Sep
20
2023
Different Types of Insurance Deductibles

Different Types of Insurance Deductibles

By | Family Finances, Life & Career, Terminology | Comments Off on Different Types of Insurance Deductibles

Buying insurance coverage helps keep you protected from the full financial fallout of an accident or injury. But even with insurance, you’ll probably still be responsible for some costs when you file a claim.

An insurance deductible is the amount of money the insured party is responsible for at the time of loss or damage: it’s the cost you have to pay before the insurance company pays out its share.

Here’s what you need to know about the different types of insurance deductibles and other insurance-related costs you may face.

What Is a Deductible?

When you buy insurance, you’ll encounter several different costs depending on the type of coverage you’re purchasing. These may include monthly premiums, copays, out-of-pocket maximums, and possibly others.

The vast majority of insurance policies, whether they’re auto, health, or homeowners, carry a deductible. So what is a deductible, and how does it work?

The deductible is a sum of money you, as the insured party, are expected to pay toward a loss. Another way to think about it: It’s the amount the insurance company deducts from the total claim and asks you to pay.

For instance, say you get into a car accident in which you sustain $8,000 worth of damage and you have a $1,000 deductible. When you file your claim, you’ll pay $1,000 toward repairs and the insurance company will cover the remaining $7,000 (or up to whatever limits are laid out in your insurance contract).

Your deductible can be a fixed dollar amount or a percentage, depending on your individual plan and the kind of insurance policy you’re talking about. Homeowners insurance, for instance, is commonly offered with deductibles calculated as a percentage of the property’s total insured value.

It’s important to understand that your deductible is separate from your premium, which is the amount of money you pay each month in order to keep your insurance policy active.

Also remember that you may also be responsible for other insurance-related expenses, like copays or coinsurance, so always read the fine print carefully.


💡 Quick Tip: If you have a mortgage, a homeowners policy may be required by your lender. Surprisingly, unlike auto insurance, there is no legal mandate to carry insurance on your home.

Copay vs Deductible

With certain types of insurance — primarily health insurance products — you may be required to pay a copay each time you go to the doctor’s office or receive a covered service. This copay is separate from your deductible, and, generally, your copay doesn’t count toward your deductible amount.

As with other types of insurance, the health insurance deductible must be paid by the insured person before the insurance company begins its coverage. However, individual health plans may cover certain services, such as regular check-ups, even before the deductible is paid in full.

Here’s an example: Say you twist your ankle and visit your doctor, who orders an MRI. If your copay is $25, you’ll pay $25 at the office before or after you see your physician. If the total cost of the doctor’s care and imaging services is $1,000 and you have a $500 deductible, you may still be responsible for the full $500. Any copays you’ve paid along the way won’t be subtracted from your deductible.

Some plans may carry a coinsurance cost rather than a copay. The two are similar, but not identical. Coinsurance is an amount you pay when you receive a medical service, separate from your deductible. Unlike copays, which are charged at a fixed dollar amount, coinsurance is calculated as a percentage of the total cost of the service. Your plan might even include both copays and coinsurance.

All insurance policies are different, and your individual costs and experience may vary depending on the services you’ve received and the specific coverage you have. You can consult your insurance paperwork or contact your insurer for full details on what’s covered in your plan.

Out-of-Pocket Maximums

Health insurance policies in particular are subject to federally mandated out-of-pocket maximums. This is the highest total dollar amount you’ll have to pay toward covered healthcare over the course of a single year, including both deductibles and copays.

The out-of-pocket maximum does not include the amount you pay toward your monthly premium, however. Nor does it include out-of-network services or services that your plan expressly does not cover.

For 2023, the out-of-pocket maximum for a Marketplace plan can’t be more than $9,100 for an individual or $18,200 for a family. In 2024, that limit rises to $9,450 for an individual or $18,900 for a family. (The maximum is allowed to be lower, however, so consult your plan paperwork for full details.)

Do You Want a High or Low Deductible?

When shopping for insurance coverage, you’ll likely have a range of options to consider, including varying deductible costs. And when it comes to figuring out whether you want a high or low deductible, the answer is: It depends.

Generally speaking, the lower your deductible, the higher your premium will be and vice versa. This makes sense when you think about it. If you have a low deductible, the insurer will have to pay out a higher amount when you incur a loss. So in exchange for the promise of covering most of the costs when a claim is filed, the company expects you to pay more up front in the form of a higher premium.

While choosing a higher deductible can help you save money over time since your monthly premiums will be lower, it also means you’re assuming more risk. If something happens and costs are incurred, you’ll be responsible for a larger share of those expenses.

