loans

Grad PLUS loans are not for everyone. Here are some of the pros and cons to consider as you decide whether this type of loan is right for you.

Pros of the Graduate PLUS Loan	Cons of the Graduate PLUS Loan
The interest rate is fixed and stays the same for the life of the loan.	You may not receive the loan if you have a negative credit history.
You can take advantage of Public Service Loan Forgiveness (PSLF) by working at a nonprofit, in a government role, or at another qualifying organization.	Grad PLUS loans are not easily forgiven, except in the event of death.
You can borrow up to the full cost of school attendance (minus any other financial aid you receive).	Grad PLUS loans generally have higher interest rates than other types of federal loans.

Alternative Financing Options

Before taking out a grad PLUS loan, it’s helpful to consider other ways to finance the cost of graduate or professional school. Alternative options include the Federal Work-Study program, getting a job or teaching fellowship, applying for grants and scholarships, and looking into other types of federal or private loans.

Work-Study

The Federal Work-Study Program provides part-time employment to help undergraduate and graduate students with financial need pay for the cost of school. To qualify for Work-Study, you must file the FAFSA (which opens on October 1 each year), and it’s a good idea to apply early because each school has limited funds.

The amount you can earn depends on the type of work you get, how much your school can offer, as well as your application date, level of financial need, and FAFSA application date. And you cannot earn over the amount of money awarded to you in your financial aid award.

Assistantship Positions

Many universities offer teaching- or research-based assistantships. In return for doing work or research for the school, the school may offer you free or reduced tuition, a monthly stipend, and/or health insurance.

Through an assistantship, you are often considered an employee of the school and you may do a range of work from teaching undergraduate classes or proctoring exams to helping with research projects or collaborating on publishing scholarly articles.

Fellowships

While the terms of a graduate fellowship can vary depending on your school or field, they are often merit-based awards of financial aid to support students pursuing advanced study.

Your school may offer them internally or they may come from an external source.

Fellowships may include a stipend or cost-of-education allowance in addition to support for other educational expenses. Types of fellowships include predoctoral fellowships, dissertation fellowships, and traineeships. Check with your school for more details about these opportunities and to learn more about how to apply.

Job Opportunities

Even if you don’t qualify for any of the above employment options, getting a job can help offset the amount you have to borrow for graduate school. Some companies may even offer tuition reimbursement.

While you’ll have to balance a job with your class schedule and workload, getting a job while you attend graduate school can offer benefits beyond just a paycheck including: gaining real-world skills, employee benefits, and the ability to add some professional experience to your resume.

Scholarships and Grants

There are a range of graduate school scholarships and grants you can apply for to help finance the cost of advanced studies. Scholarships are typically merit-based and grants are often need-based.

This type of funding is ideal because you don’t need to pay it back. You can find both federal and state grants as well as scholarships from schools or independent organizations, such as nonprofits or companies. The key is to do your research (one place to start: the U.S. Department of Labor’s scholarship search tool ) to track down opportunities and apply to a range of options.

Direct Unsubsidized Loans

As mentioned earlier, PLUS Loans have some of the highest interest rates of all federal loans. So it’s worth applying for a federal Direct Unsubsidized Loan before opting for a PLUS loan since it has a lower interest rate.

You can borrow up to $20,500 per year with a Direct Unsubsidized Loan, up to the aggregate federal loan limit of $138,500. Keep in mind that any outstanding undergraduate federal loans that you have will count toward this total amount.

Private Loans

A private student loan — from a bank, online lender, college, credit union, or other private institution — can help make up the difference between what a student can borrow in federal loans for the cost of graduate school and the remaining education expenses after other sources of income from grants, scholarships, work-study, or jobs are taken into account.

Keep in mind that private loans differ from federal loans and they don’t offer the same benefits and protections, such as income-driven repayment, deferment and forbearance and forgiveness programs like Public Service Loan Forgiveness (PSLF).

It’s important to do your research, shop around, and find the best loan options for your personal financial situation. You’ll also need to have strong credit (or have a cosigner who does) and meet eligibility criteria to qualify with a private lender.

If you’re considering a private loan, SoFi offers graduate school loans for with flexible terms, no fees, and no prepayment penalties.

The Takeaway

A grad PLUS loan is a federal Direct PLUS Loan made to a graduate or professional student to help cover the cost of graduate school. Unlike other federal student loans, grad PLUS loans take your credit history into account so if you have an adverse credit history, you’ll need to meet additional eligibility requirements to qualify.

