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Feb

2026

When Should You Start Saving for Retirement?

By Melanie Mannarino | Budgeting & Goals, Growing Wealth, invest, Preparing for Retirement | No Comments

If you ask any financial advisor when you should start saving for retirement, their answer would likely be simple: Now, or in your 20s if possible.

It’s not always easy to prioritize investing for retirement. If you’re in your 20s or 30s, you might have student loans or other goals that seem more “immediate,” such as a down payment on a house or your child’s tuition. But starting early is important because it can allow you to save much more. In fact, setting aside a little every year starting in your 20s could mean an additional hundreds of thousands of dollars of accumulated investment earnings by retirement age.

No matter what age you are, putting away money for the future is a good idea. Read on to learn more about when to start saving for retirement and how to do it.

Key Points

• Starting to save for retirement in your 20s is ideal, as it gives your money more time to potentially grow and benefit from compounding. Compounding occurs when any earnings received are added to your principal balance, so future earnings are calculated on this updated, larger amount.

• Assessing personal financial situations and retirement goals is crucial when determining how much to save for retirement, regardless of age.

• Individuals in their 30s, 40s, 50s, or 60s can still successfully start saving for retirement, with different strategies tailored to each age group.

• Regular contributions and taking advantage of employer-sponsored plans are key steps in building a solid retirement savings strategy at any age.

This article is part of SoFi’s Retirement Planning Guide, our coverage of all the steps you need to create a successful retirement plan.

What Is the Ideal Age to Start Saving for Retirement?

Ideally, you should start saving for retirement in your 20s, if possible. By getting started early, you could reap the benefits of compound interest. That’s when money in savings accounts earns interest, that interest is added to the principal amount in the account, and then interest is earned on the new higher amount.

Starting to save for retirement in your 20s can allow you to save much more. In fact, setting aside a little every year starting in your 20s could mean an additional hundreds of thousands of dollars of accumulated investment earnings by retirement age.

That said, if you are older than your 20s, it’s not too late to start saving for retirement. The important thing is to get started, no matter what your age.

The #1 Reason to Start Early: Compound Interest

If you start saving early, you could reap the benefits of compound interest.

CFP^®, Brian Walsh says, “Time can either be your best friend or your worst enemy. If you start saving early, you make it a habit, and you start building now, time becomes your best friend because of compounded growth. If you delay — say 5, 10, 15 years to save — then time becomes your worst enemy because you don’t have enough time to make up for the money that you didn’t save.”

Here’s how compound interest works and why it can be so valuable: The money in a savings account, money market account, or CD (certificate of deposit) earns interest. That interest is added to the balance or principle in the account, and then interest is earned on the new higher amount.

Depending on the type of account you have, interest might accrue daily, weekly, monthly, quarterly, twice a year, or annually. The more frequently interest compounds on your savings, the greater the benefit for you.

Investments — including investments in retirement plans, such as an employee-sponsored 401(k) plan or a traditional or Roth IRA — likewise benefit from compounding returns. Over time, you can see returns on both the principal as well as the returns on your contributions. Essentially, your money can work for you and potentially grow through the years, just through the power of compound returns.

The sooner you start saving and investing, the more time compounding has to do its work.

💡 Quick Tip: If you’re opening a brokerage account for the first time, consider starting with an amount of money you’re prepared to lose. Investing always includes the risk of loss, and until you’ve gained some experience, it’s probably wise to start small.

Saving Early vs Saving Later

To understand the power of compound returns, consider this:

If you start investing $7,000 a year at age 25, by the time you reach age 67, you’d have a total of $2,129,704.66. However, if you waited until age 35 to start investing the same amount, and got the same annual return, you’d have $939,494.76.

Age	Annual Return	Savings
25	8%	$2,129,704.66
35	8%	$939,494.76

As you can see, starting in your 20s means you may save double the amount you would have if you waited until your 30s.

Starting Retirement Savings During Different Life Stages

Retirement is often considered the single biggest expense in many peoples’ lives. Think about it: You may be living for 20 or more years with no active income.

Plus, while your parents or grandparents likely had a pension plan that kicked off right at the age of 65, that may not be the case for many workers in younger generations. Instead, the 401(k) model of retirement that’s more common these days requires employees to do their own saving.

As you get started on your savings journey, do a quick assessment of your current financial situation and goals. Be sure to factor in such considerations as:

• Age you are now

• Age you’d like to retire

• Your income

• Your expenses

• Where you’d like to live after retirement (location and type of home)

• The kind of lifestyle you envision in retirement (hobbies, travel, etc.)

To see where you’re heading with your savings you could use a retirement savings calculator. But here are more basics on how to get started on your retirement savings strategy, at any age.

Starting in Your 20s

Starting to save for retirement in your 20s is something you’ll later be thanking yourself for.

As discussed, the earlier you start investing, the better off you’re likely to be. No matter how much or little you start with, having a longer time horizon till retirement means you’ll be able to handle the typical ups and downs of the markets.

Plus, the sooner you start saving, the more time you’ll be able to benefit from compound returns, as noted.

Start by setting a goal: At what age would you like to retire? Based on current life expectancy, how many years do you expect to be retired? What do you imagine your retirement lifestyle will look like, and what might that cost?

Then, create a budget, if you haven’t already. Document your income, expenses, and debt. Once you do that, determine how much you can save for retirement, and start saving that amount right now.

💡 Learn more: Savings for Retirement in Your 20s

Starting in Your 30s

If your 20s have come and gone and you haven’t started investing in your retirement, your 30s is the next-best time to start. While there may be other expenses competing for your budget right now — saving for a house, planning for kids or their college educations — the truth remains that the sooner you start retirement savings, the more time they’ll have to grow.

If you’re employed full-time, one easy way to start is to open an employer-sponsored retirement savings plan, like a 401(k). In 2025, you can contribute up to $23,500 in a 401(k), and in 2026, you can contribute up to $24,500.

One benefit to note is that your savings will come out of your paycheck each month before you get taxed on that money. Not only does this automate retirement savings, but it means after a while you won’t even miss that part of your paycheck that you never really “had” to begin with. (And yes, Future You will thank you.)

Learn more: Savings for Retirement in Your 30s

Starting in Your 40s

When it comes to how much you should have saved for retirement by 40, one general guideline is to have the equivalent of your two to three times your annual salary saved in retirement money.