On the other hand, choosing a lower deductible means you’ll likely pay a higher premium each month. But you’ll also have less to worry about if you do need to file a claim, since the insurance company will cover more of the costs (assuming that all the damages and expenses are covered under your policy).

As with so many other financial matters, what’s right for you comes down to a number of factors, including your risk tolerance, budget, and even your lifestyle. If you participate in extreme sports, for instance, and are at risk for catastrophic injuries, you might want to pick a health insurance policy with a lower deductible and higher premiums.

Recommended: How Much Is Homeowners Insurance?

Zero-Deductible Insurance: Is It a Thing?

You may see ads for zero-deductible insurance policies and wonder if they’re too good to be true. While zero-deductible insurance policies do exist, they usually carry higher premiums than policies that do carry deductibles, and you may also be responsible for a one-time no-deductible fee or waiver.

Furthermore, some insurance coverages are required by state law to carry a minimum deductible, particularly when it comes to auto insurance.

Before you sign up for any kind of insurance coverage, be sure to read the contract thoroughly to ensure you understand what costs you’re responsible for.

Recommended: What Does Auto Insurance Cover?

Types of Deductibles

There are many different types of insurance policies with deductibles on the market. Common ones include:

•   Health insurance deductibles

•   Auto insurance deductibles

•   Homeowners insurance deductibles

•   Renters insurance deductibles

•   Life insurance deductibles

The deductible amount varies by type of insurance, company, and plan, among other factors.


💡 Quick Tip: Online insurance tools allow you to personalize your coverage for homeowners, renters, auto, and life insurance — all with zero paperwork.

The Takeaway

Purchasing insurance is an important — and sometimes legally mandated — step toward protecting yourself from the high costs of personal accidents, property damages, and medical bills. But most policies involve set costs, including deductibles. This is the portion of the claim the insured party is responsible for paying.

Whether you’re comparison shopping or switching from your current plan, it’s important to understand what your deductible will be. Having a full picture of all the costs involved can help you find coverage that fits your life and finances.

When the unexpected happens, it’s good to know you have a plan to protect your loved ones and your finances. SoFi has teamed up with some of the best insurance companies in the industry to provide members with fast, easy, and reliable insurance.

Find affordable auto, life, homeowners, and renters insurance with SoFi Protect.

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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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Sep
19
2023
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Do I Need a Trust?

By | Family Finances, Life & Career | No Comments

Where do you want your money and your assets to go when you die? It’s an important question to think about.

A trust might help ensure that the person or people you want to benefit from your assets will be honored. Using a trust can often provide tax benefits as well as the ability for assets to change hands outside of probate. This can all be done with the help of a trustee, a person given control of a trust so that they can legally administer it according to specific wishes.

Here’s how a trust works, the different types of trusts, and how to decide if a trust is right for you.

What Is a Trust?

The IRS defines a trust as “a legal arrangement which can help you to control your assets and possessions. Often, trusts can help to reduce taxes on your estate and speed up the process of allowing beneficiaries access to those assets.”

A trust can hold cash, stock, real estate, and any other assets. You might meet with an attorney who specializes in trusts to officially name your beneficiaries and dictate how you want the trust to be handled.

You could also apply special rules to your trust, like how often the beneficiary can receive a payment from it, or how the money can be used (say, for education expenses or to buy a home).

The beauty of a trust is that you get to decide and control how you want your assets to be used.


💡 Quick Tip: How do you decide if a certain trading platform or app is right for you? Ideally, the investment platform you choose offers the features that you need for your investment goals or strategy, e.g., an easy-to-use interface, data analysis, educational tools.

The Difference Between a Trust and a Will

After someone dies, the legal process to settle an estate and distribute assets, also known as probate, begins. The probate process goes through a court of law and a judge will validate any existing will for the distribution of assets.

If you have a trust, the probate process could be skipped, which might save time and ensure assets go to the chosen beneficiaries. (It’s important to note that if you die and don’t have a will or a trust, assets are distributed according to state law.)

Other major differences between a will and a trust include these factors:

•   A will goes into effect only after you die. It’s also called a “last will and testament.”

•   A trust can go into effect while you are still alive.

The Difference Between a Trustee and a Beneficiary

A trustee holds legal title to the property or assets of another person, the beneficiary. A trustee is responsible for administering the trust on behalf of those beneficiaries.

