How Much Does It Cost to Start a Business?

Looking to start your own business? You’re not alone. Some 76% of Gen Z and millennials dream of being their own boss, according to a 2022 Microsoft report.

While launching your own business allows you plenty of professional freedom, it can also be expensive. As you’re creating your business plan, one question you’ll likely face early on is, how much does it cost to start a business?

The average small business owner spends around $40,000 in their first full year. But that amount can vary based on a number of factors, including the size, type and location of your business.

Let’s take a closer look at the startup costs of different types of businesses and common ways to cover the expenses.

Typical Small Business Startup Costs

The old adage is true: You have to spend money to make money. And unfortunately, some of the biggest business costs can come during the startup phase, when you are defining your business goals, finding a location, purchasing domain names, and generally investing in the infrastructure.

In order to make sure your business is on firm financial footing, it’s important to estimate your small business startup costs in advance. Here are some common ones to keep in mind:

Payroll

Many small businesses start out as a company of one. But if you’re planning on having employees, salary will likely be one of the biggest costs you’ll have. After all, offering an attractive pay and benefits package can help you recruit and retain top talent.

In addition to wages, you might also want to budget for other types of payroll costs, such as overtime, vacation pay, bonuses, commissions, and benefits.

Office Space

No matter what your business is, you’ll need somewhere to work. Are you leasing a storefront, or will you buy a membership to a co-working space or startup incubator? If you’re planning to work from home, consider whether your new business will increase your internet or utility bills.

And don’t forget about the supplies you’ll need to do the work. Depending on your business, this could include things like computers, phones, chairs and desks, paper supplies, or filing cabinets.


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Inventory

If you’re starting a business that sells products, you’ll need to have some inventory ready to go. Calculating stock as part of your start-up costs ensures that you can buy your product in advance, so that you’re ready to serve customers from day one.

Licenses, Permits, and Insurance

Some businesses, especially storefronts and restaurants, require more legal leg work than others.

For example, if you’re starting a native-plants landscaping business, will you need a permit? If you’re starting a new bar, will you need a liquor license? Licenses and permits vary by city and state, but most come with an application fee.

Likewise, your new business may require one or more insurance policies to protect you in case of future litigation, so be sure to factor in the cost of monthly premiums.

And don’t forget about the costs associated with registering your business. Whether you plan to set up shop as a sole proprietorship, corporation, limited liability corporation or other business entity, you’ll need to pay a nominal fee. The amount will depend on the state where you operate.

And if you plan on enlisting the help of a lawyer, accountant or tax professional to get your business up and running, add those potential costs to your budget as well.

Advertising

Getting the word out about your new business is one of the most important things you can do to ensure that business starts off strong. Whether you want to advertise on social media or take out a billboard, your startup costs should reflect money you plan to put toward taking out ads for your business.

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Differences in Startup Costs Based on Industry

The actual cost of starting a small business can vary by business and industry. Here’s what you might be looking at if you want to start a few common types of small businesses.

Online Business Startup Costs

Like brick and mortar stores, the cost of doing business online varies depending on the type of business you have. But in general, you’ll need to budget for things like:

•   Web hosting service and domain name

•   Web design and optimization

•   E-commerce software

•   Payment processing

•   Content creation and social media

If you’re selling products, you will need to invest in inventory and shipping. If you’re providing services, you may need to hire employees. All of these costs can be significant.

However, one benefit of starting your small business online is that you may be able to keep other costs low. For example, if you can conduct business from home, you may not need to rent office space, which can be a major savings. If you’re able to do the work without purchasing inventory or hiring employees, the startup costs can be even lower.

Average startup cost: $500 to $20,000 or more (depending on your business)

Storefront Startup Costs

If your business idea requires a physical space, your startup costs might range from $1,000 for a small kiosk inside a mall or park to more than $69,000 for something like a home goods store.

Although $69,000 might seem like a daunting number, remember that many smaller, independently owned stores began with a much smaller budget.

Average retail startup cost: $39,210

Restaurant Startup Costs

If you’re betting on bringing in bank by selling your grandma’s famous bánh mì, you could be looking at startup costs of anywhere from $40,000 for a used food truck or cart to up to $3.7 million to buy a franchise restaurant. Typically, small restaurant costs, including coffee shops, fall somewhere in the $80,000 to $3000,000 range.

Average startup cost: $375,000

How to Finance Your Startup Business

Many who want to start a business are overwhelmed by the initial costs, but there are several ways to fund your passion project.

Friends and Family

Perhaps one of the most common ways to raise money for your small business is to ask friends and family to invest in you.

Friends and family loans can be ideal for financing a new small business because you can negotiate low-interest rates, flexible pay-back schedules, and avoid bank fees. Of course, borrowing money from friends and family can quickly become complicated by family drama, so make sure to agree on conditions before taking out a family loan.