Grad PLUS loans allow you to borrow up to the full cost of attendance for graduate school minus the amount of financial aid you receive from other sources. These loans have some of the highest interest rates of all federal loans and a higher origination fee, so you will likely want to pursue a federal Direct Unsubsidized Loan first.

It’s also a good idea to explore alternative financing options to help cover the cost of graduate school, such as federal Work-Study opportunities, assistantships and fellowships, scholarships and grants, getting a job, as well as federal and private loans.

If you have a high interest rate on existing loans or need to lower your monthly payment before grad school or after you graduate, student loan refinancing is one option to consider. SoFi offers flexible terms, no fees, no prepayment penalties — and you can view your rate in two minutes.

Learn more about a SoFi student loan refinance today.

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SOSL1121003

Jun

2022

Refinancing Student Loans During Medical School: What to Know

By Jennifer Calonia | Going to College, Student Loans, student_loan | Comments Off

Editor's Note: For the latest developments regarding federal student loan debt repayment, check out our student debt guide.

A career in medicine can be rewarding, but the high cost of medical school means many students take on additional student debt on top of their existing undergraduate student loans.

Some students defer student loan payments while they’re in medical school and others choose to refinance their student debt. The right choice for you depends on a number of factors, such as whether you have federal or private student loans. Here’s what to know about refinancing student loans during medical school.

What You Can Expect to Pay

Going to medical school is expensive: The average cost of medical school is $330,180 for four years at a private institution, according to a 2020 report from the Association of American Medical Colleges (AAMC). For a public medical school, it’s $250,222.

Many students need loans to cover the high cost of medical school tuition and other educational expenses. In fact, 73% of those surveyed in the AAMC report said they had education debt, with students in 2020 carrying an average medical school loan debt of $200,000 (including existing undergraduate loans).

If you don’t have the option for in-school deferment for your undergraduate loans while you’re enrolled in med school, refinancing your undergraduate student loans might be worthwhile and may help lower your medical school loan payments. Here’s what you need to know to decide if refinancing loans as a medical student is right for you.

Can You Refinance Student Loans During Medical School?

Whether you have federal or private student loans, you can technically refinance them at any time along your journey toward becoming a physician.

During a student loan refinance, you can combine multiple student loans of any type — federal and private — into one new refinance loan. This new loan is from a private lender, and comes with a new interest rate and different loan term.

The lender will repay your original loans that were included in the refinance process. You’ll then repay the lender, based on the details of your refinance loan agreement, in incremental monthly payments.

Another Option for Federal Student Loans During Medical School

It’s important to know that if you have federal student loans, refinancing them will remove you from the federal student loan program.

Keeping your federal student loans within the Department of Education’s loan system gives you access to benefits and protections that can be useful while in medical school, like extended deferment or forbearance.

Generally, automatic student loan deferment is applied to federal Direct Loans of borrowers who are enrolled at least half-time at an eligible school. If your federal student loans from your undergrad program weren’t placed on in-school deferment status, reach out to your school and ask them to report your enrollment status.

This student loan refinancing alternative can postpone your monthly payment requirement until after you leave school. However, if you borrowed Direct Unsubsidized Loans or Direct PLUS Loans, you’re responsible for repaying interest that accrues during this time.

Pros of Refinancing During Medical School

A student loan refinance during medical school can offer benefits.

Extend Your Loan Term

Generally, once you’ve signed your student loan agreement you’ve committed to a specific repayment term. For example, if your private student loan has a 5-year term, you’ll need to repay the loan’s balance, plus interest, in that time period.

However, repaying your loan balance while attending medical school might be difficult. With a student loan refinance, you can choose to prolong your repayment timeline over a longer term, like 10 or 15 years.

Lower Monthly Payments

By extending your student loan refinance term, your monthly installment payments become smaller since they’re stretched over a longer period. Prolonging your loan term can result in paying more interest over the life of the loan. However, it affords you a lower monthly payment so you have more funds in your budget toward the day-to-day cost of medical school.

Some Refinancing Lenders Offer Deferment

Some refinancing lenders, like SoFi, offer borrowers the option to defer their student loan refinance payments while in medical school. Generally, you’ll need to meet the lender’s minimum enrollment status and possibly meet other requirements.

This benefit, however, isn’t offered by all lenders so always confirm with the lender before finalizing any student loan refinance offer.

Cons of Refinancing During Medical School

Although there are benefits to refinancing your student loans, there are downsides to this repayment strategy as well.