There are at least two two types of beneficiaries:

•   One who receives income from the trust during their lives

•   One who receives the remainder of the estate after the first set of beneficiaries dies

Choosing the Right Type

A Living Trust

A living trust is similar to a will, but not exactly the same. A living trust is a legal arrangement that you (the grantor) create during your lifetime (like a will), but instead you specify exactly the way you want your estate handled while you are still alive. A living trust might be used for people who have complex financial situations and more than one beneficiary.

When you die, the trustee you appoint carries out your instructions without having to go through the legal process of probate. A living trust might be more effective than a will in carrying out the transfer of assets according to your wishes. Types of living trusts include:

•   A revocable trust. This gives you continued control and access to the assets in the trust as well as the option to make changes to beneficiaries or even revoke the trust whenever you want. A revocable trust keeps your decision-making flexible and fluid. Once you die, the revocable trust becomes irrevocable, and whatever wishes you’ve listed become final.

•   An irrevocable trust. This cannot be changed, modified, or adjusted without the permission of the beneficiaries. That means that any assets transferred into an irrevocable trust cannot be taken back. Irrevocable trusts might be appropriate for those who want to permanently remove assets from their estate.

The IRS lists assets that are often included in an irrevocable trust as insurance policies, cash, and business investments. Once the ownership passes to the beneficiaries, the assets listed in the trust are no longer taxable as part of the individual’s estate.

Testamentary Trust

Then there is a trust that is not considered a living trust:

A testamentary trust is created by the person who writes a will, called a “testator.” These are not to be confused with living trusts. This type of trust would not go into effect until the death of the testator.

A Few Things to Consider

You may have to consider attorney fees if you set up a trust with the help of a lawyer — there are also options to set up the trust on your own online. A good trust attorney should know the best ways to make your trust as airtight and efficient as possible. You may want to keep in mind the potential ongoing costs of maintaining a trust as well.

For instance, depending on the type of trust established, the trust may become its own tax entity, and you might need to be prepared to pay an accountant to file a trust tax return each year. Should you elect to have a corporate trustee, where someone from a bank or trust company acts as trustee for the trust, there are typically ongoing fees associated with that service as well.


💡 Quick Tip: Distributing your money across a range of assets — also known as diversification — can be beneficial for long-term investors. When you put your eggs in many baskets, it may be beneficial if a single asset class goes down.

How to Choose a Beneficiary for Your Trust

Your beneficiaries will likely be members of your family. But a beneficiary of a trust can also be a group or an institution (like a nonprofit organization or a charity). Ultimately, your beneficiary is anyone or any group that receives beneficial enjoyment from your assets, like income, the ability to use property, or ultimate ownership, per your wishes.

Where to Hold a Trust

Setting up a trust could ensure that your beneficiaries get what you intended them to have before and after you die. The IRS recommends opening a bank account for a trust, which would require the following:

•   Legal documents and identification that proves you are the legal trustee

•   A Trust Tax ID number

When opening a trust bank account after the grantor has passed away, you typically need a new Trust Tax ID number to replace the Social Security number of the deceased grantor. This number will be used on every trust-related document going forward.

Trusts and Taxes

Establishing and funding trusts could help you remove assets from your estate and reassign ownership to others. This might help reduce income taxes on the assets if transferred to a beneficiary in a lower tax bracket, or help you reduce or avoid estate and gift taxes.

Are Trusts Only for “Trust Fund Babies”?

No, trusts are not only for trust fund babies. Although the common perception might be that trust funds are only for children of the super wealthy, that is not the case. A trust fund is meant to help you make sure your money goes to whom you want it to, and that it’s put to use the way you wish. If you have children or grandchildren, and you want your money to be used in a certain way by them, a trust might help you do that.

Financial Planning for the Future

When it comes to trusts, laws can change and they can also differ from state to state. You might want to consider consulting an attorney who specializes in trusts for the most updated direction and advice.

If you’re working on financial planning based on your specific financial goals and life situation and thinking about ways to save and invest for the future, you may want to consider setting up an investment account. You could also consider talking with a SoFi Financial Planner about such topics as budgeting and saving.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).


Invest with as little as $5 with a SoFi Active Investing account.


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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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Sep
19
2023
7 life events you should financially prepare for

7 Life Events You Should Financially Prepare For

By | Budgeting & Goals, Growing Wealth, Life & Career | Comments Off on 7 Life Events You Should Financially Prepare For

From snagging that first real job to starting a family (congrats all around), life is full of important rites of passage. These events are meaningful, for sure, and they can also impact the path of your personal finances.

As you take control of your money, it can be wise to think about and plan for these key transitions. That way, you can be better prepared for how they may alter your financial health.

In this guide, you’ll learn about seven major milestones plus advice on navigating these life events successfully so you can build wealth today and tomorrow.