Once you have high-interest debt (like debt from credit cards) paid off, and have a good chunk of emergency savings set aside, take a good look at your monthly budget and figure out how to reallocate some money to start building a retirement savings fund.

Not only will regular contributions get you on a good path to savings, but one-off sources of money (from a bonus, an inheritance, or the sale of a car or other big-ticket item) are another way to help catch up on retirement savings faster.

Starting in Your 50s

In your 50s, a good ballpark goal is to have six times your annual salary in your retirement savings by the end of the decade. But don’t panic if you’re not there yet — there are a few ways you can catch up.

Specifically, the government allows individuals aged 50 and older to make “catch-up contributions” to 401(k), traditional IRA, and Roth IRA plans. That’s an additional $7,500 in 401(k) savings, and an additional $1,000 in IRA savings for 2025, and an extra $8,000 in 401(k) savings, and an extra $1,100 in IRA savings for 2026. (Note that in 2025 and 2026, those aged 60 to 63 may contribute up to an additional $11,250 to a 401(k), instead of $7,500 or $8,000.)

Also, under a new law that went into effect on January 1, 2026 (as part of SECURE 2.0), individuals aged 50 and older who earned more than $150,000 in FICA wages in 2025 are required to put their 401(k) catch-up contributions into a Roth account. With Roth accounts, individuals pay taxes on contributions upfront, but can make qualified withdrawals tax-free in retirement.

The opportunity is there, but only you can manage your budget to make it happen. Once you’ve earmarked regular contributions to a retirement savings account, make sure to review your asset allocation on your own or with a professional. A general rule of thumb is, the closer you get to retirement age, the larger the ratio of less risky investments (like bonds or bond funds) to more volatile ones (like stocks, mutual funds, and ETFs) you should have.

Starting in Your 60s

It’s never too late to start investing, especially if you’re still working and can contribute to an employer-sponsored retirement plan that may have matching contributions. If you’re contributing to a 401(k), or a Roth or traditional IRA, don’t forget about catch-up contributions (see the information above).

In general, when you’re this close to retirement it makes sense for your investments to be largely made up of bonds, cash, or cash equivalents. Having more fixed-income securities in your portfolio helps lower the odds of suffering losses as you get closer to your target retirement date.

💡 Learn more: Savings for Retirement in Your 60s

The Takeaway

Investing in retirement and wealth accounts is a great way to jump-start saving and investing for your golden years, whether you invest $10,000 or just $100 to get started.

The first step is to open an account or use the one that’s already open. You could also increase your contribution. If you’re opening an account, you may want to consider one without fees, to help maximize your bottom line.

Prepare for your retirement with an individual retirement account (IRA). It’s easy to get started when you open a traditional or Roth IRA with SoFi. Whether you prefer a hands-on self-directed IRA through SoFi Securities or an automated robo IRA with SoFi Wealth, you can build a portfolio to help support your long-term goals while gaining access to tax-advantaged savings strategies.

Easily manage your retirement savings with a SoFi IRA.

FAQ

Is 20 years enough to save for retirement?

It’s never too late to start investing for retirement. If you’re just starting in your 40s, consider contributing to an employer-sponsored plan if you can, so that you can take advantage of any employer matching contributions. In addition to regular bi-weekly or monthly contributions, make every effort to deposit any “windfall” lump sums (like a bonus, inheritance, or proceeds from the sale of a car or house) into a retirement savings vehicle in an effort to catch up faster.

Is 25 too late to start saving for retirement?

It’s not too late to start saving for retirement at 25. Take a look at your budget and determine the max you can contribute on a regular basis — whether through an employer-sponsored plan, an IRA, or a combination of them. Then start making contributions, and consider them as non-negotiable as rent, mortgage, or a utility bill.

Is 30 too old to start investing?

No age is too old to start investing for retirement, because the best time to start is today. The sooner you start investing, the more advantage you can take of compound returns, and potentially employer matching contributions if you open an employer-sponsored retirement plan.

Should I prioritize paying off debt over saving for retirement?

Whether you should prioritize paying off debt over saving for retirement depends on your personal situation and the type of debt you have. If your debt is the high-interest kind, such as credit card debt, for instance, it could make sense to pay off that debt first because the high interest is costing you extra money. The less you owe, the more you’ll be able to put into retirement savings.

And consider this: You may be able to pay off your debt and save simultaneously. For instance, if your employer offers a 401(k) with a match, enroll in the plan and contribute enough so that the employer match kicks in. Otherwise, you are essentially forfeiting free money. At the same time, put a dedicated amount each week or month to repaying your debt so that you continue to chip away at it. That way you will be reducing your debt and working toward saving for your retirement.

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CN-Q425-3236452-54
Q126-3525874-023

Feb

2026

A woman in a striped top uses a tablet to check a digital calendar, perhaps tracking how student loans are disbursed.

What Is Student Loan Disbursement? Meaning & Common Questions

By Rochel Maday | Budgeting & Goals, Student Loans, student_loan | Comments Off

Table of Contents

The Lowdown on Student Loans
Types of Student Loans: Federal and Private
How Long Does It Take to Get Student Loans Disbursed?
How Are Student Loans Disbursed?
Common Student Loan Disbursement Issues
How to Track the Status of Your Student Loan Disbursement
Final Tips
FAQ

Student loans can be confusing, especially when it comes to how and when the money is actually released. Many borrowers expect funds to arrive all at once or directly in their bank account, only to discover the process works differently than anticipated.

Generally speaking, both federal and private student loans are disbursed directly to the school to pay for things like tuition, fees, and room and board. Keep reading to learn more on the disbursement timeline, who receives the funds first, and what happens to any remaining money after school charges are paid.

Key Points

• Student loans are typically disbursed directly to the educational institution to cover tuition, fees, and other costs.

• Any excess funds from the loan after covering direct educational costs are usually paid to the student.

• Disbursement generally occurs around the start of the academic semester.

• The exact timing of loan disbursement can vary based on the type of loan and the school’s financial aid policies.

• Students should consult their financial aid office for specific details about the disbursement schedule and process.

The Lowdown on Student Loans

Student loans are designed to help college students absorb the many costs of postsecondary education.