You Could Pay More Interest Over Time

Extending your loan term causes you to pay more interest throughout the life of the loan, assuming you don’t make extra monthly payments. This means that you’ll ultimately pay more overall for your undergraduate degree.

You’ll Lose Access to Loan Forgiveness

If you refinance federal student loans, you’ll lose access to federal benefits and protections. Physicians who expect to work in the government or nonprofit sector might be eligible for loan forgiveness under the Public Service Loan Forgiveness (PSLF) program.

To be eligible for forgiveness, you must have eligible Direct Loans, and have made 120 qualifying payments toward your federal loan debt while working for a qualifying employer. After PSLF requirements are met, the program forgives the remainder of your eligible federal loan balance.

You’ll lose access to this significant benefit if you refinance federal loans into a private refinance student loan.

Should You Refinance Your Student Loans?

Student loan refinancing is a strategy that can be advantageous for certain borrowers in specific circumstances. For instance, it might be a good option for borrowers who already have a private undergraduate loan and simply want to lower their interest rate to save money.

It can also be a strategy to extend your term if your main goal is to lower your monthly undergraduate loan payments. Borrowers who have adequate savings, reliable income while in medical school, and who are confident that they won’t participate in programs, like PSLF, might benefit most.

Assess your current financial situation, and talk to your loan servicer or undergraduate loan lender to get a full understanding of your repayment options during medical school.

Refinancing Student Loans With SoFi

If refinancing your student loans is the right choice for you, consider SoFi Student Loan Refinancing.

SoFi offers low fixed or variable rates with flexible terms, no fees, no prepayment penalties — and you can view your rate in two minutes.

Learn more about a SoFi student loan refinance today.

FAQ

Can you refinance student loans in residency?

Yes, you can refinance student loans while in residency. However, if you refinance federal loans, it will make that portion of your student debt ineligible for federal loan forgiveness in the future.

Do doctors ever pay off their student loans?

Yes, doctors pay off their student loans, though how they do so can vary. Some also make extra payments toward their debt or take on extra shifts at their hospital, while others refinance or pursue loan forgiveness programs.

When should I refinance my medical student loans?

Exploring a private student loan refinance can be done at any time, especially if your income is stable and your credit has improved since you first took out the loan. If you have federal student loan debt, consider whether you’ll pursue loan forgiveness at any point along your career journey. If you might, your student loans must be kept within the federal loan program to be eligible for forgiveness.

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

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SOSL0222008

Apr

2021

What Is DeFi? Decentralized Finance, Explained

By Matthew Warholak | Growing Wealth, invest, Investing | Comments Off

DeFi, short for decentralized finance, is more than just a popular buzzword in the cryptocurrency sphere. It’s a concept that is disrupting the centralized financial services model, equalizing access and bringing more control to users across the globe.

In this article, we will cover everything a consumer might want to know about DeFi, including:

•   What is DeFi?
•   How does DeFi work?
•   How DeFi is disrupting traditional financial services
•   What’s a DApp?
•   Examples of DeFi DApps

What is DeFi?

DeFi is a blanket term referring to trustless and transparent protocols that don’t require intermediaries to operate. Traditionally, financial services and products have relied on centralized authorities such as banks, financial advisors, and clearinghouses. DeFi has reengineered this power dynamic to provide the same financial services programmatically without a central authority, thus reducing fees and making financial services and products more accessible to more people everywhere.

One way to better understand this concept is to look at the two parts of the term separately.

”De” = Decentralized

DeFi’s “de” stands for “decentralized,” or distributed control. By removing power from the hands of a few central authorities and distributing it across programmatic and autonomous code, DeFi transforms a previously centralized governance model into a decentralized one controlled by no one.

”Fi” = Finance

DeFi’s “Fi” is an abbreviation for “finance”—and more specifically, it refers to financial services. DeFi has disrupted traditional finance by transforming popular and long-standing financial services into decentralized versions without any central authority. DeFi offers an alternative to traditional financial services like the following:

•   Borrowing
•   Lending
•   Investing
•   Trading
•   Saving
•   Insurance
•   Crowdfunding
•   Crowdraising

DeFi has also enabled the creation of new financial products:

• Cryptographic tokens: There are a number of these digital assets, one of the most common tokens is a “utility token,” which serves a specific function within a digital ecosystem. One example is the Basic Attention Token (BAT), which is used as payment for advertisers, users, and content creators on the Brave browser.

• Non-Fungible Tokens (NFTs): These tokens transform digital images (for example, works of art, a tweet, a video clip, a GIF) into unique assets that can be traded on a blockchain.