Outside Investors

When we hear about startup companies, we frequently hear about so-called “angel investors” sweeping in to fully fund new businesses. But there are other practical ways to fund your small business with outside investors.

Some small businesses use crowdfunding platforms to find investors who each contribute a small amount, and others use startup funding networks to find investors looking to fund their specific type of business. Outside investors want to know that your business is likely to succeed, so you’ll need a solid business plan to land outside funders.

Personal Savings and Investments

Most people end up covering some of their small business start-up costs out of their own pocket. Self-funding your new business venture can be the most convenient option. After all, if you’re your own funder, you don’t have to worry about family drama or picky investors. And putting your own money on the line can be an extra motivation to make sure that your business is set up to succeed.

Of course, it can seem overwhelming to save up enough money to fund your small business. Luckily, there are simple strategies to effectively manage your money.

Business Loans

If you’re looking to purchase equipment, inventory, or pay for other business expenses, a business loan might make sense for you.

There are various types of small business loans available, each with different rates and repayment terms. Note that in some cases, lenders may be reluctant to give loans to a brand-new business. You might need to put up some type of collateral to qualify for funding.

Personal Loans

A personal loan can be used for just about any purpose, which can make it attractive for entrepreneurs who want to turn their passion project into a reality. These loans are usually unsecured, which means they’re not backed by collateral, like a home, car, or bank account balance.

Personal loan amounts vary. However, some lenders offer personal loans for as much as $100,000. Most personal loans have shorter repayment terms, though the length of a loan can vary from a few months to several years.

While there’s a great deal of latitude with how you use the funds, you might need to get your lender’s approval first if you intend on using the money directly for your business.


💡 Quick Tip: Before choosing a personal loan, ask about the lender’s fees: origination, prepayment, late fees, etc. One question can save you many dollars.

The Takeaway

Going into business for yourself can be personally and professionally fulfilling. But it can also be expensive, especially if you’re starting from scratch. Estimating your startup costs early on can help ensure you’re on solid financial ground from the get-go. Labor, office space, and equipment are among the biggest expenses facing many entrepreneurs, but there are smaller fees and charges you’ll likely need to consider.

Fortunately, small business owners have no shortage of options when it comes to covering startup costs. Dipping into personal savings, or asking friends and family to invest are popular choices. Taking out a business loan or personal loan is another way to help finance a new business. The money can be used for a variety of purposes, and that flexibility can be especially useful when you’re just starting out.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

SoFi’s Personal Loan was named NerdWallet’s 2023 winner for Best Online Personal Loan overall.


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


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.

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SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.


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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Top Medical School Scholarships For Students

Top Medical School Scholarships For Students

Attending medical school can be an extremely rewarding path, but it can also be an expensive one. Luckily, there are some great medical school scholarships that can help ease the financial burden. Students thinking about attending medical school, or those who are currently enrolled, may want to look into scholarships for medical school.

There are plenty of scholarships for medical students as well as general scholarships that could help you cover the cost of college. Here’s a roundup of the best medical student scholarships, how much they’re worth, and how to apply for them.

Brown Medical and Educational Foundation Scholarship

Dollar amount: Approximately $1,000

Application process: To apply for this scholarship, students must complete an application, submit an official college or university transcript in a sealed envelope, and submit three letters of recommendation.

Eligibility: To qualify for this scholarship, which could help with paying for college, students must be an undergraduate or graduate student pursuing a degree at a U.S. based four-year university while studying a healthcare degree such as nursing, dentistry, medicine, and allied health. They must have a GPA of 2.5 or higher. Recipients must also identify as a member of select ethnic groups and must be U.S. citizens.

Recommended: Finding Free Money for College

Chinese American Physicians Society Scholarships

Dollar amount: $3,000 to $5,000

Application process: The application for the 2023-2024 school year is set to open in December 2023. Applicants can expect to submit essays as a part of the application.

Eligibility: To receive a Chinese American Physicians Society Scholarship, applicants must be a student at a U.S.-based medical school. Applicants are judged on their financial needs, academic achievements, essays, and community service records. Special credit is given to applicants who are planning to serve Chinese communities after they graduate.

Dolores Zohrab Liebmann Fund

Dollar amount: Covers the cost of tuition, plus an additional stipend for living expenses

Applicant process: The Dolores Zohrab Liebmann Fund requires students to submit their application through the dean of the university at the school they are attending for graduate studies. Students can connect with their school’s fellowship or financial aid office to learn more about what the application process looks like for students at their school. Only certain schools participate in this program.