The average price of tuition for the 2025-26 school year is $11,950 for an in-state undergraduate student at a public college and $45,000 for a private college student, according to the College Board.

Because of this cost, many students rely on student loans to help pay for college. Student loans typically cover up to the cost of attendance, which may include:

• Tuition and fees

• Housing

• Meals

• Transportation

• Books and supplies

• Computers

A rule of thumb suggests that only required materials and needs can be paid for with a loan. When in doubt about whether an item can be purchased with student loan funding or not, it’s best to speak directly to the loan provider or college financial aid department.

And remember, student loan money is borrowed money and will have to be repaid, with interest.

Recommended: Are Student Loans Secured or Unsecured?

Types of Student Loans: Federal and Private

The two main types of student loans are federal student loans and private student loans. Federal loans are provided by the U.S. government, while private loans are issued by financial institutions. Federal student loans include Direct Subsidized Loans, Direct Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans.

Direct Subsidized Federal Loan

A Direct Subsidized Loan is a federal student loan available to undergraduate students who demonstrate financial need. The U.S. Department of Education pays the interest while you’re enrolled at least half-time, during the grace period, and during approved deferment periods, helping keep overall borrowing costs lower.

Direct Unsubsidized Federal Loan

A Direct Unsubsidized Loan is a federal student loan available to undergraduate, graduate, and professional students, regardless of financial need. Interest begins accruing as soon as the loan is disbursed, including while you’re in school, during the grace period, and during deferment or forbearance.

Direct PLUS Loan

A Direct PLUS Loan is a federal student loan available to graduate or professional students and to parents of dependent undergraduate students. It requires a credit check, has higher interest rates than other federal loans, and interest begins accruing as soon as the loan is disbursed.

Under Trump’s One Big Beautiful Bill, no new Federal Direct PLUS Loans for graduate students will originate after July 1, 2026. Current borrowers who received a Grad PLUS loan before June 30, 2026 can continue borrowing under current terms through the 2028-29 academic year.

Direct Consolidated Loan

A Direct Consolidation Loan is a federal loan that combines multiple eligible federal student loans into a single loan with one monthly payment. It can simplify repayment and may extend the repayment term, but it does not lower the interest rate, which is a weighted average of the consolidated loans.

Recommended: Consolidate vs. Refinance Student Loans

Private Student Loan

Private student loans are education loans offered by banks, credit unions, and online lenders rather than the federal government. They can be used to cover gaps in college costs after scholarships, grants, and federal aid are applied. Interest rates may be fixed or variable and are based on the borrower’s credit history, income, and overall financial profile, often requiring a creditworthy cosigner for students.

Unlike federal student loans, private student loans do not offer standardized repayment plans or borrower protections set by law. Terms vary by lender and may include fewer options for deferment, forbearance, or loan forgiveness. Because of these differences, borrowers should carefully compare rates, fees, repayment terms, and flexibility before choosing a private loan.

How Long Does It Take to Get Student Loans Disbursed?

Disbursement is a term that describes when a loan is actually paid out. Disbursement timelines may vary depending on whether the loan is a federal or private student loan.

Federal Student Loan Disbursement

To get a federal student loan, interested students must fill out the Free Application for Federal Student Aid, otherwise known as the FAFSA®. Information provided on this form will be used to determine how much federal financial aid and what types a student will qualify for — including federal student loans.

Applications are typically reviewed within three days to three weeks of submission. Federal student loans are generally disbursed directly to the school at the start of each semester. Each school determines when they will pay out any leftover aid to use for additional living and educational expenses.

Private Student Loan Disbursement

The application for a private student loan will be conducted with the individual lender. Each lender will have its own policies for applications and approvals. Generally speaking, it may take between two and 10 weeks to process a private student loan.

Private student loans are also generally disbursed directly to your school. The disbursement date may be timed to the start of the school year, though, this may vary depending on when you apply for and are approved for a private student loan.

How Are Student Loans Disbursed?

Whether a student chooses to accept multiple federal loans, a private loan, or a combination of the two, the money is often distributed the same way. As briefly mentioned, the loan amount is sent directly to the attending school, where it is held in the student’s account before being applied to covered costs, including tuition, fees, and room and board.

When there is leftover money in a student’s account, the excess is paid directly to the student to be used for additional expenses. These payouts tend to take place once per term and vary by school. If students receive leftover funding, they can use it as they see fit or even begin to pay back the loan early.

Keep in mind that all universities have their own policies on loans and disbursement. Questions about how a specific school handles student loans should be directed to the financial aid office.

Overage funds tend to be awarded to the holder of the loan. If a student’s parents hold a loan with overage, they’re more likely to receive the leftover money.

Also, disbursements may be held for 30 days after the first day of enrollment, especially if the student is a freshman and first-time borrower, according to the Federal Student Aid office.

What Happens if Your Disbursement Is Delayed?

If your student loan disbursement is delayed, it can affect your ability to pay tuition, fees, housing, or other education expenses on time. Schools may place temporary holds on your account or assess late fees until funds arrive. In the meantime, you may need to contact your financial aid office, request a short-term payment extension, or use alternative funds while the issue is resolved.

Common Student Loan Disbursement Issues

It’s possible for issues to crop up that could impact your disbursement. These include:

• Missing application deadlines. Applying for a private student loan or filing the FAFSA too late could impact when your student loan is disbursed. To avoid any late disbursements, be sure to submit your FAFSA before state or school-specific deadlines.

• Making mistakes on the application. If there are errors on the FAFSA or a private student loan application, this could impact your approval or potentially delay the disbursement date as you fix errors and resubmit the application.

• Forgetting to complete entrance counseling for federal student loans. You must complete the entrance counseling required for federal student loans before they are disbursed. Be sure to read the terms of all loans closely and fill out all paperwork properly to ensure timely disbursement.

How to Track the Status of Your Student Loan Disbursement

You can track the status of your student loan disbursement by regularly checking your school’s student portal and your lender or loan servicer’s online account. These platforms typically show when funds are scheduled, processed, and applied to your balance. If information is unclear or delayed, contacting your financial aid office can help clarify timelines and resolve issues.