1. Your First Job

You’ve finished your education (for now, at least) and are starting your first job. This is where your financial journey really begins. And, since you are likely earning more money than you ever have, it’s important to have a plan for how you will use that money wisely.

If your employer offers a 401(k) for retirement, you may want to consider having at least some money taken out of each paycheck each cycle and put into this fund.

Once you get your first paycheck, you can see exactly how much money you are taking home (after all deductions, including retirement, and taxes are taken out). This can be a perfect moment to make a simple budget. This will help you get the most out of your salary and build some financial stability.

•   This involves listing all of your essential monthly expenses. You can think of these as the “needs” in life, such as housing, food, and minimum payments on debts or loans.

•   Then subtract them from your monthly take-home pay to see how much you have left over to play with (the “wants” in life) and, of course, to save.

•   Saving can be crucial, so it’s wise to determine an amount you can set aside each month into a separate savings account. It’s perfectly fine to start small. Even putting a little bit of money aside each month will start to add up over time.

•   This savings account can help you build an emergency fund (generally three to six months’ worth of living expenses). Having financial back-up can help to ensure that if you should have a large, unexpected expense, you could cover it without having to rely on high interest credit cards.

•   Once you have a comfortable emergency fund, you may then want to start working on other savings for other goals, such as buying a car or other major item you are hoping to buy in the next few months or years.

If you are looking for guidance on how to establish a budget that works for you, consider the 50/30/20 budget rule. This guideline says that, of your take-home pay, you should allocate 50% towards “needs,” 30% towards “wants,” and 20% to savings.

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2. Paying Off Student Loans

Student loan payments can be a drag on your monthly budget, especially if you are trying to save toward other financial goals, like buying a home or paying for your kids’ college education.

One of the best ways to pay off student loans is to pay more than the minimum each month. The more you pay toward your loans, the less interest you’ll owe — and the quicker the balance will disappear.

There’s typically no penalty for paying student loans early or paying more than the minimum. However, there is a caveat with prepayment: Student loan servicers, which collect your bill, may apply the extra amount to the next month’s payment.

The problem with that is that it advances your due date, but it won’t help you pay off student loans faster. That’s why it can be a good idea to tell your servicer (whether online, by phone or by mail) to apply overpayments to your current balance, and to keep next month’s due date as planned.

Another option you may want to look into refinancing your student loans. This could help you pay off student loans sooner without making extra payments.

Refinancing replaces multiple student loans with a single private loan, ideally at a lower interest rate. To speed up repayment, it can be a good idea to choose a new loan term that’s less than what’s left on your current loans.

Keep in mind, however, when you refinance a federal student loan into a private loan, however, you may lose the benefits and protections that come with a federal loan, like deferment and public service-based loan forgiveness.

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3. Buying a Car

Buying your first car can be an exciting experience. And, you might want to rush to the nearest dealer and purchase a shiny, new model right away.

However, saving up for a vehicle before you buy minimizes the amount you have to borrow to buy a car and can save you a substantial amount in interest.

To get a sense of how much you need to save for a down payment, you can research some car makes and models that might suit you and get a sense of prices for both new and used cars.

You can then zero in on a price range you can afford and calculate the down payment. Deciding between a new vs. used car? A good rule of thumb is to put 20% down on a new vehicle and 10% down on a used one.

Making a higher down payment helps you qualify for a loan, and it can earn you a lower interest rate and result in more affordable monthly payments.

Once you know how much to save, the next step is to find a good place to start saving. Good options include: a money market account, online savings account, or checking and savings account.

These accounts can enable you to earn more interest than a standard checking account but allow you to access the money when you are ready to buy that car.

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4. Buying a Home

For many people, buying a home is the biggest purchase they will ever make. So, it’s important to prepare for it.

A great first step is to figure out how much house you can afford to buy. You can come up with a target price range based on the area you want to live in, details about the type of home you want, and how much you’re comfortable spending on a monthly mortgage payment.

This exercise will help you understand how much you need to save and roughly how long it will take you to save enough.

Mortgage lenders and online mortgage calculators can also help you decide the absolute maximum you can afford to spend on your house.

One common rule of thumb is that your home payment (including loan payment, property taxes and homeowners insurance) should take up no more than a third of gross pay (your monthly paycheck amount before taxes and deductions are taken out). However, this can vary depending on the cost of housing in your area.

Once you have a target home price, you can start saving for a down payment. Many mortgage lenders prefer you to make an upfront deposit of up to 20% of your home’s cost. However, there are mortgages available for those who put down significantly less (even zero).