How Does DeFi Work?

With DeFi, services and products are not subject to approval by a small group of decision makers but rather by smart contracts. Like traditional contracts, smart contracts contain information and terms regarding transactions between parties, but they are completely digital. They function like a small computer program stored inside of a distributed ledger known as a blockchain, a permanent and ever-growing record of information and transactions stored in individual blocks.

DeFi shares many aspects with cryptocurrencies, including the following:

Permissionless/Borderless

DeFi applications are permissionless—completely free of charge and available to anyone who wants to use them, the only requirement being an internet-connected smartphone or computer. Unlike traditional financial services, DApps don’t require lengthy applications to create an account, as users interact directly with smart contracts from their crypto wallet.

DeFi applications are also borderless, meaning they are country-agnostic and do not discriminate against users based on citizenship, geographic location, or government standing. Anyone can access funds on a DeFi app in one country, travel to another, and access their funds abroad without any restrictions whatsoever.

Transparent

DeFi applications are built on a blockchain network, a distributed ledger composed of smart contracts that stores transaction details as they occur and builds on top of them. Transaction activities become permanently cemented into the blockchain’s history of transactions across the entire network, while constantly updating it with new ones.

Because smart contracts and blockchain technology are designed to be permanent and publicly visible, transaction records cannot be hidden or altered thereafter. This allows all transaction activities to be visible to all market participants without violating privacy, because addresses are not directly tied to personal identities. It also allows anyone to audit the code and find bugs.

Trustless

DeFi recognizes and circumvents the trust problem of traditional finance by minimizing the need for third parties, banks, and clearinghouses. For most DeFi apps, users interact with self-executing smart contracts based on conditions being met, as opposed to waiting on approval from overseeing stakeholders.

Interoperable

Different DeFi applications (DApps) are designed to be compatible with each other, allowing DApps to be built or composed by combining DeFi products. This interoperability enables simple blockchain operation and a scalable ecosystem.

How DeFi is Disrupting Traditional Financial Services

Financial services such as borrowing, lending, and investing have traditionally been areas with a high barrier to entry, typically preventing people with little money or financial expertise from gaining access to these services. Though traditional banking is common in first world countries, there are over 1.7 billion people who are unbanked globally , representing over 30% of the human population, according to the most recent World Bank Global Findex report.

Domestically, 22% of US adults are underbanked or unbanked , according to the Federal Reserve’s most recent Report on the Economic Well-Being of U.S. Households. “Underbanked” means they have at least one account at an insured institution but also obtain financial services outside of the banking system such as money orders, check-cashing stores, payday loans, pawn shops, and more. The FDIC found in its 2019 “How America Banks” survey that 5.4% of US adults are unbanked entirely , having no accounts with any financial institution.

With the advent of DeFi, previously inaccessible financial services such as borrowing, saving, investing, and international payments are now accessible to anyone with access to the internet regardless of age, income, nationality, financial background, or credit score. To date, there are currently 3,809 DApps, with 140.59k daily active users.

What’s a DApp?

A DApp, or decentralized application, is a digital program that runs on a decentralized blockchain network without the control of a single authority. DApps are open-source and the basis for any cryptocurrency project; Bitcoin is considered the first DApp.

While the actual DApps themselves are typically ‘unownable’ services, DApps sometimes distribute underlying tokens that allow users to buy crypto.

DeFi applications can be built on any decentralized protocol but are primarily built on Ethereum, the premier decentralized blockchain network used for building new DApps which is powered by smart contracts and its native digital currency Ether. Ethereum enables developers to write smart contracts on the Ethereum blockchain which automatically execute when certain conditions are met. Smart contracts are then stored and executed across every node on the Ethereum network, making them decentralized applications.

The Ethereum DApps enable developers to build far more advanced technology than just trading cryptocurrency. Instead of needing to develop a new blockchain for every application, Ethereum created a secure platform for DApps to be built and deployed. Ethereum is one of the most popular blockchain networks and its native Ether token is the second-largest cryptocurrency behind Bitcoin.

DApps are similar to centralized applications but benefit from the features of existing on a decentralized blockchain network. Because they don’t have a single point of failure, they are thought to be more secure against cyberattacks. A distributed network of nodes maintains the network and prevents any system downtime common among centralized applications. DApps aren’t owned by anyone and aren’t subject to owner malfeasance such as embezzlement.