Final Tips

The world of student loans can be intimidating at first, but it’s not impossible to learn how to navigate the financial waters of postsecondary education. These final tips may help:

• Compare all options. It’s better to have too many loan options and turn some down than face uncertainty about how to pay for everything.

• Apply early. This ensures there’s time to make corrections if necessary. There are rules and requirements unique to all types of loans.

• Avoid overborrowing. Try to calculate overall expenses and keep loan amounts as close as possible to the estimate. Being approved for a large loan doesn’t mean the total amount has to be accepted.

• Get a part-time job. A part-time job may help to alleviate the stress that loan payments can add.

The Takeaway

Student loan disbursement is a critical step in the borrowing process, as it determines when and how your loan funds are delivered to cover education costs. Understanding the timing, method, and potential delays of disbursement can help you plan ahead, avoid surprises, and manage your finances more confidently throughout the school year.

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

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

Do student loans get deposited into your bank account?

Typically, student loans do not get deposited in your bank account. Instead, the loans are disbursed directly to the school, where they are applied to tuition payments and room and board. If there is any money leftover after paying for tuition, the money will then be distributed to the student. These payouts tend to take place once per term and vary by school.

How long do student loans take to deposit?

After applying through the FAFSA, it may take up to 10 days to find out what types of aid — including student loans — you are eligible for. If approved for a federal student loan, this money will be disbursed directly to the school. Typically, this will happen within the first 30 days of the start of term.

What does disbursement mean?

Disbursement is when the loan amount is paid out to the borrower. In the case of student loans, the loan is typically disbursed directly to the student borrower’s school.

Can you use a student loan to pay a tuition bill that is past due?

Yes, you can use a private student loan to pay off an outstanding tuition balance. Each lender determines how far in the past a loan can be used to pay an overdue balance, but many will allow loans to cover past-due balances that are six to 12 months outstanding.

Can I use leftover student loan money for personal expenses?

Yes, leftover student loan funds can be used for approved education-related expenses, such as housing, food, transportation, books, and supplies. However, they should not be used for nonessential or luxury purchases. Using excess funds responsibly can help cover living costs while minimizing unnecessary debt.

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

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

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Feb

2026

Student Loan Forgiveness Tax Bomb, Explained

Do You Have to Pay Taxes on Forgiven Student Loans?

By Jennifer Calonia | Fresh Out of School, Student Loans, student_loan | Comments Off

The Internal Revenue Service (IRS) generally requires that you report a forgiven or canceled debt as income for tax purposes. But tax on student loan forgiveness is a different matter.

The American Rescue Plan (ARP) Act specifies that student loan debt forgiven between 2021 and 2025, and incurred for postsecondary education expenses, will not be counted as income, and therefore does not incur a federal tax liability.

This includes federal Direct Loans, Family Federal Education Loans (FFEL), Perkins Loans, and federal consolidation loans. Additionally, nonfederal loans such as state education loans, institutional loans direct from colleges and universities, and even private student loans may also qualify.

However, some states have indicated that they still count canceled student loans as taxable income. Read on for more information about taxes on student loans, including which forgiven student debt is taxable and by whom.

Key Points

• Because of the American Rescue Plan Act, student loans forgiven between 2021 and 2025 are exempt from federal taxation.

• Eight states — Arkansas, California, Illinois, Indiana, Minnesota, Mississippi, North Carolina, and Wisconsin — still tax forgiven loans.

• Use a student loan forgiveness tax calculator to estimate potential state tax liability.

• Set aside monthly payments to save for potential tax bills on forgiven student loans after 2025.

• Explore the student loan interest deduction to help reduce federal taxable income.

Types of Student Loan Forgiveness Programs

Federal student debt can typically be canceled through an income-driven repayment plan (IDR) or forgiveness programs. However, as of February 2026, applications for some income-driven repayment plans are on hold due to legal challenges. You can find out more about this situation on the Federal Student Aid (FSA) website.

Here are some common federal forgiveness programs and how typically they work.

Public Service Loan Forgiveness (PSLF)

If you are employed full-time for the government or a nonprofit organization, you may be eligible for Public Service Loan Forgiveness for federal student loans like federal Direct Loans.

After you make 120 qualifying payments under an income-driven repayment plan for an eligible employer, the PSLF program forgives the remaining balance on your federal student loans.

However, because IDR plans are currently not accepting applications, and you must achieve forgiveness by repaying your loans under one of these plans, you will likely need to wait before you can start working toward PSLF. You can get more details about PSLF on the FSA website.

Income-Driven Repayment (IDR) Forgiveness

IDR options generally offer loan forgiveness after borrowers make consistent payments for a certain number of years. However, forgiveness on all but one of the IDR plans is paused as of February 2026.

On an IDR plan, how much you owe each month is based on your monthly discretionary income and family size. These are the types of IDR plans.

• Income-Based Repayment: With IBR, payments are generally about 10% of a borrower’s discretionary income, and any remaining balance is forgiven after 20 or 25 years. On the IBR plan, forgiveness (after the repayment term has been met) is still proceeding as of February 2026, since this plan was separately enacted by Congress.

• Pay As You Earn (PAYE): The monthly payment on PAYE is about 10% of a borrower’s discretionary income, and after 20 years of qualifying payments, the outstanding loan balance is forgiven. As of February 2026, forgiveness has been paused for borrowers who were already enrolled in this plan.

• Income-Contingent Repayment (ICR): The monthly payment amount on ICR is either 20% of a borrower’s discretionary income divided by 12, or the amount they would pay on a repayment plan with a fixed payment over 12 years, whichever is less. After 25 years of repayment, the remaining loan balance is forgiven. As of February 2026, forgiveness has been paused for borrowers who were already enrolled in the plan.

Teacher Loan Forgiveness

With Teacher Loan Forgiveness (TLF), teachers who have been employed full-time for five consecutive years at an eligible school and meet certain other qualifications may be eligible to have up to $17,500 of their federal Direct Subsidized and Unsubsidized Loans and federal Stafford Loans forgiven.

Recommended: Do Student Loans Count as Income?

Which Student Loan Cancellations Are Not Federally Taxed?

When it comes to student loan forgiveness and taxes, under the provisions of the ARP Act, private or federal student debt for postsecondary education that was or is forgiven in the years of 2021 through 2025 will not be federally taxed. This means that these borrowers are not required to report their discharged loan amount as earned income, and the forgiven amount is not taxable.