If you are saving for a down payment, you can think about when you want to buy a home and then work backwards to determine how much you need to save each month to reach this goal.

As with car savings, a good place to save for a home is a high-interest savings account, such as a money market account, online savings account, or checking and savings account.

5. Changing Jobs

At some point during your career, you may change jobs. Generally, this can be a smart financial and professional move, but changing jobs is still something you’ll want to plan for financially. Some tips to help your money work harder for you:

•   You’ll likely be eligible for a new set of employee benefits, including health insurance. However, it will probably be up to you to ensure that you have health coverage during the transition. To avoid any gaps, it’s a good idea to ask your new employer how soon you will be able to qualify for healthcare.

•   You may also want to create a plan for transferring your 401(k) and health savings account (HSA) to your new accounts. Rolling them over is generally a simple process, but you may want to contact your previous employer for guidance.

•   An FSA vs. an HSA can require a different approach. If you have a flexible spending account (FSA), you may need to submit all eligible expenses for reimbursement under your old program before you leave your current job. It can be a good idea to check with your company’s HR department to find out whether or not you have a grace period for submission.

Since you may be earning a higher salary, you may also want to re-examine your budget, and perhaps do some tweaking, such as funneling a bit more money into your retirement fund and/or savings account each month.

6. Saving For Your Kids’ College

Next to buying a home, child education expenses are among the biggest you may have in your lifetime. Just like retirement: it’s never too early to start saving for college. But even if you put it off, you can still help cover most or all of those college costs with wise saving and investing.

While predicting how much college will be for a kindergartener may be difficult, it gets a little easier the older your kids get. However, you can find current college costs and predictors for future college tuition costs online and use that as a benchmark for your savings.

One great place to start building education savings is in a 529 college savings plan. These are savings plans, usually sponsored by state governments, that encourage saving for future education costs.

They are often tax-friendly, in that many states will let you deduct your contribution from your state income tax. Even better, when you withdraw the money for college, the money will not be federally taxed.

That means, any growth (or money in the account that you didn’t put in) is not taxed, which can be a significant advantage over traditional investment accounts.

You can put money into your own state’s 529, or any other state’s plan. Whatever you choose, consider making monthly contributions automatic, so that your bank transfers the money right into the 529 on the same day each month.

One way to ease saving for college is to use smaller life transitions to help fund your education savings plan. When your child no longer needs daycare or preschool, for example, you could funnel what you were paying for that into your account.

7. Retirement

Retirement may seem far away, but it can come up faster than you expect and, if you’re unprepared, you may struggle financially. Saving for retirement early can provide peace of mind later.

And, the earlier you start saving for retirement, the less you’ll actually have to put away, thanks to the magic compounding interest (which means the interest you earn on your investments also earns interest).

While it can seem impossible to predict how much money you’ll need once you retire, some financial experts recommend this rule of thumb: Aim to save at least 15% of your pretax income each year from age 25 onward. If you start later, you would want to up those percentages.

Fortunately you can get Uncle Sam to help. By contributing to tax-advantaged savings accounts like traditional 401(k)s and individual retirement accounts (IRAs), your contributions are made before tax, reducing your current taxable income.

That means you get a tax break the year you contribute. Plus, that money can grow tax-free until you withdraw it in retirement, when it will be taxed as ordinary income (and at retirement time, you may be in a lower tax bracket).

With Roth 401(k)s and IRAs, your contributions are after tax, but you can withdraw the money tax-free in retirement (assuming certain conditions are met).

If you are contributing to 401(k) at work and your employer offers matching funds, you may want to increase your automatic contributions at least to that level. This is effectively “free” money.

The Takeaway

Throughout your life you will likely experience some significant events and milestones that can have a major impact on your financial well-being.

The better prepared you are for these transitions, the less stressful and more enjoyable they can be.

If you’re looking for a simple way to start saving for your financial goals, like buying a car or a home, you may want to consider opening an account that charges low or no fees and pays higher than average interest.

Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.


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SoFi members with Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below).

Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY on future Eligible Direct Deposits, as long as SoFi Bank can validate them.

Deposits that are not from an employer, payroll, or benefits provider 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, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.

As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% 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 members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Eligible 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 an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% 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 Eligible 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 Eligible 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 Eligible 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 Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.

Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.

Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% 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 1/24/25. There is no minimum balance requirement. Additional information can be found at http://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.


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.

