Jun
04
2024
What Is the Difference Between Money Market Accounts vs CDs?

Money Market Account vs Certificate of Deposit

By | Growing Wealth, Investing, money | Comments Off on Money Market Account vs Certificate of Deposit

Both certificates of deposit (CDs) and money market accounts (MMAs) are types of savings accounts that tend to earn higher interest rates than traditional savings accounts. But there are some key differences between them.

An MMA allows you to withdraw money as needed (and even comes with checks or a debit card), though you may be limited to a certain number of transactions per month. With a CD, on the other hand, your money is locked up for a set period of time. In exchange for leaving your money untouched, however, CDs generally pay higher rates than MMAs.

Whether you should choose a CD or MMA will depend on your financial needs and goals. To help you make the right choice, here’s a closer look at how these two savings options compare.

Main Differences Between Money Market Accounts and CDs

Here’s a quick snapshot of the differences between money market accounts and CDs.

Money Market Accounts CDs
Interest rates Variable; typically lower Fixed; typically higher
Liquidity Highly liquid Lacks liquidity (early withdrawal incurs a penalty, in most instances)
Minimum balance requirements Higher than regular savings accounts Varies by CD
Debit card/checks Yes No

Money Market Accounts

A money market account (MMA) is a type of savings account offered by banks and credit unions that provides some of the conveniences of a checking account. Like a typical savings account, you earn interest on your deposits, often at a higher rate than what you could earn in a traditional savings account. In addition, these accounts typically come with checks and/or a debit card, making it easier to access your funds.

Money market accounts may come with withdrawal limits (such as six or nine per month), however, so they aren’t designed to be used as a replacement for a checking account. MMAs also often require you to keep a certain minimum balance in order to avoid fees or earn the advertised annual percentage yield (APY).

The money you deposit in an MMA is insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC), if held at an FDIC-insured bank, or by the National Credit Union Administration (NCUA), if held at an insured credit union. That means you can’t lose your money (up to certain limits) even if the bank were to go bankrupt or shut its doors.

Pros of Money Market Accounts

Here’s a look at some advantages of opening a money market account.

•   Higher interest rate: Typically, money market accounts have higher interest rates than traditional savings accounts.

•   Security: Because of the FDIC and NCUA insurance, the funds in a money market account are typically insured against loss.

•   Funds are liquid: You can withdraw your money when you need to (though you may be limited to a certain number of transactions per month).

•   Ease of access: It’s possible to access the funds in a money market account by withdrawing cash at an ATM, doing an electronic transfer, using a debit card, and/or writing checks.

Cons of Money Market Accounts

MMAs also have some disadvantages. Here are some to keep in mind.

•   Better rates may be available elsewhere: You may be able to find a high-yield savings account at an online bank that offers a higher APY than an MMA at a traditional bank (with potentially fewer restrictions and/or fees).

•   Minimum balance requirements: Banks often require a minimum deposit to open an MMA, as well as a minimum amount you must keep in the account in order to earn the top APY and/or or avoid a monthly maintenance fee.

•   Variable interest rate: APYs on MMAs are based on market interest rates at a given time. It’s difficult to predict how the market will perform and if this interest rate will rise or fall.

•   Limited growth potential: If you’re looking for long-term growth, you can potentially make more by investing your money in the market.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.30% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


Certificates of Deposits (CDs)

A certificate of deposit (CD) is a type of savings account that offers fixed interest rate that is generally higher than a traditional savings account. A CD also comes with a fixed-term length and a fixed maturity date. This means you need to leave the funds in a CD untouched for a set term, which can range anywhere from a few months to several years. Generally, the longer the CD’s term, the higher the APY, but this is not always the case.

CDs don’t charge monthly fees, but will typically have an early withdrawal penalty, and you usually can’t add any additional funds after the initial deposit.

CDs are offered by banks and credit unions: at credit unions, they are often referred to as share certificates. Like regular savings accounts, CDs are typically insured by the FDIC or NCUA, so you get your money back (up to $250,000) in the unlikely event that the bank or credit union were to go out of business.

Pros of CDs

Here’s a look at some of the advantages that come with depositing money into a CD.

•   Potentially higher rates: CDs tend to offer higher APYs than regular savings accounts and money market accounts.

•   Guaranteed rate of return: Because CDs typically have fixed rates for fixed terms, you know up front how much interest you will earn.

•   Security: Like other types of savings accounts, CDs are insured by either the FDIC or NCUA.

•   Convenience: It’s fairly easy to open a CD, since most banks and credit unions offer them.

Cons of CDs

There are also some disadvantages of CDs that you’ll want to bear in mind.

•   Relatively low returns: While CDs tend to earn more than a regular savings account, investing in stocks and bonds can be a better option if you’re looking to maximize your returns over the long term (though, unlike CDs, returns are not guaranteed).