Beyond the special five-year window of tax exemption provided by the ARP Act, participants in the Public Service Federal Loan program who receive forgiveness don’t have to pay taxes on their canceled loan amount. The PSLF program explicitly states that earned forgiveness through PSLF is not considered taxable income.

Which Student Loan Cancellations Are Federally Taxed?

Borrowers who receive loan cancellation after successfully completing an income-driven loan repayment plan can generally expect to pay taxes. However, those whose debt was or will be discharged in the years 2021 through 2025, will not need to pay federal taxes on their forgiven loans due to the ARP Act.

Forgiven amounts that are taxable are treated as earned income during the fiscal year it was received. Your lender might issue tax Form 1099-C to denote your debt cancellation.

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

Which States Tax Forgiven Student Loans?

Typically, states follow the tax policy of the federal government. But some states have announced that their residents must include their forgiven or canceled student loan amount on their state tax returns.

As of February 2026, the eight states that say certain forgiven loans are taxable are:

• Arkansas (except for loans forgiven through PSLF)

• California (except for loans forgiven through PSLF)

• Illinois (except for loans forgiven through PSLF)

• Indiana (except for loans forgiven through PSLF, TLF, and certain other programs)

• Minnesota (except for loans forgiven through PSLF)

• Mississippi

• North Carolina

• Wisconsin (except for loans forgiven through PSLF and TLF).

Additional states tend to conform to federal tax laws, so it’s important to consult a qualified tax professional who is knowledgeable about forgiveness of student loans in your state to confirm the latest information of how much you owe.

How to Prepare for Taxes on Forgiven Student Loans

If you’re anticipating a tax liability after receiving loan forgiveness, there are a few steps you can take to get ready.

Step 1: Calculate Your Potential Tax Bill

The first step when preparing for a student loan forgiveness tax bill is calculating how much you might owe come tax season. This can be influenced by factors including the type of forgiveness you are receiving and the forgiven amount.

To avoid sticker shock, you can use a student loan forgiveness tax calculator, like the Loan Simulator on StudentAid.gov. It lets you see how much of your student loan debt might be forgiven, based on your projected earnings.

Step 2: Choose the Right Plan

Although IDR plans are not currently accepting applications, they are designed to help keep borrowers’ monthly payments to a manageable amount while they’re awaiting loan forgiveness. All of these repayment plans calculate a borrower’s monthly payment based on their discretionary income and family size.

Step 3: Prioritize Saving

If you’re expecting loan forgiveness after 2025, it might be beneficial to start allocating extra cash flow to a dedicated tax savings fund now. Incrementally setting money aside over multiple years can ease the burden of a sudden lump-sum tax bill down the line.

Another way to potentially save some money is to take the student loan interest deduction on your taxes each year, if you qualify. The deduction, which is up to $2,500 annually, can reduce your taxable income.

You’ll need your student loan tax form to make sure you are eligible for the deduction. The form should be sent to you by your loan servicer or lender. You’ll file the form with your taxes.

Recommended: Guide to Student Loan Tax Deductions

What If I Can’t Afford to Pay the Taxes?

If you can’t afford to cover an increased tax bill, contact the IRS to discuss your options. Inquire about payment plans that can help you pay smaller tax payments over a longer period of time. However, be aware that fees and interest may accrue on such plans.

The Takeaway

Thanks to a special law passed by Congress in 2021, post-secondary education loans forgiven from 2021 through 2025 will not count as earned income and will not be federally taxed. That said, state taxes may be due on forgiven loans, depending on where the borrower lives.

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

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

FAQ

Is loan repayment considered taxable income?

If your employer offers loan repayment assistance benefits, they would typically be considered taxable income. However under the CARES Act, which was signed into law in 2020, employer assistance loan payments up to $5,250 made each year from 2021 through 2025 are tax-free.

Will refinancing my student loans help me avoid taxes?

Refinancing student loans does not involve taxes. However, the interest you pay on a refinanced student loan may qualify for the student loan interest deduction. If you’re eligible, you may be able to deduct up to $2,500, which could lower your taxable income.

Will student loan forgiveness be taxed after 2025?

The American Rescue Plan Act stipulates that forgiven student loans will not be taxed from 2021 through 2025. Currently, there are no plans to extend that tax relief beyond 2025.

Are state taxes different for forgiven student loans?

While states typically follow the federal tax policy, five states say that certain forgiven loans are taxable. Those five states are: Arkansas (except for loans forgiven through Public Service Loan Forgiveness), Indiana (except for loans forgiven through PSLF, Teacher Loan Forgivenesss, and certain other programs), Mississippi, North Carolina, and Wisconsin (except for loans forgiven through PSLF and TLF).

What steps should I take if I owe taxes on forgiven student loans?

If you owe taxes on forgiven student loans, calculate how much you’ll owe in taxes with the forgiven loan amount factored into your taxable income. Then, once you have the estimate of what you owe, you can start saving up to pay it. One way to do this is to put away the monthly amount you previously paid on your student loans to help offset the amount you owe. So if your student loan payment was $100 a month, deposit that amount monthly into a savings account, and use it to help pay what you owe in taxes.

Photo credit: iStock/fizkes

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

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

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

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.

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

SOSLR-Q125-020

Feb

2026

A person is typing on a laptop, which is on a chalkboard table surrounded by drawings of school supplies.

Should I Refinance My Federal Student Loans?

By Kayla McCormack | Fresh Out of School, Student Loans, student_loan | No Comments

Refinancing federal student loans can either help you pay down your loans sooner (by shortening your term) or lower your monthly payment (by extending your term). However, when you refinance federal student loans with a private lender, you may lose federal benefits and protections.

Refinancing is not a simple decision to make. Read on to learn more about federal student loan refinancing and whether it’s right for you.

Table of Contents

What Is Federal Student Loan Refinancing?
How Do Refinancing and Consolidation Differ?
What Are the Potential Benefits of Refinancing Federal Student Loans?
What Are the Potential Disadvantages of Refinancing Federal Loans?
How Many Times Can You Refinance Your Student Loans?

Key Points

• With refinancing, you can pay off your federal student loans sooner or lower your monthly loan payments.

