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5 Alternatives to Emergency Student Loans

You thought you had your college costs covered. Then something unexpected happened — a sudden job loss, unplanned expense, family emergency — and now you’re short on funds and wondering how you’ll make ends meet.

Fortunately, some schools offer emergency student loans to help students rebound from a financial set-back and manage the unexpected. While these tend to be smaller amounts, an emergency loan can help you get through a rough financial patch, allowing you to stay in school and complete your degree.

However, not every college and university offers emergency student loans, and those that do may have limited funds for emergency student loans and varying eligibility requirements.

Here are key things to know about emergency or fast student loans, plus other ways to access quick funds when you hit a set-back or unexpected college expense.

The Basics of Emergency Student Loans

The term emergency student loan generally refers to a loan offered to actively enrolled students in dire financial situations, typically by colleges and universities. If you have experienced an unexpected financial hardship, whether due to a job loss, a death in the family, or any life circumstance that results in immediate financial need, you may be eligible to apply.

Emergency loans are generally disbursed and repaid on rapid schedules. Repayment terms may be as short as 30 to 90 days. The amount you can borrow varies by school but the cap is typically between $500 to $1,500. Some emergency student loans are interest-free, while others charge a low interest rate.

Typically, you cannot use an emergency student loan to cover your tuition for the semester. However, you can use it to cover other expenses, like food, housing, childcare, and medical expenses.


💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.

How to Get Emergency Student Loans

If you need an emergency or instant student loan, a good first step is to contact your school’s financial aid office. If your school offers emergency loans, you will likely need to:

•   Find out if you are eligible. You’ll want to check your school’s eligibility requirements to make sure you qualify before you go through the application process.

•   Fill out the emergency student loan application. You may be able to do this online or you might need to do it in person at the financial aid office. You’ll likely need to have your student ID and enrollment information. Your school may also ask for documentation of your financial emergency before it will approve the loan.

•   Make a plan to repay your loan on time. You may need to repay the loan within just a few months, so you’ll want to determine how you will make those payments. If you miss a payment, the school might charge fees and/or hold your academic records.

Are Emergency Student Loans a Good Idea?

While emergency student loans can be helpful, they may not be the right solution for everyone. For one, the loan might not offer enough money to help you out. For another, schools typically have strict qualification criteria for emergency student loans. For example, you typically need to have experienced an unexpected event that triggered a dire and sudden financial need, such as:

•   Loss of a parent

•   Dismissal from a job or unexpected reduction in income

•   Natural disaster

•   Significant crime or theft

Also keep in mind that an emergency loan is still a loan, so you’ll want to make sure you can handle more debt before you tap a fast student loan. Also be sure you can manage the short repayment period. Having a loan go into default may jeopardize your education and your eligibility for future financial aid. In other words, it’s a good idea to establish a plan before you borrow money.

Emergency Student Loan Alternatives

Emergency student loans can be a great resource for some students. However, they aren’t right for everyone. You may not qualify for your school’s emergency student loan program. Or, you might need a larger sum of money or a longer repayment timeline. Also, not all schools offer emergency loans. Luckily, there are other options on the table to help you through a cash crunch during college. Here are five you may want to explore.

1. Unused Federal Student Loans

If you’ve already submitted your Free Application for Federal Student Aid (FAFSA) but turned down some or all of the federal student loans you were offered, there is good news: It’s possible to change your mind. Once you have filed a FAFSA, you are allowed to accept the funds at any time during the academic year.

For example, you might have been offered $5,000 in federal loans but only claimed $2,000 of that money. If you find yourself in financial hardship later in the academic year, you could still claim the unused portion of federal student aid. You can use federal student loans to cover tuition as well as living expenses. Your financial aid office can help you figure out if this is an option for you.

Since you’ve already been approved for the loan, funding time will likely be much faster compared to the regular waiting time for federal aid. It shouldn’t take more than 14 days to receive the funds.

If you’ve had a major change in your financial situation, such as a job loss or the passing of a parent, you may want to resubmit your FAFSA to reflect your new situation. Depending on the changes, you might qualify for more aid.