•   Rates won’t go up: Because CDs come with fixed interest rates, the APY won’t go up even if market rates rise during the term of your CD (unless you open a bump-up CD).

•   No liquidity: Unlike other types of savings accounts, you can’t withdraw funds as needed. To benefit from a CD, you must wait until the CD term ends before you access your cash.

•   Withdrawal penalties: If you end up needing the money before the CD matures, you will likely incur an early withdrawal penalty.

When Should I Consider a Money Market Account or CD Over the Other?

MMAs and CDs have different requirements and benefits, and which one will serve you best will depend on your needs and preferences.

Choosing a Money Market Account Over a CD

A money market account may be a better choice than a CD if:

•   You want the option to add and withdraw money regularly. You can save money over time with a money market account. You can also withdraw the money at any time, though you may be subject to some restrictions.

•   You’re building an emergency fund. A money market account can be a good place to stash your emergency fund. You can likely maintain the minimum balance requirement and can benefit from the extra interest. Should you need the money, however, you can get it right away.

•   You’re saving for a large purchase. If you’re saving for a big ticket item like a car, a money market account will allow you to write a check from the account when you’ve reached your goal and it comes time to use those funds.

Choosing a CD Over a Money Market Account

A CD may be a better fit than a money market account if:

•   You have a longer-term savings goal. If you don’t need to use the money for a year or two, you may benefit from the higher returns offered by CD.

•   You want to make sure you don’t touch the money. If you’re setting aside money for a specific future expense, like a wedding or vacation, a CD helps insure you won’t impulsively spend it on something else.

•   You want some growth without risk. Unlike money invested in the market, the money you put into a CD is insured (up to certain limits) and the rate of return is guaranteed.

Recommended: How to Save Money: 33 Easy Ways

The Takeaway

Both money market accounts and CDs offer safe ways to earn more interest on your savings than you could in a traditional savings account. While money market accounts offer more flexibility and liquidity than CDs, CDs tend to offer higher APYs.

If you won’t need the money for a set period of time (say, six months to three years), and can find a good rate on a CD, you might be better off going with a CD over an MMA. If you may need to tap the funds at some point (but you’re not sure when), an MMA allows you to earn a higher-than-average interest rate while keeping the money liquid, with the added benefit of offering checks or a debit card.

Before choosing any type of savings account, however, it generally pays to shop around and compare current APYs. You may find another savings vehicle, such as a high-yield savings account, that offers the returns you want with minimal requirement, restrictions, or fees.

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.

Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.30% APY on SoFi Checking and Savings.

FAQ

Are CDs or money markets better?

If you don’t need to access your funds for a while, a CD could be a better fit. CDs tend to offer higher interest rates than money market accounts, and the interest rate is fixed which makes the return predictable. Conversely, if you might need to draw on the funds in the near-term, an MMA may be a better route.

What are the tax implications of money market accounts vs. CDs?

With both certificates of deposit (CDs) and money market accounts (MMAs), the interest you earn is considered taxable income. You will receive a Form 1099-INT from your bank at the end of the year, which you must report on your tax return.

The Interest from CDs is typically taxed in the year it is earned, even if you don’t withdraw it until the CD matures. This means you might owe taxes on interest even if you haven’t received it yet. Interest on MMAs, however, is usually credited monthly and taxed in the year it is credited.

What are other options besides money market accounts and CDs?

Money market accounts and certificates of deposit (CDs) offer a low-risk way to earn a solid interest rate on your money. But they aren’t your only option. Here are some alternatives:

•   High-yield savings accounts. These accounts offer higher interest rates than traditional savings accounts and provide easy access to your funds with no fixed terms.

•   Treasury Securities. U.S. Treasury bills, notes, and bonds are government-backed securities that can offer competitive returns. They vary in term length and interest rate and are considered very safe investments.

•   Bond Funds. These mutual funds invest in a diversified portfolio of bonds, offering potentially higher returns than money market accounts and CDs, though they come with higher risk.

Photo credit: iStock/Vanessa Nunes

SoFi members with direct deposit activity can earn 4.30% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. 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 (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.30% 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 Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.30% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

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

Interest rates are variable and subject to change at any time. These rates are current as of 10/8/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

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.

SOBK-Q224-1885727-V1

Read more
Jun
04
2024

Paying for Pharmacy School Need to Knows

By | Going to College, Student Loans, student_loan | Comments Off on Paying for Pharmacy School Need to Knows

A Doctor of Pharmacy (Pharm.D.) degree is a four-year, licensed professional degree that teaches students how to fill prescription medications and how to educate patients about using prescriptions safely. Pharmacy school can be expensive, adding up to nearly $200,000 dollars on the high end.