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18
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6 Reasons to Go to College

By | Going to College, Life & Career, Student Loans, student_loan | Comments Off on 6 Reasons to Go to College

Whether or not to go to college is a major decision. There are numerous factors to consider, including the cost of tuition, the time commitment involved, and the availability of financial aid and loans. And while the price of a college degree continues to increase, it’s an investment that can have major pay-offs, both financially and otherwise.

Going to college can open doors to new experiences, both during and after getting a degree. While the financial opportunities that college can bring are certainly worth considering, there are so many other advantages to getting an undergraduate degree. Here’s a look at some of the top benefits to becoming a college grad.

Explore Areas of Interest

Some students enter college already knowing what they want their major to be. Whether someone’s a star chemistry student going pre-med or a drama nerd ready to delve into theater, college can be a time to deepen the interests students have cultivated throughout their education.

Declaring a major sets a student up to explore a particular subject from all angles, becoming somewhat of an expert in their chosen field. A student will take numerous courses in their major, sometimes culminating in a thesis project on a specialized subject.

There are often clubs and activities in each major field, allowing students to develop communities with others who have shared interests, broadening the scope of their education.

College can also be a time to explore new areas, and can give students the chance to discover subjects they may not have known much about before.

College students are often encouraged to explore new subjects, especially in their freshman year, in order to experiment, and perhaps find a new and promising area of study.

Going to college can be a way to deepen one’s understanding of a particular subject, whether it’s something a student may have studied previously, or a completely new topic.

Either way, getting a degree is a way to open your mind and tap into a sense of intellectual curiosity in an environment conducive to rigorous and serious academic exploration.


💡 Quick Tip: You can fund your education with a low-rate, no-fee private student loan that covers all school-certified costs.

Increase Earnings

One of the most practical arguments for going to college is to improve your earning potential. The Association of Public and Land-Grant Universities reviewed the impact a college degree could have on someone’s earning potential and found that millennials with a high school diploma earned just 62% of what their counterparts with a college degree earned. And while actually achieving that college degree may cost a lot, a majority of college graduates believe it was worth it.

Like any investment, there has to be money put in up front, unless you get a full scholarship or a college loan. Ideally, that upfront investment of time and money will pay off in the long run.

Recommended: Return on Education for Bachelor’s Degrees

Open Up Potential Career Paths

While a college degree may have been a way to stand out from the crowd in the past, today it’s proving to be a prerequisite for most jobs. Research suggests that people with a Bachelor’s degree earn roughly 75% more than those with just a high school diploma, and that, generally, the higher the level of educational attainment, the larger the payoff.

While going to college can be a highly rewarding experience in itself, it can be wise to consider possible career paths while selecting courses and deciding on a major. However, there is nothing wrong with getting a liberal arts education. Employers may not necessarily be looking for a specific specialization when hiring, but often may appreciate someone with a well-rounded academic background.

Certain fields, however, like business and medicine, may require that students’ major field corresponds to their choice of career. When exploring different subjects during college, you might find out about a new area you want to pursue as a career, a huge benefit of getting an undergraduate degree as well.

Recommended: Is Getting A Degree In Marketing Worth It?

Expand Your Circle

College can be a time to build the relationships that will greatly affect your life — and possibly your career. Over the course of the four years it takes to complete a bachelor’s degree, there are countless opportunities to make new connections — from the people in your dorm, to your classmates, to those you meet through extracurriculars.

College can be a time to develop a wide and varied circle, or to simply grow several deep and lasting friendships. It can also be a time to meet a romantic partner, whether the relationship is short- or longer-term.

Having a wide circle can help out in a variety of ways. From finding post-grad roommates to knowing people in the field of work you’re trying to get into, college connections can be an invaluable resource in life.

Improve Critical Thinking and Communication

The so-called “soft skills” of being a good listener or critical thinking are also in high demand by employers, and college can be a prime time to develop them. These are skills that can be honed both in and outside the classroom, and college aims to give students a well-rounded experience that helps them develop both socially and academically.

Gain Independence

College is the first time many people live away from home, and it can be a nerve-racking experience. But once you’re over the hump, living on your own can be an extremely fun and rewarding experience.

College can be a chance to dip your toes in the waters of independence, experimenting with living alone, gaining some financial independence, maintaining a budget, and deciding what classes to take.

College can be the ideal stepping stone toward independence, and is a helpful way for young adults to see what adulthood can be like.


💡 Quick Tip: Need a private student loan to cover your school bills? Because approval for a private student loan is based on creditworthiness, a cosigner may help a student get loan approval and a lower rate.

The Takeaway

While making the decision whether or not to go to college is not always easy, there are a host of good reasons to continue your education. The benefits can be financial, social, and intellectual, and can continue to be felt throughout your life.