Eligibility: Students must be U.S. citizens and attend a U.S.-based accredited and designated higher education institution as a graduate student in the fields of humanities, social sciences or natural sciences. They must have an outstanding record as an undergraduate and have financial need. National descent is not taken into consideration.

Recommended: Finding & Applying to Scholarships for Grad School

The Hispanic Health Professional Student Scholarship

Dollar amount: For the 2023-2024 school year, the National Hispanic Health Foundation will give awards of $5,000 annually for up to four years, plus individual scholarship awards of $2,00 each. Overall, the NHHF has awarded $1,954,000 to 346 awardees as of January 2023.

Application process: By September 15, 2023, applicants must submit the following supporting documents as a part of their application for the The Hispanic Health Professional Student Scholarship:

•   Personal statement or essay that is double-spaced and a maximum of two pages outlining their career goals

•   Curriculum vitae that shares up to date employment experience, education history, extracurricular activities, and awards

•   One letter of recommendation

•   Proof of their U.S. citizenship DACA status, or residency

•   Unofficial copy of their school transcripts

•   Proof of enrollment

Eligibility: To be eligible for this scholarship opportunity, students must have a 3.0 GPA and be currently enrolled full time in a U.S. graduate program studying one of the following subjects:

•   Medicine (allopathic or osteopathic)

•   Dentistry

•   Pharmacy

•   Nursing (including BSN)

•   Public Health

•   Physician Associate

Joseph Collins Scholarship

Dollar amount: $10,000

Application process: Applicants for the Joseph Collins Scholarship must demonstrate an interest in the arts and letters or another type of cultural pursuit that falls outside of the field of medicine and needs to show an intent to specialize in psychiatry, neurourology, or become a general practitioner.

Eligibility: The moral character of the applicant and their scholastic record will be taken into account. Students who are attending medical schools east of the Mississippi river and are ranked in the top 50% of their class are eligible to apply.

The National Health Service Corps Scholarship Program

Dollar amount: Full year of scholarship support (tuition and fees plus monthly stipends) for up to four years).

Application process: To apply for the National Health Service Corps Scholarship Program, applicants must pass an eligibility screening, submit general information about themselves, their degree, and their backgrounds, as well as providing two letters of recommendation, and writing an essay.

In return, recipients of this scholarship will work in primary care in Health Professional Shortage Areas (HPSAs). The time commitment may vary based on how much aid the student received.

Eligibility: To be eligible for this scholarship, applicants have to be either a U.S. citizen or a U.S. national and be able to submit proof of their status. Applicants must also be enrolled as full-time students and attend an accredited school or academic program in the U.S. or in a U.S. territory. They must be studying to be a physician, dentist, nurse practitioner, nurse midwife, or physician assistant.

MPOWER Global Citizenship Scholarship

Dollar amount: One $10,000 award and two $2,000 awards

Application process: To apply for this scholarship program, applicants must complete the application form provided by MPOWER. There is one essay question.

Eligibility: Recipients of the MPOWER Global Citizenship Scholarship must be international students that are legally allowed to work and attend school in either the U.S. or Canada. They must also be enrolled in a U.S. or Canadian school that MPOWER supports.

Paul & Daisy Soros Fellowships for New Americans

Dollar amount: Up to $90,000 in financial support over two years.

Application process: In order to apply for the Paul & Daisy Soros Fellowships for New Americans, students must submit the following information and materials in an online application.

•   Personal and contact information

•   Higher-education history

•   Information about the graduate program they are seeking support for

•   Three to five recommendations

•   Resume

•   Two essays

•   College and graduate school transcripts

•   Standardized test scores

•   Optional exhibits (such as artwork, examples of written work, and so on)

Eligibility: Applicants must be aged 30 or younger by the time of the application deadline and need to plan on either starting or continuing a full-time graduate degree program in the U.S.

Students may apply before they begin graduate school or while they are enrolled. Applicants must also meet the scholarship’s definition of “new American,” which is an individual whose birth parents were born outside of the U.S. as non-U.S. citizens.

Pisacano Scholars Leadership Program

Dollar amount: $7,000 per year up to four years.

Application process: Applications can be mailed or emailed and must included the following information:

•   Official copy of undergraduate and graduate school transcript if applicable

•   Official copy of medical school transcript

•   Copy of MCAT scores

•   Copy of USMLE score or COMLEX score

•   Copy of current CV

•   Essay

Eligibility: In order to qualify for the Pisacano Scholars Leadership Program, applicants must be third-year medical students who have demonstrated a strong commitment to the specialty of family medicine.

Leadership skills, academic achievements, communication skills, identifiable character and integrity, and community service involvement will all be taken into consideration.