2. University Grants and Scholarships

Some colleges and universities offer emergency aid in other forms besides loans. Emergency grants and scholarships work in a similar way to emergency student loans in that they’re meant to help cover unexpected financial hardships. However, unlike loans, grants don’t have to be repaid.

For example, some schools offer completion scholarships or grants, which can forgive a portion or all of the outstanding balance that might otherwise keep a student from advancing or graduating. Other schools have voucher programs to help with specific on-campus costs like books and dining hall meals.

You’ll need to get in touch with your financial aid office to see if you qualify for any emergency assistance grants, scholarships, or vouchers under your circumstances. The school may require proof of hardship or emergency.

Recommended: Finding Free Money for College

3. Private Student Loans

If you’ve tapped all of your federal aid options, you might turn to private student loans to help cover emergency expenses. These are loans offered by banks, credit unions, and online lenders.

Private student loans typically come with higher interest rates than federal student loans and don’t offer the same borrower protections (like forbearance and forgiveness programs). However, you can often borrow up to your school’s cost of attendance with a private student loan, giving you more borrowing power than you can get with the federal government. Depending on the lender, you may be able to take advantage of quick student loan approval and disbursement and use the money to pay for your emergency expenses.

Some lenders send the money straight to the school and, once tuition is covered, the school will typically give you the remainder of the loan to cover living expenses. In other cases, lenders will send the funds to you to make the appropriate payments.

4. Tuition Payment Extension

If you’re not sure you can pay your tuition on time due to a sudden emergency, it’s worth asking your financial aid office if they provide temporary payment extensions or payment plans.

Some colleges may be willing to grant you an extension on paying your tuition. For example, they might offer an emergency deferment plan which allows enrolled students to postpone payments through a specific date, such as the 90th day of the term. This might give you a bit of extra breathing room in your budget.

You might also explore tuition payment plans. Many schools allow you to spread out your tuition into affordable monthly or bi-monthly payments. Typically, schools don’t charge interest on thes plans. However, when exploring this alternative, it’s a good idea to ask about any fees or interest charges that might apply.

5. Food Pantries

The cost of food is high these days, and this may be particularly burdensome during an emergency. Your school may have an on-campus food pantry that can help reduce your expenses until you’re back on your feet. Also keep in mind that local churches and other charitable organizations in your area may also offer food at no cost to those in need. Feeding America is a helpful resource to find food banks near you.These food pantries can provide basics like canned foods, pastas, dried breakfast items and more.


💡 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.

Where Can You Look for Other Forms of Emergency Student Aid and Assistance?

Outside of emergency student loans and grants, colleges and universities often offer additional resources that can help with unplanned costs during an emergency. You might find on-campus support in the form of housing opportunities, bus passes, or food pantries. Even if your school doesn’t offer emergency assistance directly, a financial aid administrator may know of off-campus organizations that will offer support.

You might also explore assistance from alumni-funded foundations or other nonprofit scholarships or grants that can provide emergency assistance. For example, the UNCF offers a “Just-in-time” emergency grant of up to $1,000 for students at risk of dropping out of college due to a financial hardship (like medical bills, a car repair, or a trip home to help a sick parent). Students must complete an online application form and show proof of financial hardship.

After You Graduate

If you took out federal or private student loans during college to cover expenses (both planned and unplanned) and you’re now in the repayment stage, you might want to look into refinancing. When you refinance your student loans, a lender pays off your existing loans with a new one, ideally at a lower interest rate. That can potentially save you money in the long run — and from the first payment you make.

Just keep in mind that if you refinance federal student loans with a private lender you forfeit federal protections, such as income-driven repayment plans and forgiveness programs.

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.

Check out what kind of rates and terms you can get in just a few minutes.


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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.

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


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

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

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How to Study for the MCATs

So you want to go to medical school and become a doctor? Then you know that the MCAT, a rigorous test, is likely in your future. Since it’s an important qualifying test for medical school and can be challenging, you likely want to arm yourself with info and prepare well for it.

Here, you’ll learn some of the most important information, such as:

•   What are the MCATs

•   How to start studying for the MCATs

•   How to pay for the MCATs and medical school.

Read on, and hey: You’ve got this!

What Are the MCATs?