Examples of DeFi DApps

DeFi is a new space that only started to see the launch of live products in 2017 or so. Here are a few of the most popular types of DApps that emerged in 2020:

Borrowing and Lending Platforms

Securing a traditional loan typically involves submitting an application at a financial institution with ample personal information, agreeing to a credit check, pledging collateral (if necessary), and waiting for interest to be factored in by the intermediary for facilitating the loan that’s sourced by a federal institution. With DeFi, smart contracts connect interested lenders and borrowers, impose terms of loans, and impose interest without a third party. Lending DApps typically require collateral to be pledged in the form of crypto or stablecoins as a measure of insuring risk taken on by the lender. Through smart contract automation and elimination of a third-party intermediary, DApp lending platforms have formed loans with interest sometimes below 10 percent .

Decentralized Exchange (DEX)

A decentralized exchange (DEX) is an exchange that uses smart contracts to enforce trading rules, execute trades, and securely handle funds if necessary. Unlike centralized exchanges, DEXs don’t have an exchange operator nor do they require account creation, identity verification, or impose exchange fees. Because DEX’s are unique and don’t have a centralized authority, it is debated whether or not some or all DEX’s are subject to the crypto regulations enforced on centralized exchanges. Further, many DEX’s do not custody users’ funds at any point during trading, adding additional uncertainty as to the application of regulations. However, like any exchange, they do require liquidity to be able to match buyers and sellers.

Betting Platform

DeFi disrupts one of the most restricted and heavily centralized industries in existence: Gambling. In addition to an intensive and exclusive registration process, users of traditional online gambling platforms are subject to getting their betting limits lowered and accounts closed. With a decentralized peer-to-peer platform, this is not possible.

Several betting DApps have been launched as global betting platforms with no limits, allowing users to bet on traditional sports events as well as real-world events such as economics, elections, pop culture, and m
ore. Users can place bets using digital currencies and get rewarded in them upon winning a bet. Users buy or sell on a particular outcome of an event, with the DApp showing the current odds based on active user bets.

NFT Marketplace

An innovative DeFi development has been the launch of marketplaces for exchanging non-fungible tokens , or NFTs. NFTs are unique cryptographic tokens that represent digital goods such as online gaming goods and also tokenize real-world assets such as art, collectibles, company equity, and commodities. An NFT marketplace allows users to freely buy, sell, and trade NFTs representing otherwise non-fungible assets.

The Takeaway

DeFi is a term for the decentralized finance model that’s reengineering traditional financial services and products. By reallocating decision-making from central authorities to executable code within smart contracts, many financial services are becoming cheaper and easier to access for anyone.

Photo credit: iStock/akinbostanci

SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

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.

Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.

SOIN21024

Apr

2021

Different Types of Crypto Airdrops and How to Find Them

By Brian Nibley | Growing Wealth, invest, Investing | Comments Off

A crypto airdrop is sort of like receiving a coupon to get a sample of something for free. New shops or restaurants sometimes offer a free drink or small item to first-time customers, for example. The hope is that the people who receive free items or coupons will enjoy the service, tell their friends, and become long-time customers.

When a company airdrops crypto to users, they aim to accomplish something similar. By depositing free coins into the wallets of users, the company is betting that the users might spread word of the new project and its potential use cases.

Of course, as with anything crypto-related, there’s more to it than just getting a simple “freebie” out of nowhere. This article offers answers to the most common questions regarding crypto airdrops, including:

•   What is a Crypto Airdrop?
•   What Are the Different Types of Airdrops?
•   How Do I Get Airdrops from Crypto?
•   Are Crypto Airdrops Worth It?
•   Are Crypto Airdrops Safe?

What is a Crypto Airdrop?

In a crypto airdrop, a new crypto project gives cryptocurrency to new users for free, or in exchange for a simple task like sharing a social media post. This practice became popular during the initial coin offering (ICO) craze of 2017 and 2018. Many crypto projects used airdrops to promote their ICOs and spark enthusiasm about their new digital asset.

In addition to regular coins, governance tokens are also sometimes airdropped, giving early adopters a larger say in how a project will develop going forward.

For users, the appeal is simple: Crypto airdrops allow people to obtain tokens without having to buy cryptocurrency. And for the companies, the benefit is clear: People who otherwise would never have known about the project could wind up becoming investors, or at the very least, provide free advertising for the company.

What Are the Different Types of Airdrops?

Airdrops can happen several different ways. The term is most often used to apply to free tokens being deposited to a user’s wallet in exchange for nothing more than registering with an email address. But that’s not the only type of crypto airdrop.

Standard Airdrop

This is the type of airdrop just mentioned, where users receive free tokens just for signing up for a newsletter or something similar.