How Student Loan Refinancing Can Help

Those students who already have medical school debt and may no longer be eligible for medical school scholarships may want to consider refinancing their existing student loans. Under the right terms, refinancing student loans could help lower their monthly payments. Refinancing student loans involves consolidating student loans through a private lender into a new loan that ideally comes with a lower interest rate and better term.

If the applicant can secure a better interest rate, they may end up paying less over the life of their loan. However, if they lengthen the term of the loan to reduce their monthly payments, they may end up paying more in interest over the life of the loan.

When a borrower applies to refinance their loan or loans, the lender will generally take their credit score, credit history, and other key financial information into consideration to determine their rates and terms.

It’s important to know that refinancing federal student loans into private ones causes the borrower to lose out on federal protections such as forbearance, deferment, and income-driven repayment plans.

Recommended: Private vs. Federal Student Loans

The Takeaway

Scholarships can be an effective way to help medical students pay for med school.

Application processes and eligibility requirements will vary from scholarship to scholarship so it may be helpful to explore and research different scholarships that fit your unique educational and personal profile.

If you’re interested in refinancing your student loans, SoFi offers loans with flexible terms and no fees. A student loan refinance calculator can help you determine if refinancing makes good financial sense for you.

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


Photo credit: iStock/JohnnyGreig

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.

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


SoFi Student Loan Refinance
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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Making Sense of the Rising Cost of Medical School

Making Sense of the Rising Cost of Medical School

The costs of medical school are rising at an alarming rate. According to Education Data, the cost of attending medical school rises by $1,500 per year.

Thirty-five years ago, medical students graduated with an average of $32,000 in student loan debt. Now, the average medical school debt for graduates is $202,450, according to the Education Data Initiative, with 73% of students graduating with debt.

The rising cost of medical school, plus the daunting number of years of education and training, is making some prospective medical students ask: Is an MD really worth it? That’s ultimately up to you.

It’s also worth noting that while medical school has traditionally been a path to a lucrative career, the steep up-front costs might be starting to make the endgame look less appealing.

This can be particularly true for would-be doctors interested in working in relatively low-paying fields, such as general practice (as compared to, say, anesthesiology).

While it might be relatively easy to pay down student loan debt for those entering a higher-paying specialty, a doctor going into general practice might take years (even decades!) to pay off their student loans.

To gain a better understanding of how much medical school actually costs, we’ll take a look at the costs of an MD, and some ways young doctors can get out of medical school debt faster after graduation.

How Much Does Medical School Cost?

The average medical school tuition varies depending on factors like whether the student is attending a public or private university.

The average total cost of in-state tuition for a student at a public university is $159,620. At a private school, the average total cost is $256,412.

But that’s only the cost of tuition, fees, and insurance — there’s also living costs to consider, which is why it’s useful to consider the entire cost of attendance (COA).

Each school publishes the estimated costs of attendance for their program, which typically not only include tuition and fees, but also costs like room and board, textbooks and supplies, and travel.

Why Is Medical School More Expensive Than Ever?

The rising cost of medical school tuition is part of a larger trend. It is estimated that the cost of college tuition and fees at private, nonprofit, four-year institutions in America grew at a rate of 3.5% from the 2021-2022 school years.

So what is driving the price increase? In general, college tuition has increased dramatically in the past 30 years, while wages have grown at a much slower rate. But what’s behind the dramatic uptick in college prices? The potential answer is two-fold. One factor is the demand for a college education has also dramatically risen over the last three decades.

Another factor more pertinent to public universities: a decline in state funding. It’s been observed in multiple states that as the education budget gets stripped, tuition costs paid by students also rises. And while lawmakers likely understand such a correlation exists, as long as federal financial aid is so freely available for students, there is likely little incentive to digress from such cuts.

How Long Does Paying for Med School Take?

So why do med students often go into so much debt?

It’s partly because the grueling requirements of their programs don’t often allow for part-time work. As a result, many students apply for financial aid to cover their college price tag, which means they graduate with significant amounts of student loan debt.

How long does it take to pay back the debt? Much of this depends on the student, the career path they take, and the medical loan repayments they make. However, the relatively low salaries young doctors earn during their residencies don’t typically allow for much opportunity to pay back loans until their first position after residency.

Let’s say, hypothetically, a borrower has federal Direct Loans, such as Stafford, PLUS, or a Direct Consolidation Loan. And let’s also say you can prove you have partial financial hardship (PFH), and qualify for an income-driven repayment plan.

In that situation, the monthly repayment would be capped at 10-15% of the borrower’s monthly discretionary income for a period of up to 25 years. After the 25 years, whatever hasn’t been repaid is forgiven (although that amount may be taxable).

However, if after residency, the borrower in question gets a position with an income that removes them from the PFH tier, they could switch to the Standard Repayment Plan for federal student loans and potentially pay off the loan more quickly.