MCAT stands for Medical College Admission Test® (MCAT®). The test, which the Association of American Medical Colleges (AAMC) creates and administers every year, is multiple-choice and standardized. Some important facts:

•   Medical schools have been utilizing it for more than 90 years to determine which students should gain admission.

•   Most medical schools in the United States and some in Canada will require that students take the MCATs. Every year, more than 85,000 prospective medical school students take it.

•   There are four sections to the MCATs:

◦   Critical analysis and reasoning skills

◦   Biological and biochemical functions of living systems

◦   Chemical and physical foundations of biological systems

◦   Psychological, social, and biological foundations of behavior.

•   Students will receive five scores: one for each section, and then one total score.

◦   In each section, they can get a score ranging from 118 to 132, and the total score ranges from 472 to 528.

◦   Generally, a competitive MCAT score is a total of 511 or above, which would place a student in the 81st percentile.

The average MCAT score for all medical school applicants is currently 501.3. Usually, students will receive scores 30 to 35 days after they take the exam.

Keep in mind that MCAT scores, while important, are just one part of a medical school application. Medical schools often review other factors, including things like a student’s:

•   GPA

•   Undergraduate coursework

•   Experience related to the medical field, including research and volunteer work

•   Letters of recommendation

•   Extracurricular activities

•   Personal statement.

Because of this array of inputs, If a student has a high GPA from a competitive undergraduate school, for instance, and they don’t score very high on the MCATs, they may still have a chance of getting into a medical school.

Getting a competitive score on the MCAT can give applicants an edge, especially when applying to ultra-competitive medical schools. One way students can help improve their chances of getting a desirable score on the MCAT is to learn how to study for the unique demands of this test.


💡 Quick Tip: Ready to refinance your student loan? You could save thousands.

Studying for the MCAT

One of the first things a student can do when determining how to prepare for the MCAT is to create a study plan. A well-crafted study plan will review what materials the student should review in order to prepare for the exam.

That said, there’s no one best way to prep for the MCAT. Consider these options; you might use one or a variety of techniques.

The AAMC Website

One great place to get started is the AAMC website, which provides an in-depth outline of the test on their website. Obviously, the same questions students will see on the actual exam won’t be listed, but sample questions that are similar to the real questions are. Students may find helpful tutorials and other content as well.

Online Resources

There are a variety of other online resources students can explore to help them review. For example, the AAMC currently recommends students take a look at Khan Academy’s MCAT Video Collection, where there are more than 1,000 videos as well as thousands of questions that students can use to review.

There are also MCAT study apps like MCAT Prep from Varsity Tutors and MCAT Prep by Magoosh that students can download and use to study.

Books, Textbooks, and Class Resources

How else to prep for the MCATs? It may also help to buy or borrow books from the library that go into detail on the MCAT. One word of advice: Students should just make sure that the books they’re reading are up to date. Information (and the MCAT) get refreshed often; you don’t want to be studying yesterday’s medical data.

It can also be helpful to review class notes and study guides from courses you’ve taken that are related to MCAT materials. Some schools have study groups and other academic support resources for students who are studying for the MCAT. If you’re currently enrolled in classes, take a look to see what might be offered at your campus. You might luck out with some great ways to learn more.

Practice Tests

AAMC offers official sample MCAT practice exams online. You can access two for free, and others for a cost of $35 each. Taking practice tests can help students familiarize themselves with the exam. Taking practice tests can also be important in helping students understand the timing of each section.

Study Groups and Tutors

Here are other ideas for how to start studying for the MCAT:

•   Getting an MCAT tutor who has taken the test could also be helpful. A tutor will generally be able to provide guidance on what kind of questions a student can expect. Plus, they will likely have hands-on experience with effective methods and tips for studying.

If you decide that how to prep for the MCAT should involve a tutor, ask friends and fellow students who have taken the MCATs recently for recommendations. There are also test preparation companies that provide resources for students to find tutors online or in person. Do check reviews and references.

•   Study groups can also be a tool to help students who are preparing for the MCATs. Students can find others who are on the same path and work together to build proficiency. If possible, find a group where each student has a different strength and weakness. This can maximize students learning from one another.

