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The U.S. economy feels very different depending on where you stand. Some Americans have been riding its tailwinds, with rising home values and 401(k) balances creating record wealth and opportunities. Others are working against a relentless headwind, as paychecks get swallowed up by the heightened cost of basic necessities and the dream of owning a home seems to slip further away.

This contrast reflects what economists call a “K-shaped” economy, with the K being what the economy looks like when you plot these divergent paths on a graph: The top arm of the K reflects the segments whose financial world is expanding, while the bottom arm represents those seeing their options shrink.

It’s not simply that some are faring better than others, but that one is getting better while the other gets worse. The term is even being used to describe stark differences across corporate America: Big tech companies, especially those tied to AI, are booming, while other industries lag.

Some economists say evidence of a K-shaped economy goes back decades, though the term reportedly emerged during the early days of the pandemic recovery. What’s new is the size of the gap.

“The K-shaped economy is becoming steadily more K-shaped,” Mark Zandi, the chief economist at Moody’s Analytics, wrote on X Sunday. “It means the economy is highly dependent on a small group of the well-to-do, who, in turn, spend based in significant part on how their stock portfolios are performing.”

One example: Moody’s estimates the top 20% of incomes (people making over $175,000 a year) accounted for almost 60% of total spending in the third quarter of last year — the most since the firm started tracking that data in 1989. That, in turn, means the bottom 80% accounted for less than ever.

So what?

A K-shaped economy not only divides us, but makes it hard to capture the full picture of what’s going on across the country.

The collective equity in U.S. homes is at near-record levels, but many renters can’t afford today’s property prices or mortgage rates. Major U.S. stock indexes might climb to new highs for the umpteenth time, but not everyone has the money to invest in the market. The overall unemployment rate has risen a bit, but the increase is much steeper for recent college grads.

Plus, net numbers can be misleading in a K-shaped economy: Government data shows consumer spending is up, but not everyone is spending more. U.S. airlines are optimistic about their growth, but because tickets for premium seats — not the main cabin — are driving sales. And yes, the average price paid on a new car topped $50,000 for the first time, but mostly because those buying are scooping up luxury models and expensive EVs.

In short, there are striking differences in the American experience, and it can be confusing and isolating to reconcile certain headlines with your own situation. Recognizing that the economy is complex can help you avoid second-guessing your reality or simply renew your appreciation for what you have.

Related Reading

The K-Shaped Economy Reigned in 2025. It’s Not Going Away in 2026 (CNN)

Wealth Inequality in America Just Hit Its Widest Gap in More Than 3 Decades (CBS News)

Entry-Level Hiring Is Drying Up: How Grads Can Survive It (SoFi)

How are payments allocated? 

When you make a loan payment, it's applied in a specific order. First, any fees or charges are covered. Next, the payment is applied to outstanding interest. Finally, the remaining amount goes towards reducing your principal balance. If you're considering making a payment that's different from your scheduled amount, understanding this order can help you plan effectively. If you need to make special payment arrangements, you can give us a call to discuss your options.

If you pay more than your current amount due: 

• • Extra payment amounts (any amount higher than the current amount due) will be applied to your loan(s) with the highest interest rate. 
• • Once the loan with the highest interest rate is paid in full, any extra payment amount will be applied to the next-highest interest rate loan.
• •  If two or more loans have the same highest interest rate, extra payments will be applied to the loan with the lowest outstanding principal balance.

If you pay less than your current Up-to-Date Account

• •  If your account is up to date, partial payments (any amount lower than the current amount due) will be applied to your loan with the lowest current amount due. 
• •  If two or more loans have the same current amount due, any remaining partial payment will be applied to the loan with the highest interest rate.

Delinquent Account:

If you're making a partial payment on a delinquent account, it will be applied to the loan that's most overdue. This helps bring that loan's delinquency status more in line with your other loans.

• • Any remaining partial payment will be applied to the loan with the lowest regular monthly payment amount.
• • If two or more loans have the same regular monthly payment amount, any remaining partial payment will be applied to the loan with the highest interest rate. 

If you have an In-School Student Loan from SoFi disbursed after May 1, 2019, you might be eligible to release your cosigner after making 12 consecutive on-time payments of principal and interest, provided you pass an underwriting review and meet other requirements. Requirements subject to change.

However, if your loan was disbursed before May 1, 2019, SoFi doesn’t currently offer a cosigner release program for those loans.