Is It Possible to Shorten the Medical Debt Payment Timeline?

Here are some tips for those interested and able to shorten their repayment timeline, which can lower the amount of student loan interest paid over the life of the loan.

Repaying Loans During Residency

It is possible to start paying down medical school debt in residency. While some students may be tempted to put their loans in student loan forbearance in their residency years, doing so can add quite a bit in compounding interest to the bill.

Instead, consider an income-driven repayment plan to start paying back federal loans with an affordable payment. Another option is to look into SoFi’s medical residency refinance options to compare. Keep in mind, though, that if you choose to refinance your federal student loans, you will no longer be eligible for federal benefits and protections, including income-driven repayment plans, deferment, and student loan forgiveness.

Making Extra Payments

Another tactic to help pay off student loans faster is via simple budgeting. After getting your first position post-residency, consider committing to living on a relatively tight budget for just a few more years. Putting as much salary toward extra student loan payments as possible could potentially help cut time — and interest payments — off the repayment timeline.

Speeding Up Med School Debt Repayment With Refinancing Student Loans

If you refinance your medical student loans, iit may be possible to secure a lower interest rate and/or a lower required monthly payment – depending on the terms you choose, your credit score, and other factors.

A lower interest rate could help reduce how much money is paid in interest over the life of the loan. Extending your loan term could mean a lower monthly payment – but keep in mind that you’ll most likely pay more in interest over the life of the loan.

While refinancing could help borrowers save money over the life of the loan, it does mean giving up the benefits that come with federal student loans, like income-driven repayment, deferment, forbearance, and student loan forgiveness specific to physicians.

But for borrowers who don’t foresee needing these services, refinancing might be a viable option.

The Takeaway

The cost of medical school has risen in the past 30 years, and so has the amount of debt med students take on to pursue a career as an MD. But a career in the medical field can potentially be both lucrative and rewarding, so for some, medical school can be worth the time, effort, and cost.

Borrowers who are repaying student loans from medical school may consider strategies like income-driven repayment plans, making overpayments, or student loan refinancing to help them tackle their student loan debt.

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


SoFi Student Loan Refinance
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.


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.


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

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

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Scholarships and Grants to Pay Off Student Loans

Now that the pandemic-related pause on federal student loan repayment has ended, you may be wondering if there are any grants or scholarships to help you pay down, further delay, or even forgive some or all of your student loan debt. The answer is yes. While some grants and programs are targeted to borrowers with financial need or who work in a certain field, others are open to anyone. Read on to learn how to find “free money” to help you manage your student loan debt.

Federal Government Grants

There are a number of grant programs that are available from the U.S. Department of Education that can help people pay off their student loans or reduce the amount of debt they owe.

Government grants are funds given out by the federal government or other organizations that do not have to be repaid. Below are some popular grant programs you may be able to tap while you are still in school.

Federal Pell Grant

The Federal Pell Grant is a financial aid program for students who are still enrolled in undergraduate courses at an accredited college or university and who demonstrate need. It does not have to be repaid and can cover up to the full cost of attendance.

Teacher Education Assistance for College and Higher Education (TEACH) Grant

This program provides financial assistance to individuals pursuing an undergraduate or graduate degree in education. The TEACH Grant offers up to $4,000 per year for students enrolled in eligible educational programs at accredited universities. However, to maintain your TEACH grant, you have to work in a high-need field or at a low-income school for at least four years. If you don’t, the grant turns into a loan you must repay.

Iraq and Afghanistan Service Grant

The Iraq and Afghanistan Service Grant is designed to help students whose parents or guardians died due to service in Iraq or Afghanistan after September 11, 2001. To qualify, you need to be under 24 and demonstrate financial need based on information submitted in your Free Application for Federal Student Aid (FAFSA®). This grant has to be applied for on an annual basis in order to receive the funds.


💡 Quick Tip: Ready to refinance your student loan? With SoFi’s no-fee loans, you could save thousands.

State & Local Grants

Many states offer grants that can help residents pay off their student loans. In some cases, you need to work in a certain field and/or in an underserved area. For example, the New York State Young Farmers Loan Forgiveness Incentive Program provides loan forgiveness awards to individuals who get an undergraduate degree from an approved New York State college or university and agree to operate a farm in the state on a full-time basis for five years.

California’s Department of Health Care Access and Information , on the other hand, offers a range of loan repayment programs for those working in the healthcare field, including doctors, therapists, dentists, and more.

No matter what field you are in, it can pay to research loan repayment opportunities in your state. This tool on the Department of Education’s website can help you find the agency that distributes education grants in your state.