•   It may help to use a shared calendar or another tool to make sure everyone is on the same page for dates, times, and locations for when the study group will meet.

•   Want to find a study group as part of how to prepare for the MCATs? Search engines, professors’ recommendations, school bulletin boards/online groups, and fellow students are good bets.



💡 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.

Important Dates to Keep in Mind

Now that you know the ins and outs of preparing for the MCAT, what about taking the test itself? Students can take the MCATs several times throughout the year, from late January through September. There are hundreds of test locations around the U.S. and Canada as well as select locations around the globe.

If a student’s preferred MCAT test date or location is not available, they can sign up for email notifications to see if it becomes available down the line.

Recommended: Refinancing Student Loans During Medical School

Paying for the MCATs and Medical School

As you explore the best way to prepare for the MCAT and plan your medical school journey, you’ll likely be keeping costs in mind. Here are details to note.

Paying for the MCATs

The registration fee for the MCAT exam is $330, and that includes distribution of scores. There may be additional fees for changes to a registration, a late registration, and for taking the test at international sites.

The AAMC does offer a Fee Assistance Program to students who are struggling to pay for the test and/or medical school applications. To be eligible for the Fee Assistance Program, students must meet the following eligibility requirements:

•   Be a US Citizen or Lawful Permanent Resident of the US.

•   Meet specific income guidelines for their family size.

Note that the Fee Assistance Program will review financial information of the student and the student’s parents, even if the student is considered independent.

Keep in mind that along with the MCAT fee, applying to medical school can be quite expensive. Most medical schools in the US utilize the AAMC’s American Medical College Application Service® (AMCAS®). To apply to medical schools, students will generally pay a first-time application fee of $170, as well as $40 for each additional school.

Some medical schools may require a secondary application, and those fees range depending on the school. Students may also need additional money to travel to and tour schools.

Recommended: Cash Course: A Student Guide to Money

Medical School Costs

The application process is just one portion of the expense of med school. After being accepted, there’s the cost of tuition, books, and more, and these medical school costs have been rising steeply lately.

•   The average cost of the first year of medical school at a public school with in-state tuition is $67,641, which includes tuition, fees, and living expenses.

•   The average cost for the first-year at a private medical school is $93,186. The average debt for medical school graduates is currently $202,453. Debt after medical school can go even higher when you add in undergraduate loans.

Obviously, that’s a significant number and can make you wonder how to pay for medical school. First, do remember that medical school is a path to a rewarding and challenging career, as well as potentially a lucrative one. The average medical school graduate earns more than $150,000, with high earners enjoying salaries above the $400K mark, according to ZipRecruiter data.

Paying for School with the Help of SoFi

Paying for the MCATs and medical school can be a challenge. SoFi understands this, which is why they offer students private student loans and the opportunity to refinance their current student loans.

Keep in mind, however, that if you refinance with an extended term, you may pay more interest over the life of the loan. Also note that refinancing federal student loans means forfeiting their benefits and protections, so it may not be the right choice for everyone.

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.

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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Strategies for Lowering Your Student Loan Interest Rate

When you’re in college, you don’t have a lot of control over the interest rates on your student loans. With federal loans, the U.S. Department of Education sets the rate each year for all borrowers. And if you get private student loans, a limited credit history can make it hard for young people to score favorable terms.

But once you graduate, there are a few things you can try to save money on interest. Here are a few tips that may lower your interest rate on student loans.

Refinancing Your Student Loans

Scoring discounts with your current servicer can help you get a lower student loan interest rate, but there is another option to consider. Depending on your financial profile, you may qualify for a lower student loan interest rate than what you’re currently paying with student loan refinancing.

There are multiple advantages to refinancing student loans. You can potentially lower your interest rate by bundling several loans (federal and private) into one new loan. And if you shorten your loan term, you may be able to pay off your student loans much faster and pay less in interest over the life of your loan.

Student Loan RefinancingStudent Loan Refinancing

Student loan refinancing is ideal for borrowers with high-interest student loans who have good credit scores and know they won’t use any of the federal loan benefits, like student loan forgiveness. (All federal loan benefits, including income-based repayment, will be lost if you refinance.)