What if I’m having trouble making payments on my SoFi loan? If you’re facing financial troubles, a natural disaster, or other hardships, you may qualify to lower your monthly payments on your SoFi loan.

Call us today if you’re facing a hardship:

• We’ll ask about your financial situation, how long you’ll likely need help, and your ability to make monthly payments.

• We’ll talk through any program eligibility and enrollment options available to help: (855) 456-SOFI (7634)

Important Information: Hardship options may be approved at the discretion of SoFi. An approval or denial notification will be provided by SoFi. For approved hardship programs, unpaid accrued interest may be capitalized.

If you were living in the states of Michigan, Minnesota, Missouri and Washington at the time the loan was originated will not have interest capitalized. SoFi members utilizing the following repayment options will not have interest capitalized at the end of the

deferred period:

• Military Deferment

• Disaster Deferral Forbearance

• Return-to-School Deferment

Deferments

SoFi Private Student Loans offer the following deferments. Additional eligibility criteria and requirements (including the date of your loan agreement) may apply. Need help determining if you qualify? Give us a call at (855)456-SOFI (7634).

• In-School Status in a SoFi-Approved School

  • If you've selected a repayment option that allows for deferment, you won't have to make any payments as long as you're enrolled at least half-time. If you've opted for a repayment plan that requires payments while you're in school, you'll continue making those payments as long as you're enrolled at least half-time. If your enrollment drops below half-time, you'll enter a grace period before entering full repayment. But don't worry, if you go back to school and become at least a half-time student again, your loan will go back to its 'in-school' status. 

  • Please note that borrowers that select Immediate Repay are not subject to the same enrollment and grace period rules. Additionally, Parent borrowers do not have access to grace periods for either of their repayment types.

• Undergraduate Deferment 

• Undergraduate Deferment lets students who’ve dropped below half-time or taken a break from school—and have already used up their grace period and started making full payments—go back to the repayment plan and payment type they originally chose when they applied.

• Repayment terms will stay the same as when you first took out your loan. This means that if you had a fully deferred, partial interest, or interest-only repayment plan, you'll continue with that same plan during your deferment period.

• If you're heading back to school at least half-time, you can contact SoFi to request a deferment on your loan payments. To qualify, you'll need to provide proof that you're enrolled in an approved school—either you or your school can provide this documentation. While you'll need to submit an application the first time, subsequent deferments can be requested by giving us a call.

• Students are still required to complete your degree within 60 months of

total in-school time. 

• Parent Loan borrowers are not eligible for this deferment.

• Return-to-School Deferment

• If you're going back to school for a graduate or professional degree at an approved school and are enrolled at least half-time, you might be eligible for a Return-to-School Deferment. 

• Parent Loan borrowers are not eligible for this deferment. 

• Return to School Deferment may extend the remaining repayment term of the loan.

• Residency, or Internship Deferment

  • If you're in an eligible internship or residency program, you might be able to defer your loan payments for up to 48 additional months. This applies if you originally chose to defer payments, pay partial interest, or make interest-only payments while in school. However, if you're a Parent Loan borrower or opted for immediate repayment, you're not eligible for this deferment. The type of deferment you'll receive is based on your original loan status while in school.

    • The Medical Residency Deferment request form cannot be approved unless supporting documentation is received verifying matching to a medical residency/ internship training program.
      
      You won’t be eligible for an additional grace period after the expiration of the internship/residency. You’ll enter principal and interest repayment at the end of the internship/residency period.

    • Medical Residency Deferment may extend the remaining repayment term of the applicable loan. 

    • Payment relief will be processed based on the certified dates documented within the internship/residency form. 

• Law Clerkship Deferment

  • If you're participating in an eligible law clerkship, you may be able to defer your loan payments for up to 12 months. This applies if you originally chose to defer payments, make interest-only payments, or pay partial interest while in school. However, if you're a Parent Loan borrower or started making full payments right away, this deferment isn't an option for you. The type of deferment you'll receive is based on your original loan status while in school.

    • The Law Clerkship Deferment request form cannot be approved unless supporting documentation is received.

    • You’re not eligible for an additional grace period after the expiration of the clerkship.  Members will enter principal and interest repayment at the end of the internship/residency period.

    • Law Clerkship Deferment may extend the remaining repayment term of the applicable loan. 

    • Payment relief will be processed based on the certified dates documented within the deferment form. 