Recommended: Search Grants and Scholarships by State

Private Scholarships to Pay off Student Debt

There are actually numerous private grants and scholarships that can help you pay off your student loans. Aid might be need-based, merit-based, or a combination of both. You can also look for private funding options using a search engine like Fastweb or FinAid. SoFi also offers a Scholarship Search Tool.

To uncover more obscure scholarships, you may want to reach out directly to companies and organizations you have some connection to. This might include:

•   Family members’ employers and associations

•   Community service groups with whom you’ve volunteered

•   Identity/heritage groups listed on Scholarships.com

•   Religious communities you’re involved with

While private scholarships can be small, if you can piece together a few, you may be able to make a significant dent in your student debt.

Recommended: Finding & Applying to Scholarships for Grad School

Student Debt Forgiveness Programs

While the Biden Administration’s broad, one-time loan forgiveness program was struck down by the Supreme Court in June 2023, the President has announced plans to pursue a similar initiative through the federal rulemaking process. In the meantime, here are some other loan forgiveness options you may want to explore.

Public Service Loan Forgiveness

If you’re employed by a government or not-for-profit organization, you might be eligible for the government’s Public Student Loan Forgiveness (PSLF) Program. The PSLF Program forgives the remaining balance on your Direct Loans after you’ve made the equivalent of 120 qualifying monthly payments under an accepted repayment plan, while working full-time for an eligible employer.

To see if your employer qualifies and to apply for the PSLF program, you can use the PSFL Tool on the Department of Education’s website.

If you have private student loans, however, you aren’t eligible for the PSLF program

Income-Driven Loan Forgiveness

An income-driven repayment plan sets your monthly federal student loan payment at an amount that is intended to be affordable based on your income and family size. Not only that, it forgives your remaining loan balance after 20 or 25 years of payments. The Department of Education currently offers four income-driven repayment plans:

•   Revised Pay As You Earn Repayment Plan (REPAYE Plan)

•   Pay As You Earn Repayment Plan (PAYE Plan)

•   Income-Based Repayment Plan (IBR Plan)

•   Income-Contingent Repayment Plan (ICR Plan)

The newly announced Saving on a Valuable Education (SAVE) plan will eliminate the REPAYE Plan by July 2024. According to the Department of Education, the new SAVE plan can significantly decrease your monthly payment amount compared to all other income-driven repayment plans. If you enroll (or already are enrolled) in the REPAY plan, you will be automatically switched over to SAVE.

If you’d like to repay your federal student loans under an income-driven plan, you need to fill out an application at StudentAid.gov.

Recommended: Student Loan Debt Guide

Teacher Loan Forgiveness Program

The Teacher Loan Forgiveness Program will pay up to $17,500 on your Federal Direct Subsidized or Unsubsidized Loans. To receive this loan benefit, you must be employed as a full-time qualified teacher for five consecutive academic years at a low-income school or educational service agency.

If you are a teacher interested in learning more about the Teacher Loan Forgiveness Program, you can go to this federal webpage.

Armed Forces Loan Payment Programs

Many branches of the United States military offer loan payment programs that can help you pay off your federal student loans. Programs include:

•   Air Force JAG Program

•   Army College Loan Repayment

•   Army Reserve Loan Repayment

•   National Guard Loan Repayment

•   Navy Student Loan Repayment

While each military loan repayment program works in a slightly different way, these grants can potentially pay off a significant portion (or even all) of your student loan debt.

Corporate Loan Repayment Grants

Another way you may be able to get student loan repayment help is to simply ask your boss. Many companies now offer help with student loan repayment as a job perk. As more and more employees struggle with debt, employers have started to offer these benefit programs in order to attract and retain top-notch talent.

In some cases, a company will make regular, direct payments to your student loan servicer or lender on your behalf. In others, an employer may offer to contribute to your retirement if you put a certain percentage of your paycheck toward student loans. Wondering if your employer offers the same perks? Check with HR to see if you can take advantage of a company-wide loan repayment benefit program.

Recommended: Is an Employee’s Student Loan Repayment Benefit Taxed As Income?

Student Loan Refinancing

One way to potentially make both your public and your private loans more affordable is to consider student loan refinancing.

With a student loan refinance, you exchange one or more of your old loans for a new one, ideally with a lower rate or better terms. This process can be helpful if you have a solid credit score (or have a cosigner who does), since it might qualify you for a lower interest rate. In addition, you could choose a shorter repayment term to get out of debt faster.

You can refinance both federal and private student loans. Keep in mind, however, that refinancing federal student loans can result in a loss of certain borrower protections, such as income-driven repayment and student loan forgiveness. Because of this, you’ll want to consider the potential downsides of refinancing before making changes to your debt.