Here are a few things that can help you improve your chances of getting a lower student loan interest rate with refinancing:

•   A high credit score: Lenders typically have a minimum credit score requirement, so the higher your score, the better your chances of getting a low rate usually are.

•   A low debt-to-income (DTI) ratio: Your income is also an important factor that lenders consider, especially as it relates to your overall debt burden. If a smaller portion of your monthly income goes toward debt payments, it shows you may have more income to dedicate to your new loan’s payments.

•   A co-signer: Even if your credit and income situation is in good shape, having a co-signer with great credit and a solid income might help your case.

•   A variable rate: Some student loan refinance lenders offer both variable and fixed interest rates. Variable interest rates may start out lower but increase over time with market fluctuations. Fixed rates, stay the same over the life of the loan. If you’re planning on paying off your student loans quickly, a variable rate might save you money.

•   The right lender: Each lender has its own criteria for setting interest rates, so it’s important to shop around to find the best lender for your needs. Some lenders, including SoFi, even allow you to view rate offers before you officially apply.


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

Consolidate Your Student Loans

Have multiple student loans floating around that you’d love to combine into one? Consider loan consolidation, where you’ll merge all your student loans into one easy monthly payment with a single interest rate. Here’s the rub, though: Consolidation alone does not necessarily get you a lower student loan interest rate. It just offers you one payment instead of multiple.

When consolidating federal student loans, you can use a Direct Consolidation Loan. Your new interest rate is simply the weighted average of all your current student loan interest rates. The weighted average might be a smidge higher than the interest rates you were paying previously. Often folks utilize consolidation to stretch out the life of their student loan, which lowers your payments but may increase the amount you owe over time.

Even though consolidation itself is not a direct way to get a better rate on your student loans, it can be helpful if you’re having trouble keeping track of your monthly payments. Consolidation may also be useful if you want to merge non-direct federal loans (like Perkins loans) with direct loans, in order to qualify for income-driven repayment and/or loan forgiveness programs.

By the way, the term “consolidating” is often used interchangeably with “refinancing,” but they technically mean different things. When refinancing student loans, you also happen to be consolidating, but it is done with the goal of achieving a more favorable interest rate on your student loans.

Recommended: The Basics of the Student Loans

Set Up Automatic Payments

Many student loan servicers — both federal and private — offer an interest rate discount if you set up autopay on your account. Depending on the servicer, you can lower your student loan interest rate. SoFi, for example, offers a 0.25% autopay discount.

The reason servicers offer this discount is that by setting up automatic payments, you’re less likely to miss payments and default on the loan.

In addition to getting a lower student loan interest rate, you’ll also (hopefully!) have peace of mind knowing that you won’t accidentally miss a payment. If you feel you’re putting a little too much money toward student loans, check with your loan servicer to see whether they offer an autopay discount.


💡 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.

Get a Loyalty Discount

In addition to an autopay discount, some private student loan companies also offer a loyalty discount when you have another eligible account with them.

If you’re already a member with SoFi, for instance, you receive an interest rate discount of 0.125% on all new loans.

Other lenders may require that you have an eligible checking or savings account with them to qualify for the bonus, and you may even get a bigger discount if you make your monthly payments from that account.

To get an idea of how a change in interest rate would impact your loan, take advantage of a student loan refinance calculator to see what your new payments could be.

Choose the Right Repayment Plan

If you don’t choose a specific repayment path, you’re typically opted into the Standard Repayment Plan. In this plan, your payments are generally based on a 10-year timeline. But this one-size-fits-all plan is not the best option for everyone.

The federal government also offers four income-driven repayment (IDR) plans — Pay As You Earn (PAYE), Saving on a Valuable Education (SAVE), Income-Based Repayment (IBR), and Income-Contingent Repayment (ICR) — where the monthly payments are based on your income and family size. While choosing one of these plans may lower your monthly payments, it will likely not alleviate how much interest you pay over time. In fact, you might even pay significantly more.

After 20 or 25 years, depending on the IDR plan, any remaining balance is forgiven. However, the amount forgiven may be considered taxable income by the IRS. So even though your student loan debt goes away, prepare yourself for a big tax bill that year.