• Refinancing involves rolling your private and federal loans into a new private loan with a different term and interest rate.

• The benefits of refinancing include potential savings on interest, lower monthly payments, and streamlined repayments.

• Refinancing your student loans with a private lender involves careful consideration, as you lose the benefits and protections that come with government-held student loans.

• Factors such as your credit score, your income, and market conditions can influence the terms of your student loan refinancing.

What Is Federal Student Loan Refinancing?

If you graduated with student loans, you may have a combination of private and federal student loans. Federal student loans are funded by the federal government. Direct Subsidized Loans and Direct PLUS Loans are both examples of these.

Interest rates on federal student loans are fixed and set by the government annually. The rate for the 2025-26 school year is 6.39% for undergraduate students. Private student loan rates are set by individual lenders. If you’re unhappy with your current interest rates, you may be able to refinance your student loans with a private lender and a new — ideally lower — interest rate.

Recommended: Types of Federal Student Loans

Can I Refinance My Federal Student Loans?

It is possible to refinance your federal student loans with a private lender, but you lose the benefits and protections that come with a federal loan, such as income-based repayment plans and public service-based loan forgiveness. On the plus side, refinancing may allow you to pay less interest over the life of the loan or pay off your debt sooner.

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

How Do Refinancing and Consolidation Differ?

Student loan consolidation and student loan refinancing are not the same thing, but it’s easy to confuse the two. In both cases, you’re signing different terms on a new loan to replace your old student loan(s).

Consolidation bundles multiple federal student loans together, allowing borrowers to repay with one monthly bill. However, it does not typically get you a lower interest rate. When you consolidate federal student loans through the Direct Consolidation Loan program, the resulting interest rate is the weighted average of the original loans’ rates, rounded up to the nearest one-eighth of a percent. This means you don’t usually save any money. If your monthly payment goes down, it’s usually because the loan term has been extended, and you’ll spend more on total interest in the long run.

Refinancing, on the other hand, rolls your existing federal and private loans into a new private loan with a different loan term and interest rate. When you refinance federal and/or private student loans, you get a new interest rate. This rate can be lower if you have a strong credit history, saving you money. You may also choose to lower your monthly payments or shorten your payment term (but not both).

What Are the Potential Benefits of Refinancing Federal Student Loans?

Potential Savings in Interest

The main benefit is potential savings. If you refinance federal loans at a lower interest rate, you could save thousands over the life of the new loan. Plus, you may be able to switch out your fixed-rate loan for a variable-rate loan if that makes more financial sense for you (more on variable rates below).

Lower Monthly Payments

You can also lower your monthly payments, which typically involves lengthening your loan term and paying more in overall interest. (Shortening your term usually results in higher monthly payments but more savings in total interest.)

Streamlining Repayments

Refinancing multiple loans into a single loan can help simplify the repayment process. Instead of multiple loan payments with potentially different servicers, refinancing allows you to combine them into a single monthly payment with one lender.

What Are the Potential Disadvantages of Refinancing Federal Loans?

When you refinance federal loans with a private lender, you lose the benefits and protections that come with government-held student loans. Those benefits fall into three main categories:

Deferment/Forbearance

Most federal loans will allow current borrowers to put payments on hold through deferment or forbearance when they are experiencing financial hardship. Student loan deferment allows you to pause your subsidized loan payments without accruing interest, while unsubsidized loans continue to accrue interest.

With student loan forbearance, you can reduce or pause your payments, but interest usually accrues during the forbearance period. Some private lenders do offer forbearance — check your lender’s policies before refinancing.

Special Repayment Plans

Current federal loans offer extended, graduated, and income-driven repayment plans (such as Pay As You Earn, or PAYE), which allow you to make payments based on your discretionary income. However, it’s important to note that these plans typically have a higher total interest over the life of the loan. Private lenders do not offer these programs.

Student Loan Forgiveness

Teachers, firefighters, social workers, and other professionals who work for select government and nonprofit organizations may apply for Public Service Loan Forgiveness (PSLF). Changes made by the former Biden Administration have made qualifying easier — even for borrowers who were previously rejected. Learn more in our guide to PSLF.

The Teacher Loan Forgiveness program is available to full-time teachers who complete five consecutive years of teaching in a low-income school. Find out more in our Teacher Loan Forgiveness explainer.

You may be eligible for forgiveness under an income-driven repayment (IDR) plan after 20 or 25 years of payments. Most of the current plans are scheduled to close in the coming years, leaving only Income-Based Repayment for current borrowers or the new Repayment Assistance Plan, which launches in July 2026. Learn about your options in our guide to IDR plans.

Private student loan holders are not eligible for these programs.

Potential Advantages of Refinancing Federal Student Loans	Potential Disadvantages of Refinancing Federal Student Loans
Lower Interest Rate: Refinancing provides an opportunity to qualify for a lower interest rate, which may result in cost savings over the long term. There is also the option to select a variable rate for individual financial circumstances.	Loss of Deferment and Forbearance Options: These programs allow borrowers to temporarily pause their payments during periods of financial difficulty.
Adjustable Loan Term: This allows borrowers to make lower monthly payments, usually by extending the loan term, which could make loan payments easier to budget for but may increase the total amount of the loan in the long run.	Loss of Federal Repayment Plans: Loan holders become ineligible for special repayment plans, such as income-driven repayment.
Getting a Single Monthly Payment: Combining existing loans into a new refinanced loan can help streamline monthly bills.	Loss of Loan Forgiveness: Borrowers become excluded from federal forgiveness programs, including Public Service Loan Forgiveness.

How Many Times Can You Refinance Your Student Loans?

There is no limit to the number of times you can refinance your student loans. Each time you refinance, you essentially take out a new loan to pay off the old one, ideally with better terms. However, it’s important to ensure that refinancing is beneficial for your financial situation. Here are some key considerations:

Improved Financial Situation

You might qualify for better loan terms if your credit history or financial circumstances have changed for the better.

• Credit Score: If your credit score has improved, you may qualify for a lower interest rate.

• Income: A higher or more stable income can make you eligible for better loan terms.

• Debt-to-Income Ratio: A lower debt-to-income ratio can also help you secure more favorable terms.

Market Conditions

• Interest Rates: If market interest rates have decreased since your last refinancing, you might be able to get a better rate.