💡 Quick Tip: Refinancing could be a great choice for working graduates who have higher-interest graduate PLUS loans, Direct Unsubsidized Loans, and/or private loans.

The Takeaway

While you may think of grants as a way to help finance your education while you are in school, there are grants (as well as scholarships and other programs) available that can also help you repay your student loans. Options include federal and state programs, private/corporate grants, and federal loan forgiveness and repayment plans. Another option that could potentially make student repayment more manageable is refinancing.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

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


SoFi Student Loan Refinance
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.


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.


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

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.

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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A Look into the Public Service Loan Forgiveness Program_780x440

A Look Into the Public Service Loan Forgiveness Program

If you are employed by a government or a nonprofit, you might be able to get forgiveness for the remaining balance on your federal student loan through the Public Service Loan Forgiveness Program (PSLF).

Created by the Department of Education in 2007, PSLF is intended to help public-service professionals who may not earn large salaries and must struggle to repay their federal student loans. In this context, many teachers, firefighters, and social workers qualify.

The program has drawn frequent criticism for being hard to navigate and difficult to qualify for, charges that the Department of Education says it is addressing to make sure as many people as possible can access PSLF. In October 2023, the White House announced $5.2 billion in additional debt relief had been given to 53,000 borrowers under PSLF programs due to “reducing red tape and addressing past administrative failures.”

Many professionals are stressed out about their student loan debt and wondering if they qualify for forgiveness. Here’s the latest information on PSLF eligibility and student debt forgiveness.

What is Public Service Loan Forgiveness?

The PSLF program provides professionals a way out of their federal student loan debt by working full-time in public service. The remaining balance on your Direct Loans will be forgiven—meaning you will not have to pay it back–after you’ve made the equivalent of 120 qualifying monthly payments under an accepted repayment plan and while working full-time for an eligible employer.

What Are Public Service Loan Forgiveness Jobs?

The question for many people is who qualifies for PSLF? The jobs include teachers, firefighters, first-responders, nurses, military members, and doctors. But with this program, it is not only the type of job you have that determines if you can get forgiveness but also the type of employer. That is crucial. Qualifying employers include federal, state, local, tribal government and non-profit organizations.

To find out if your employer qualifies for PSLF, you can search through the Federal Student Aid search tool.


💡 Quick Tip: Enjoy no hidden fees and special member benefits when you refinance student loans with SoFi.

Who Is Eligible for the Public Service Loan Forgiveness Program?

How does PSLF work? To qualify, borrowers must meet certain eligibility criteria. They include:

Work for a Qualified Employer

Part of PSLF eligibility requires working for a qualified government organization (municipal, state, federal, military, or tribal) or a qualified 501(c)(3) non-profit organization. Full-time AmeriCorps or Peace Corps volunteers are also eligible for PSLF. (Learn more about military student loan forgiveness.)

Some other types of non-profits also qualify, but not labor unions, political organizations, and most other non-profits that don’t qualify for 501(c)(3) status. Working for a government contractor doesn’t count; you have to work directly for the qualifying organization.

Only full-time workers are eligible — that is, workers who meet their employer’s definition of full-time or work a minimum of 30 hours per week. People employed at multiple qualifying organizations in a part-time capacity can be considered full-time as long as they’re working a combined 30 hours per week.

Note that time spent working in religious instruction or worship does not count toward meeting the full-time requirement.

Recommended: How To Get Out of Student Loan Debt

Having Eligible Loans

Eligible loans include Direct loans such as Stafford loans, PLUS loans (but not Parent PLUS loans), and Federal Direct Consolidation loans.

If you want to have your Federal Family Education Loan (FFEL) or Perkins loans forgiven, you’ll have to consolidate them into a Direct Consolidation Loan first. Any payments you made on the FFEL Program loans or Perkins Loans before you consolidated won’t count toward the necessary payments.

Private student loans are not eligible for Federal forgiveness programs.

Recommended: Student Loan Forgiveness Guide

Applying for Public Service Loan Forgiveness

There are a few hoops to jump through in order to pursue PSLF. To apply for the program, you’ll need to take the following steps:

1. Consolidate FFEL Program and Perkins Loans

Borrowers with FFEL Program and Perkins Loans must consolidate them with a Direct Consolidation Loan. This is necessary because if you consolidate your loans afterward, you won’t get credit for any qualifying payments you made on those loans. Already consolidated your Direct loans? Consider consolidating your Perkins Loans separately and start making new qualifying payments.

2. Sign Up for an Income-Driven Repayment Plan

There are several income-driven repayment plans to choose from.They are designed to make your student loan debt more manageable by giving you a monthly payment based on your income and family size.