Another money-saving repayment option for federal student loans is the Public Service Loan Forgiveness (PSLF) program. If you work in a qualifying public service job — for the government or a nonprofit organization — you might be eligible to have your student loans forgiven after 10 years of service.

You can confirm whether your work qualifies here. You’ll want to submit an Employment Certification as soon as possible to be sure that you’re on track to qualify.

Recommended: 4 Student Loan Repayment Options, and How to Choose

Lower Your Student Loan Interest Rate

There are several ways to get a lower student loan interest rate. It can be as easy as calling your servicer to find out what discounts are available. You can also choose a new repayment plan, consolidate your federal loans, or refinance federal and private loans. With refinancing, you may secure a lower interest rate if you have a high credit score, low debt-to-income ratio, a cosigner, or a variable interest rate. Just know that when refinancing federal student loans, borrowers lose federal protections and forgiveness.

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.

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.

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.

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

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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What Is the Minimum Down Payment for an FHA Loan?

Saving up for a down payment is a common challenge for many prospective homebuyers. FHA loans allow qualifying borrowers to put as little as 3.5% down on a property, helping lower the barriers to homeownership for many.

With an FHA loan, borrowers may also be eligible for down payment assistance. But there are other out-of-pocket expenses to keep in mind when considering an FHA loan. Let’s take a closer look at FHA loan down payment requirements and how much money you’ll need to get to the closing table.

What Is an FHA Loan?

An FHA loan is a type of mortgage that’s issued by a lender, such as a bank or credit union, but insured by the Federal Housing Administration (FHA). The purpose of the FHA mortgage program is to make homeownership more affordable for low- to moderate-income buyers.

Since FHA loans are government-insured, they offer more flexible eligibility requirements for borrowers who might not qualify for a conventional home loan. FHA loans have lower minimum down payment and credit score requirements, making them popular with first-time homebuyers and applicants with limited savings or poor credit. Compared to conventional mortgages, FHA loan interest rates are typically lower, but will vary depending on the lender and on the borrower’s credit score and finances.


💡 Quick Tip: Buying a home shouldn’t be aggravating. SoFi’s online mortgage application is quick and simple, with dedicated Mortgage Loan Officers to guide you through the process.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.


FHA Loan Income Requirements

There aren’t any minimum or maximum income requirements to qualify for an FHA loan. However, there may be income limits for borrowers receiving down payment assistance through a state or local program.

In any case, lenders will look at an applicant’s ability to manage monthly mortgage payments and ultimately repay the FHA loan. Besides savings and assets, lenders assess an applicant’s debt-to-income (DTI) ratio, which measures the percentage of monthly income that goes toward debt payments. A lower DTI ratio is typically viewed as favorable. Depending on the lender, borrowers can get an FHA loan with a DTI ratio of up to 50%. In comparison, conventional loans typically require a DTI ratio of 43% or less.

Recommended: How Much is a Down Payment?

What Is the Down Payment Required for an FHA Loan?

Down payments are calculated as a percentage of the home purchase price. Historically, lenders looked for buyers to put down one-fifth of a home’s purchase price upfront. But you no longer always need to put down 20% on a house. The minimum down payment percentage for FHA loans depends on a borrower’s credit score.

The average down payment on a house in the U.S. was 13% in 2022. But with an FHA loan, borrowers with a credit score of 580 or more may qualify for a down payment of 3.5% of the home purchase price. Those with credit scores between 500 and 579 will need to put 10% of the home price towards a down payment. For a $400,000 house, this translates to $14,000 for a 3.5% down payment and $40,000 for a 10% down payment.


💡 Quick Tip: Generally, the lower your debt-to-income ratio, the better loan terms you’ll be offered. One way to improve your ratio is to increase your income (hello, side hustle!). Another way is to consolidate your debt and lower your monthly debt payments.

What Other Cash Will I Need to Close?

Besides the down payment, the remaining amount you need to close on a house will depend mainly on the home’s purchase price. Taking out an FHA loan requires paying an upfront mortgage insurance premium (MIP) of 1.75% of the loan total. It may be possible to roll this cost into the loan, which would increase the loan principal and monthly payment amount.