• Promotional Offers: Keep an eye out for new promotional rates or special offers from lenders.

Loan Terms

• Shorter Terms: Refinancing to a shorter loan term can reduce the overall interest you pay.

• Extended Terms: If you seek lower monthly payments, extending the loan term can provide relief, though it may increase the total interest you pay over the life of the loan.

• Consolidation: Refinancing multiple loans into a single loan can simplify your payments and possibly offer you better terms.

The Takeaway

If you’re looking to pay off your federal student loans sooner or lower your monthly payments, refinancing could be a feasible option. Potential benefits include getting a lower interest rate, adjusting the loan term, and streamlining repayments into a single loan.

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

FAQs on Refinancing Your Federal Student Loans

Who typically chooses federal student loan refinancing?

Many borrowers who refinance have graduate student loans, since federal unsubsidized and Grad PLUS loans have historically offered students less competitive rates than federal student loans. To qualify for a lower interest rate, it’s helpful to show high income and a history of managing credit responsibly, among other factors. The one thing many refinance borrowers have in common is a desire to save money.

Do I need a high credit score to refinance federal loans?

Generally speaking, the better your history of dealing with debt (which is reflected in your credit score), the lower your new interest rate may be, regardless of your chosen lender. However, though many lenders look at credit scores as part of their analysis, it’s not the single defining factor. Underwriting criteria vary from lender to lender, so shopping around is advisable.

For example, SoFi evaluates a number of factors, including employment and/or income, credit score, and financial history. Check here for current eligibility requirements.

Are there any fees involved in refinancing federal loans?

Fees vary and depend on the lender. That said, SoFi has no application or origination fees.

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

Should I choose a fixed- or variable-rate loan?

Generally speaking, a variable-rate loan can save you money if you’re reasonably certain you can pay off the loan somewhat quickly. The more time it takes to pay down that debt, the more opportunity there is for the index rate to rise — taking your loan’s rate with it.

Most federal student loans are fixed-rate, meaning the interest rate stays the same over the life of the loan. When you apply to refinance, you may be given the option to choose a variable-rate loan.

Fixed-rate refinancing loans typically have:

• A rate that remains the same throughout the life of the loan

• A higher rate than variable-rate refinancing loans (initially, at least)

• Payments that stay the same over the life of the loan

Variable-rate refinancing loans typically have:

• A rate that’s tied to an “index” rate, such as the prime rate

• A lower initial rate than fixed-rate refinancing loans

• Payments and total interest costs that vary based on interest rate changes

• A cap, or a maximum interest rate

What happens if I lose my job or can’t afford loan payments?

Some private lenders offer forbearance — the ability to put loans on hold — in case of financial hardship. Policies vary by lender, so it’s best to learn what they are before you refinance. For policies on disability forbearance, check with the lender directly, as this is often considered on a case-by-case basis.

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.

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.

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

SOSLR-Q126-012

Feb

2026

A man with dark hair and glasses sits in front of a laptop writing notes about the average cost of the CPA exam.

CPA Exam Cost: How Much Is It?

By Bob Haegele | Building Your Career, Student Loans, student_loan | Comments Off

Table of Contents

How Much Does It Cost to Take the CPA Exam?
Do You Need a Finance Degree to Take the CPA Exam?
Other CPA Exam Costs
Covering CPA Exam Costs
FAQ

The average cost of the CPA exam, including required fees, is about $1,330, but the exact cost varies for each candidate. The biggest reason for this is that every state has its own board of accountancy, each of which sets its own costs for additional fees that are needed to sit for the exam.

There are also necessary costs that aren’t tied to the exam itself, such as licensing fees and continuing education costs. If you have to retake or reschedule the exam, you may have to repay registration and examination fees. Plus, the single most expensive part of the process tends to be the review course, the price of which can vary widely.

Taking the CPA exam can be expensive. Fortunately, there are many ways to cover the costs, and the price can be well worth it if you pass the exam.

Key Points

• The average CPA exam cost, including required fees, is around $1,330, but the full process, including review courses, licensing, and extra fees, can run about $2,150-$8,170, depending on the state you are in and the prep course you choose.

• Core exam costs include application fees ($50-$400), registration fees ($10-$100), background checks ($30-$100), and exam fees of about $263 per section, with four sections total.

• The most expensive part is usually the CPA review course, which can range from $1,000-$6,000, and often includes tiered pricing with options such as limited or lifetime access.

• Additional costs may also include an ethics exam (up to $320), annual licensure fees ($50-$400), potential travel and accommodations for testing centers, and international exam surcharges (around $356 per section).

• Candidates can cover their exam expenses using personal savings, employer reimbursement, credit cards, or private student loans. Some accounting firms also offer to pay for exam or review costs.

How Much Does It Cost to Take the CPA Exam?

As noted, the cost to take the CPA exam, including all required fees, is about $1,330, but your final cost will depend on where you live and the review course you choose. As a result, you could end up paying much more or less than this amount. However, while the total cost can vary significantly, there are certain items that are common expenses for all exam candidates.

CPA Exam Costs
Application Fee	$50-$400
Registration Fee	$10-$100
Background Check	$30-$100
CPA Review Course	$1,000-$6,000
Total Examination Section Fees	$1,052
Auditing and Attestation (AUD)	$263
Business Analysis and Reporting (BAR), Information Systems and Control (ISC), or Tax Compliance and Planning (TCP)	$263
Financial Accounting and Reporting (FAR)	$263
Taxation and Regulation (REG)	$263
Grand Total	$2,142-$7,652 (including all fees and prep course)

This is a wide range, but that is expected given that the costs can vary from one state to another. The fees shown above are approximate, and your state’s fees may be higher or lower.

In addition, the CPA review courses sometimes have tiered pricing, so two people taking the same course and living in the same state may have different costs. There can be several differences between various tiers of review courses, such as 24-month access versus lifetime access.

Do You Need a Finance Degree to Take the CPA Exam?

Each of the 55 licensing jurisdictions, which include all 50 states, plus Washington DC, Guam, Puerto Rico, the Virgin Islands, and the Mariana Islands, maintains its own licensing requirements. Consequently, each state may have slightly different requirements to sit for the exam.