• Active-Duty Military Deferment

  • If you're serving on active duty during a war, military operation, or national emergency, or performing qualifying National Guard duty, you may be eligible for an Active-Duty Military Deferment. This deferment is also available if you're a spouse or dependent of a service member. To apply, give us a call if your active-duty status is confirmed through the Department of Defense's DMDC website. If not, you'll need to provide your military orders. If your deferment is approved, it will automatically be extended for 180 days after your demobilization date.

In cases of no DMDC match you must provide:

• Signed certification or a written statement from the commanding or personnel officer—or a copy of the military orders as eligible documentation.

• The written statement or copy must include all information needed to establish your eligibility for this deferment including the period of the qualifying service.

• If you are/were serving in a different duty station, in support of a military operation while the U.S. had declared war in which service qualifies for special pay under section 310 of title 37, United States Code, the written statement or copy of the military orders must identify the hostile fire/imminent danger pay area in which you are/were on active duty.

• During an approved Military Deferment period, interest will still accrue on your loan, but you won't be charged interest on that accrued interest when the deferment ends – that's because the unpaid interest won't be capitalized. You might be able to apply this deferment retroactively if you have the right documentation, like your military orders or verification through the DMDC. One of the benefits is that there's no limit to how long you can have this deferment, and it will extend your loan's repayment term. Plus, if you're not covered under the Servicemembers Civil Relief Act (SCRA), your interest rate will be capped at 6% during the deferment period.

• If you are/were serving in a different duty station, in support of a military operations while the U.S. has declared war in which service qualifies for special pay under section 310 of title 37, United States Code, the written statement or copy of the military orders must identify the hostile fire/imminent danger pay area in which you are/were on active duty. 

Key Points:

• Must be active-duty military 

• Can be requested by you or your spouse/dependent 

• Interest continues to accrue during forbearance

• Interest is NOT capitalized at the end of the forbearance period

• Repayment term of the applicable loan is extended, meaning repayment amount will not increase

• When you're on active duty, SoFi will apply your Military Deferment in 12-month increments, ensuring you're covered for the duration of your service. They'll keep track of your active duty status through the DMDC database or by reviewing your military orders, and update your deferment accordingly. This means you can focus on your duties without worrying about your loan payments.

• Disability Rehabilitation Program Deferment

To qualify for a Rehabilitation Program Deferment, the training program you're in must meet specific criteria:

• Be licensed, approved, or recognized by the Department of Veterans Affairs or a relevant state agency for rehabilitation training.

• Have a written plan outlining the start and end dates of the services.

• Require a significant time commitment that would typically prevent you from working 30+ hours/week for at least 3 months.

• You must be receiving or scheduled to receive these rehabilitation services.

To apply, you'll need to submit a Rehabilitation Program Deferment Form. Here are some key details about the deferment process:

• Deferments can be requested in 3-month increments, up to a maximum of 36 months.

• You can apply retroactively, but not more than 3 months back.

• This deferment won't extend your loan's repayment term.

• By meeting these requirements, you can temporarily suspend your loan payments while you focus on your rehabilitation.

Forbearance

Forbearance may be available in the following circumstances. Additional eligibility criteria and requirements may apply. To determine if you qualify, give us a call at (855)456-SOFI (7634).

• Military Mobilization if you are involved in a Military Mobilization which is not covered under the Military Deferment option.

• Disaster Deferral if you're impacted by a disaster, SoFi may be able to help.

• Skip-a-Pay if you are experiencing a short-term hardship situation (e.g., unexpected one-time expense) expected to be resolved within 1 month.

Reduced Repayment Options

If you’re facing financial hardship due to things like medical expenses, job loss, and/or increased expenses, you may be eligible for a Reduced Repayment Option. Additional eligibility criteria and requirements may apply. To determine if you qualify, give us a call at (855)456-SOFI (7634).

Loan Modification

A Maturity Extension Loan Modification may be available if you are experiencing financial hardship. Loan modifications are a one-time permanent restructuring of the debt to lower future payments. Additional eligibility criteria and requirements may apply. To determine if you qualify, give us a call at (855)456-SOFI (7634).

Important Information – Forbearance, Reduced Repayment Options, and Loan Modification may be approved at the discretion of SoFi, depending on permissions granted by SoFi. An approval or denial notification will be provided. For approved Repayment Options or Loan Modification, unpaid accrued interest may be capitalized at the end of any Repayment Option or prior to the Loan Modification start date.