Buyers will also be on the hook for FHA loan closing costs, which typically range from 2% to 5% of the home’s purchase price. Borrowers can potentially avoid the upfront expense by rolling closing costs into an FHA loan. By financing closing costs, borrowers will pay a portion of the costs each month, plus interest. Note that financing closing costs can increase a borrower’s DTI ratio and potentially impact their ability to qualify for an FHA loan.

An alternative option to cover closing costs would be to ask for seller concessions. FHA loans allow the seller to contribute up to 6% of the home value for closing costs as a seller concession.

Recommended: What Do You Need to Buy a House?

How to Save for an FHA Loan Down Payment

Understanding how much house you can afford is a useful place to start to determine your housing budget and savings goal. Using an FHA loan mortgage calculator can help crunch the numbers to determine your down payment and monthly payment based on different loan terms. Not sure you will choose an FHA loan? Use a home affordability calculator to determine how much house you can afford.

With a savings goal in mind, calculate how much you can set aside each month after paying for debts and expenses. Consider cutting discretionary spending, such as dining out and travel, to increase monthly savings.

Buyers can also get the money they need for an FHA down payment in the form of a gift from family, friends, employer, charitable organization, or government program. Gifted funds need to be accompanied by a gift letter to show the lender that the money is going toward the down payment and doesn’t need to be repaid.

Is Down Payment Assistance Available for FHA Loans?

Borrowers who can’t afford a down payment on an FHA loan may be eligible for financial assistance. Down payment assistance can come in several forms, including grants and forgivable loans. These programs are available through local, state, and federal government programs, as well as nonprofit organizations.

Most down payment assistance programs are geared towards first-time buyers. They may include additional eligibility requirements, such as income limits and participation in homebuyer education courses. Consult a list of first-time homebuyer programs and loans to see what you might be eligible for. If it has been more than three years since you have owned a home, you may qualify for first-time homebuyer status.

Additional Cost Considerations for FHA Loans

In addition to the upfront costs of a down payment, closing costs, and MIP, there are other expenses to plan for.

The MIP includes an additional annual fee besides the 1.75% that’s required for closing. Annual payments range from 0.15% to 0.75% depending on the loan terms and loan-to-value ratio. The total annual cost is divided by 12 and spread out across the monthly payments in a given year. Note that MIP usually spans the life of the FHA loan unless a borrower refinances.

Depending on the property location, borrowers may also need to pay for flood insurance to get an FHA loan.

Pros and Cons of an FHA Loan

FHA loans are popular for their lower down payment mortgage requirements, but they’re not for everyone. Here are some advantages and drawbacks to consider when comparing home mortgage loan options.

Pros:

•   Smaller down payments

•   More lenient credit score requirements

•   No income limits

•   Can finance closing costs

Cons:

•   Required to pass an inspection and appraisal

•   Must be used for a primary residence.

•   Loan limits of $472,030 to $1,089,300 for a single-family home, depending on the cost of living by state.

•   Can require an inspection and stricter standards for the condition of the property.

The Takeaway

What is the minimum down payment for an FHA loan? Borrowers with credit scores of 580 or more can put just 3.5% down, while those with scores between 500 to 579 need to put 10% toward a down payment. The combination of lower minimum credit score and low down payment make FHA loans one attractive option for first-time homebuyers.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

What is the lowest down payment for an FHA loan?

The lowest down payment for an FHA loan is 3.5% of the loan amount. Borrowers can explore down payment assistance programs to help cover the cost.

What is the down payment for an FHA loan 2023?

The down payment for an FHA loan in 2023 ranges from 3.5% to 10% depending on the borrower’s credit score.

What will disqualify you from an FHA loan?

Borrowers could be disqualified from an FHA loan based on a high debt-to-income ratio, poor credit, or insufficient funds to pay for the down payment, closing costs, and monthly mortgage payment.


Photo credit: iStock/Edwin Tan

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 Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.


*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

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.

¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
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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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.


💡 Quick Tip: Some lenders can release funds as quickly as the same day your loan is approved. SoFi personal loans offer same-day funding for qualified borrowers.

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 2024 winner for Best Personal Loan overall.


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


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

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

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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