Bounty Airdrop

Bounty airdrops require users to perform a simple task to receive the airdropped tokens. Most often this involves re-tweeting something about the project, creating an Instagram post and tagging a few friends, or joining a Telegram group.

Exclusive Airdrops

Airdrops of this type are designated exclusively for people who have an established history with a particular project, website, or community. For example, Uniswap gave its loyal users 2500 UNI tokens in September 2020. This equaled about $1,200 at the time, and there were no strings attached.

Hard Fork Airdrop

This one is a little different. When a coin hard forks from its original blockchain, a new coin gets created, and those who held the original coin will receive an equal amount of the new tokens in their wallets. The most well-known example of this would be the Bitcoin Cash (BCH) hard fork that occurred in 2017: Bitcoin users who held BTC received an equal amount of BCH automatically.

Holder Airdrop

These airdrops are similar to hard forks in that users who already hold certain tokens will receive new ones. EOS and Ethereum, for example, have sometimes offered users free tokens when a new project was created on one of their blockchains. These are not hard forks of the original coins, but rather entirely new projects created on top of the EOS or Ethereum protocol.

All these types of airdrops have one thing in common—the distribution of new coins.

How Do I Get Airdrops From Crypto?

The easiest way to find crypto airdrops might be to simply search for “crypto airdrops” or “what is a crypto airdrop.”

Since these events are designed for marketing and project promotion, they tend to make themselves relatively easy to find. There are even some websites exclusively devoted to listing upcoming airdrops, like Coin Airdrops .

However, scams abound in the cryptocurrency world, and users would do well to safeguard their information wherever possible. When searching for airdrops, it’s possible to encounter someone claiming to offer an airdrop when they’re actually just engaging in a phishing attempt (trying to steal information).

If an alleged airdrop were to ask for something like your login credentials to a website or bank account, the private keys to a cryptocurrency wallet, or any other personal details, it might be a scam. Requests to download “special” software or clicking links found in emails could also be phishing attempts designed to expose your device to malware or steal sensitive information.

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Is it Even Worth the Effort?

When considering that airdrops provide something for nothing, some people might say they are worth it.

At the same time, when a new project decides to airdrop crypto, this leads to a supply glut that can drive prices to tank later on. Because a lot of users end up receiving coins, a lot of them tend to cash out at the earliest opportunity. It’s not uncommon for airdropped coins to lose most or all of their value over time.

One good example of this involves the Auroracoin (AUR) airdrop. AUR was a cryptocurrency designated for citizens of Iceland in March 2014. All residents of the country were eligible to register for free receipt of 31.8 AUR, which was worth roughly $380 at the time.

At the time of writing, one AUR was worth about $0.10, meaning the 2014 airdrop would be worth little more than $3 in 2021. Auroracoin can only be traded on two smaller crypto exchanges as well, meaning there is very little liquidity in the market and holders might find it difficult to sell.

This demonstrates the degree to which airdropped coins can become almost worthless over time.

Are Crypto Airdrops Safe?

Some users have also fallen victim to fraudulent airdrops in the past. During the ICO craze of 2017 and 2018, there were many fake crypto startups that were actually frauds.

Amid an industry with much more hype than regulation, some savvy scammers devised a way to attract investment funds without actually creating anything. They would create a coin or say they were planning on creating a coin, and then claim to have plans to airdrop crypto.

Sometimes the companies would require small fees to be eligible for the alleged airdrop, or other speculators would make investments believing that the airdrop itself would lead to a successful project.

While these types of scams might be less common today than they were three or four years ago, investors would still do well to be wary when it comes to crypto airdrops.

Looking at the idea of “safe” from another perspective, few would argue that the coins received in an airdrop could be considered a safe investment. Altcoins in general can be highly speculative, and that goes double for any new coin that has been airdropped.

As we saw in the Auroracoin example, airdropped crypto can lose nearly all of its value.

Many people who sign up for or become eligible for airdrops are aware of the situation, and could likely to take profits as soon as possible. The few airdrop recipients who happen to receive a coin of significant value at a time when there is a liquid market for it might make some money. Others may be left holding a bag of worthless coins later on.

The Takeaway

Crypto airdrops involve users receiving something for virtually nothing—an email address, or some social media promotion. But while some recipients have gotten lucky enough to be the first movers in an airdrop that actually had value, many others have also fallen victim to lofty promises of the “next big thing” in crypto.

SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below: Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.

Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments. Limitations apply to trading certain crypto assets and may not be available to residents of all states.

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

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

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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