The friends and connections you make during college can enrich your life and help you to network in your chosen field of work, while the financial security a college degree can offer is a major factor in the decision-making process as well. It’s important to make an informed decision, taking all of these points into consideration.

If the high cost of college is holding you back, keep in mind that there are a number of funding options that can help you manage the costs. To apply for financial aid, you simply need to fill out the Free Application for Federal Student Aid (FAFSA). This will tell you whether you are eligible for grants, scholarships, work-study programs, and federal student loans.

If you still have gaps in funding, you can also apply for a private student loan. Private student loans are available through private lenders, including banks, credit unions, and online lenders. Rates and terms vary, depending on the lender. Generally, borrowers (or cosigners) who have strong credit qualify for the lowest rates.

Keep in mind, though, that private loans may not offer the borrower protections — like income-based repayment plans and deferment or forbearance — that automatically come with federal student loans.

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.

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 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., 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 04/24/2024 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org).

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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14
2023
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Why College May Not Be for Everyone

By | Building Your Career, Life & Career, Student Loans, student_loan | No Comments

While college is a good option for many people, it isn’t for everyone — and not going to a four year college doesn’t mean you can’t have a meaningful career.

More people than ever before have a college degree, but a four-year program isn’t the only way to be successful. Even employers are realizing that there are many skills that can’t be captured in a degree program. In fact, some major tech companies, including Google and Apple, no longer require applicants to have a four-year degree for some of their positions.

There are certain jobs for which you need a college degree, like an electrical engineer, marketing manager, or teacher, but there are plenty of careers out there that don’t require additional degrees.

Key Points

•   College may not suit everyone, and skipping it doesn’t preclude a successful career.

•   Major tech companies are increasingly open to hiring individuals without a four-year degree.

•   Specific careers require a college degree, but many do not.

•   Alternatives like trade schools, apprenticeships, and certificate programs offer viable career paths.

•   Taking a gap year or starting a business are potential options for those opting out of college.

Reasons You Should Not Go To College

There are a number of valid reasons to delay college — or put it off entirely. Here are some to consider:

•   You’re not excited about your options. Maybe you didn’t get into the schools you expected to or you’re having second thoughts when you try to imagine yourself attending the schools you did get into. If the thought of college fills you with dread or doubt rather than excitement, taking a year off to reassess your options can be a good strategy.

•   You’re unsure what career you are interested in pursuing. You may want to explore different options by being exposed to college-level courses at a community college, or spend time volunteering, working, or traveling.

•   You’re already working. If you already have a job, you may be wanting to lean into your current job or save money to go to school in a few years.

•   You’re exploring non-degree avenues. There are many high-paying trades that don’t require a degree but may require on-the-job experience or an apprenticeship.

•   You have a plan for a gap year. Some people like to take a year to travel, work, or otherwise take a break in between high school and college to further explore their identity and what they want to do in the future.

•   You feel you’re going to college only to please your family. If you feel pressured to go to college, it may be a sign that college isn’t the right option for you, at least right now.

•   You have essential family obligations. Some students need to help their families and may not be able to take time off to go to school. These students may consider community college or a part-time degree program. Speaking with your current high school counselor may help you find ways to juggle multiple responsibilities.

•   You want to take time to pursue a talent. From sports to the performing arts to a creative path, some people choose to explore a talent more seriously, focusing time, energy, and resources prior to going to college. This can be a decision you make with the help of your family and any coaches or teachers.

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Reasons You Should Go To College

College can be a great time to grow and learn and, for some, it’s a natural step. Here are some other reasons why college may make sense:

•   You’re excited and realistic about college. You recognize college may have ups and downs but feel confident that college feels “right” as your next step — not just something your family or teachers expect from you.

•   A college degree will help you achieve your career goals. You’ve done your research and/or talked with alums and people working in your targeted field and feel confident that college makes sense for your career goals.

•   College fits into your overall financial plan. You have a sense of how much college will cost and a plan for how you will pay for it, which might include a combination of financial aid, savings, and federal or private student loans. You also want to make sure you will be able to manage any student loan payments after you graduate.

•   You have a ‘Plan B’ in case you realize that college isn’t the right fit. Sometimes people realize one semester into school that college may not be what they need at that moment in their lives. It can be helpful to talk about what this may be, so that you don’t feel trapped if school doesn’t feel like it’s a good fit.

How Graduation Rates Vary by Type of College
Source: National Center for Education Statistics

Recommended: what is considered full time student

Alternatives to a College Degree

Just because you aren’t interested in a four-year degree doesn’t mean you need to forgo higher education entirely. Alternative educational models, like trade schools and community colleges, offer many practical certification and two-year associate degree programs that can help you get ahead.