All 50 states require a bachelor’s degree as well as 150 credit hours in order to become a licensed CPA. However, rather than requiring a finance or accounting degree, states may instead require 120 hours of college credit plus 30 additional, accounting-specific hours to sit for the exam.

It is important to review your state’s requirements before you begin preparing for the exam. While some states require 30 hours of accounting courses, others may require upper-level accounting courses. Your state or territory’s board of accounting website will list the specific requirements needed to sit for the exam.

Other CPA Exam Costs

There isn’t just one fee to sit for the CPA exam. Candidates must cover several costs, all of which vary depending on where you live. This is one of the reasons the cost can be quite different from one state to the next.

Ethics Exam

Your state may require you to take and pass an ethics exam in order to practice there. Some states have their own ethics exams, while others administer the American Institute of Certified Public Accountants (AICPA) exam. Currently, the AICPA exam costs $250-$320 depending on the course option you select.

Registration Fees

Most states require a registration fee for each of the four exam sections. Fees vary but are generally $10-$100 per section. Some states also have tiered pricing for registration, allowing you to save money if you register for multiple sections at once. If you choose to register for multiple sections at once, keep in mind that each section is estimated to take four hours, with a total of 16 hours for the entire exam.

Application Fees

Application fees are due when you apply to take the CPA exam. These vary since each state sets its own fees, but they are usually between $50 and $400. The fee is nonrefundable, but you usually don’t have to pay the application fee again if you have to retake the exam. However, if your application is rejected, you may have to pay the fee more than once.

CPA Licensure

The CPA licensure fee is only necessary after you pass the exam. This is the fee you pay to your state accountancy board to be a licensed accountant. These fees also vary by state and can run anywhere from $50-$400. This is an annual cost, so you should expect to pay the fee every year to maintain your license.

Keep in mind that each state has its own licensing requirements and accountancy board. If you move out of state, you will have to be licensed in the new state to be recognized as a CPA there.

Background Check

Your state may require you to pass a background check as part of the licensing process. These fees can range anywhere from $30 to $100. In the case of California, there is an additional “rolling” fee of $15 for fingerprinting.

Travel and Accommodations

Currently, the CPA exam cannot be taken online and can only be administered at Prometric Testing Centers. You can find a testing center with Prometric’s Pro Scheduler. These centers are located only in select cities, so you may end up with additional expenses for transportation and accommodations, depending on how close you are to a testing site.

International Candidate Credential

If you want to take the exam outside the United States, you may be required to pay additional fees for international candidate credentialing. Also, most states allow international applicants to sit for the exam, but several states and territories do not. In addition to any domestic fees, you may also have to pay fees of $356 for each of the following: Auditing and Attestation (AUD), Financial Accounting and Reporting (FAR), Taxation and Regulation (REG), and one discipline, such as Business Analysis and Reporting (BAR).

Covering CPA Exam Costs

Although the exact cost of the CPA exam can vary significantly, one thing is certain: The exam and licensing process is expensive. Fortunately, there are many ways to cover the costs.

Private Student Loan

A private student loan can help you cover some or all of the costs of the CPA exam. For example, SoFi private student loans have no fees, come with multiple repayment options, and have low fixed and variable rates. Everything is handled online, and the application process is simple.

Private student loans are different from federal student loans. Federal student loans are available only to currently enrolled undergrad or grad students whose school includes the exam expenses in the official cost of attendance. Federal student loans may have more consumer protection, but private student loans may offer more competitive interest rates. Consider both private and federal student loans if you need to finance your CPA exam costs.

Credit Card

You may be able to pay for some or all of your costs with a credit card. In fact, if paying online, payment by credit card may be required for examination fees. The same may be true for application and registration fees.

Since exam prep courses are offered by third parties, using a credit card is a standard payment method for your review.

Personal Savings

If possible, you should avoid using emergency funds, but personal savings can help cover exam costs. If you aren’t able to pay for the entire expense using your savings, scholarships, grants, and both federal and private student loans can help you cover what is left. Personal savings can be useful, though, particularly if you still owe money after considering other options.

Scholarships

There are several scholarships available that can help you cover much of the cost of the CPA exam. For instance, the AICPA offers a scholarship of up to $1,000 to exam candidates. Another example is the Newt D. Becker scholarship, which is worth up to $2,499.

Your state board may also offer scholarships. For example, Wisconsin offers several $3,000 college scholarships as you work toward your 150 hours required to sit for the exam. Check with your state board to see if your state offers any additional scholarships.

Employer Reimbursement

Some employers will reimburse you for the cost of the exam itself, review materials, or both. If you work for an accounting firm, and the exam is relevant to your job, it’s a good idea to ask whether your employer reimburses these costs.

Recommended: Scholarship Search Tool

The Takeaway

There are many costs associated with the CPA exam, from prerequisite coursework to maintaining your license every year. Each of the 55 licensing jurisdictions has its own requirements and fees, so where you live can affect not only licensing requirements but also the cost of the whole process.

Without a doubt, becoming a licensed CPA isn’t cheap. The price tag is likely to be four figures, which is high, especially before you are certified. However, you have options, including private student loans, to help cover the cost of the exam and related requirements.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

How much does the CPA exam cost to take?

The cost for the exam and required fees is about $1,330, but the exact amount depends on where you live. Each state sets its own fees, so they may vary significantly from one to the other. Exam prep courses can also add to the overall cost.

Are there any hidden costs to take the CPA exam?

If you have considered all of the costs mentioned here, there should not be additional hidden fees for the CPA exam. However, there may be some fees you don’t anticipate. For example, if you have to retake or reschedule the exam, you may have to repay the registration fee in addition to repaying fees per exam section.

Is the CPA ethics exam required in all states?

Most states require candidates to take an ethics exam. Many require only the AICPA ethics exam, while some require a state-specific course and exam. A few states, including Pennsylvania and Michigan, do not require an ethics exam as part of the CPA licensing process. Check the specific requirements for your state.

What happens if you don’t pass the CPA exam?

If you fail a section of the CPA exam, you must wait 24 hours after receiving your score to reschedule the test. It is important to check your state’s requirements for retaking the exam. You will also need to pay retake fees, which include a reapplication fee.

Photo credit: iStock/ridvan_celik

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.

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.

SOISL-Q126-015