The latest IDR program is called the Saving on a Valuable Education (SAVE) Plan. It lowers payments for almost all people compared to other IDR plans because your payments are based on a smaller portion of your adjusted gross income (AGI). Also, if you make your full monthly payment, but it is not enough to cover the accrued monthly interest, the government covers the rest of the interest that accrued that month.

Note: As a result of the CARES Act, months that you were in repayment while the requirement to make a payment was paused still count as qualifying payments if you also certify your employment for the same period of time.

3. Certify Your Employment

To do this, print out an Employment Certification form and get your employer to fill it out and send it in for approval. The Federal Student Aid website suggests filling this form out annually or at least every time you switch jobs.

You can also use the Public Service Loan Forgiveness Help Tool at StudentAid.gov/pslf/ to find qualifying employers and get the forms that you need.

4. Make 120 Qualifying Monthly Payments

You must make these payments while you’re employed by a qualified public service employer. Switching employers isn’t a problem, so long as you are still working for a qualifying organization.

5. Apply for Forgiveness

After you make the final payment, submit your application for forgiveness.

Current State of the Program

Because the program was created in 2007, the first borrowers to qualify for loan forgiveness applied in 2017. However, early estimates by the Government Accountability Office (GAO) reported the denial rate as more than 99%. At the same time, many borrowers weren’t even aware that the forgiveness program exists.

In 2022, the Biden Administration addressed these issues by introducing a “limited PSLF waiver,” which allowed student loan holders to receive credit for payments that previously didn’t qualify for PSLF. The waiver deadline expired on Oct. 31, 2022.

However, post-deadline, the effort to make it easier to qualify for PSLF is continuing. The DOE extended elements of the waiver through the IDR account adjustment program, which goes until the end of 2023.

President Biden announced in October 2023 that during his administration the DOE had secured relief for “almost $51 billion for 715,000 public servants through Public Service Loan Forgiveness (PSLF) programs, including the limited PSLF waiver and Temporary Expanded PSLF (TEPSLF).”

Beware of false communications from scammers posing as the DOE or your loan servicer. Read up on the latest student loan forgiveness scams.

Pros and Cons of the Public Service Loan Forgiveness Program

The advantages of the program are pretty straightforward. The disadvantages have more to do with how the program is executed in the real world.

Pros of PSLF

1.    The balance of your student loans is forgiven after a set time. This works as a kind of bonus to make up for the low pay earned by people working in the public sector.

2.    The amount forgiven usually isn’t considered income, so you aren’t taxed on it (and you don’t have to save additional money to account for the IRS bill). With other loan forgiveness programs, you might see a big tax bill.

3.    Professionals in qualifying jobs are making a difference, and your government appreciates it enough to give you a break on your federal student loans.

4.    You may pay less monthly because you’re on an income-driven plan. This means paying out less of your hard-earned cash every month.

Cons of PSLF

1.    The program is only open to those with certain types of employers. And it’s contingent on staying with a qualifying public service employer for 10 years. With the SAVE program, qualifying loan holders may be able to pay off their federal student loans no matter who their employer is.

2.    Some borrowers aren’t aware of the program, partly due to a lack of education by employers, loan servicers, and schools.

3.    There are a lot of hoops to jump through to get your loans forgiven. Plus, if you don’t jump through a hoop properly, you can jeopardize your forgiveness.

4.    The extra money that can potentially be earned from working for a corporate employer may help you pay off your loans sooner than through PSLF.

5.    You might end up paying more in interest by making 120 payments than if you budgeted to aggressively repay your loans in less than 10 years.

Alternatives to the Public Service Loan Forgiveness Program

Another program available to some individuals is the Teacher Loan Forgiveness program. This program is available to full-time teachers who have completed five consecutive years of teaching in a low-income school. This program has strict eligibility requirements that must be met in order to receive forgiveness.

If you receive Teacher Loan Forgiveness, the five-year period of service that supported your eligibility will NOT count toward PSLF. However, the limited PSLF waiver discussed above temporarily waived this restriction for individuals who previously received Teacher Loan Forgiveness.

These federal forgiveness programs do not apply to private student loans. If you are looking for ways to reduce your interest rate or monthly payments on private student loans, refinancing with a private lender can be an option. (Note: You may pay more interest over the life of the loan if you refinance with an extended term.)

It is important to mention that refinancing your federal student loans with a private lender may make you ineligible for the Public Service Loan Forgiveness program, should you choose that route.

The Takeaway

The Public Service Loan Forgiveness program is one way for eligible borrowers to have their federal student loans forgiven. Recent changes to the program by the Biden Administration promises to make qualifying for PSLF easier. However, if you have student loans that aren’t eligible for PSLF, consider taking advantage of either refinancing or income-driven repayment.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.


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


SoFi Student Loan Refinance
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.


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.


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

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

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