It is important to know that even if you’re not planning to pursue a four-year degree, you still have options when it comes to creating a career that is right for you.


💡 Quick Tip: You’ll make no payments on some private student loans for six months after graduation.

Trade School

Sometimes known as technical or vocational schools, trade schools can prepare you for a specific job, such as a dental hygienist, electrician, cosmetologist, or web developer. These programs are normally much shorter than four years, and certain programs may allow you to finish in only a few months. There are both public and private trade schools.

Trade schools don’t award bachelor’s degrees. Instead, when you graduate from a trade school, you typically receive a diploma or certificate indicating that you are trained and certified to perform a specific job. Some trade school programs do offer associate degrees, which are the same type of degrees offered by many community colleges.

Recommended: How to Know if Trade School is Right for You

Community College

As mentioned above, community colleges usually offer two-year degrees called associate degrees. These degrees can either stand alone or be a stepping stone to obtaining a bachelor’s degree at a four-year school.

Indeed, many community colleges offer career preparation programs that are designed to help students jump into the workforce without the need for a bachelor’s degree.

Community college could also be a great way to test out college life and see if you want to continue pursuing higher education. They tend to be much less expensive than four-year universities, which means it won’t cost you an arm and a leg before you decide if higher education is right for you.

Apprenticeships

Apprenticeships are paid positions designed to teach the apprentice about a specific job or industry. They can help you learn how to use industry-specific tools and technologies and help you develop your skills over a period of time. This may be in fields as diverse as plumbing to transportation engineering to baking.

Apprenticeships can be a win-win for employers and employees because they allow those starting out to begin working (and earning a paycheck) immediately, and they help employers fill vacant jobs.

Recommended: A Complete Guide to Apprenticeships

Certificate Programs

Similar and sometimes overlapping with trade schools, certificate programs offer specialized training in a specific area. This may include coding, cybersecurity, yoga, fitness, getting a commercial driver’s license (CDL) or other areas where specialized knowledge may be a prerequisite. These certificates may also be helpful in making job seekers eligible for positions with higher starting salaries.

Recommended: Are Coding Bootcamps Worth the Money?

Taking a Gap Year

A gap year is when a student takes a year off between high school and college. Some colleges allow accepted students to defer for a year, holding a place for them in the next year’s incoming class. Some people create a travel itinerary, others may work or volunteer for the year. There are some gap year programs that create opportunities for students, but keep in mind that some programs may be costly.

Starting a Business

If you are already passionate about — and have a lot of knowledge about — a specific field or industry, you might consider skipping college altogether and jumping into that business.

Starting your own business takes a lot of hard work, but it could mean that you get to be your own boss and work in an industry you love. And because you could quickly become an expert on the products or services you provide, you aren’t necessarily at a disadvantage because you lack a degree.

If You Do Go the College Route

There are plenty of options if you choose not to attend a four-year college. However, there are also options within the world of college, including the type of college you choose, the major you decide to pursue, and how you pay for college.

There’s no denying that college can be expensive. In the 2022-2023 school year, the average cost for tuition and fees at an in-state college was $10,423, while the average sticker price for a private college was $39,723. And, these numbers don’t include room and board. This can be a big financial commitment, especially if you are on the fence about pursuing higher education.

That’s why it can be a good idea to begin creating a payment strategy early. A great first step is to fill out the Free Application for Federal Student Aid (FAFSA) to see how much federal aid — including scholarships, grants, work-study, and federal student loans — you qualify for.

Federal student loans do have limits on how much a student can borrow each year they are enrolled in school. Some students may need additional funds to bridge the gap. In that case, some may consider borrowing a student loan from a private lender, such as a bank or credit union, to help cover college costs.

In general, it can be a smart idea to tap all your federal loan and grant options before you consider private student loans. That’s because federal loans offer some protections, such as deferment options, that private loans may not. However, private loans can cover up to 100% of the cost of attendance, including money to pay for books, room and board, and personal expenses.


💡 Quick Tip: Parents and sponsors with strong credit and income may find much lower rates on no-fee private parent student loans than federal parent PLUS loans. Federal PLUS loans also come with an origination fee.

The Takeaway

College can lead students on a new career path, but depending on your goals and other factors, may not be necessary. Some students may choose to pursue a trade or vocational program instead of a four-year degree, while others may simply want to wait a year or so to earn and save more money to cover the cost of going to college.

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.

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 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., 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 04/24/2024 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org).

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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