With that price tag, it’s not a surprise that pharmacy students may have to rely on a few different sources of financing to pay for school, sometimes using a combination of savings, grants, scholarships, and student loans. This article will review the pharmacy school costs, the amount pharmacists can make, and nine tips for paying for pharmacy school.

How Much Does Pharmacy School Typically Cost?

The cost of pharmacy school can vary depending on where you enroll, the location, and the extent to which public dollars support the university you plan to attend. As mentioned, the complete cost of pharmacy school can add up to $200,000. The cost can swing higher for students who opt for an out-of-state institution. The American Association of Colleges of Pharmacy (AACP) lists the tuition and fees for pharmacy school for the 2022-2023 academic year on its website, which can help you compare costs at the pharmacy schools you may be considering.

For example, the first school on the list, Auburn University, costs $22,736 for in-state pharmacy students and $43,508 for out-of-state students. Mandatory fees cost $410 for 33 credit hours for students in their first year. However, in the fourth year, it costs $27,216 for in-state students and $58,374 for out-of-state students, with $210 for mandatory fees for 46 credit hours.

It’s worthwhile to compare the costs of various institutions before you make a decision. However, remember that financial aid can potentially bring the costs down further, so don’t rely completely on the published tuition prices. A conversation with the financial aid office at each school may give you a more in-depth analysis of how much it will actually cost, taking your personal situation into account.

Is Pharmacy School Worth It?

For the right individual, pharmacy school can be worth it. The costs of pharmacy school may seem daunting, but the professional perks, ability to become a part of a healthcare team, job opportunities, and career stability can mean that pharmacy school is the right option for many individuals. The high salary of pharmacists may also make pharmacy school worth it.

How Much Can Pharmacists Make?

The 2023 median pay for pharmacists was $136,030 per year, or $65.40 per hour, according to the Bureau of Labor Statistics (BLS). Job outlook from 2022-2032 will increase 3% per year, which is as fast as average.

9 Tips for Paying for Pharmacy School

Think of paying for pharmacy school as a pie. There are many ways to pay for pharmacy school by dividing that pie. For example, various pieces of the pie might make up scholarships, grants, loans, and money out of your own pocket. No matter how you slice the pie, every dollar you contribute is an investment into your career and your future. We’ll discuss scholarships, including university, pharmacy, and private scholarships, as well as grants in the next section.

1. Scholarships

Scholarships are funds that you don’t have to pay back. You can get scholarships as a pharmacy student from a number of different sources, including from the university that you plan to attend as well as through designated pharmacy scholarships and private scholarships.

It’s worth considering other interests beyond pharmacy. Scholarships may be awarded based on heritage, location, or even hobbies or special skills. Maybe you have talents in another area that qualify you for additional scholarships.

University Scholarships

Pharmacy colleges and schools traditionally offer direct financial assistance to pharmacy students through various sources, including alumni associations and local chapters of pharmaceutical organizations and fraternities.

Consider setting a meeting with the financial aid office at the university you plan to attend to learn more about specific scholarships from each pharmacy school you’re interested in attending.

Pharmacy Scholarships

Local and state pharmaceutical associations, practicing pharmacists, drug manufacturers, and wholesalers may offer pharmacy scholarships to promising pharmacists, as well.

For example, 10 pharmacy students annually can receive a $5,000 Walmart Health Equity Scholarship. Students must be accepted or enrolled in the professional curriculum at a U.S. college or school of pharmacy, and show evidence of leadership skills, academic success, and must have a preference to serve rural or medically underserved patients.

Here’s another example: Five underrepresented minority students can receive the CVS Health Minority Scholarship for Pharmacy Students annually. Students must be African American, Hispanic or Latino, American Indian, Native Hawaiian, and/or Pacific Islander students, as well as U.S. citizens or permanent residents. Each successful candidate will receive a single $7,000 scholarship.

Private Scholarships

Private scholarships come from companies, service groups and organizations, foundations, and individuals. For example, Tylenol offers a scholarship for students pursuing careers in healthcare, including pharmacy. There may also be scholarships available from local or regional organizations.

2. Grants

Like scholarships, you do not have to repay the money you receive from grants. Grants, which are typically based on need, can also be awarded based on merit. Filling the Free Application for Federal Student Aid (FAFSA®) automatically considers you for federal grants based on need. You may also become eligible for state grants. Your college or university can give you more information about the types of grants you’re eligible for through your pharmacy program.

3. Federal Student Loans

You may be wondering how to pay for pharmacy school without loans. It’s possible to do it through a combination of scholarships, grants, and savings, though many people take advantage of federal student loans through the U.S. Department of Education. Federal student loans have fixed interest rates and benefits such as income-driven repayment plans. Just like obtaining an auto loan or a mortgage, you must pay back loans with interest.

Federal student loans are a type of federal financial aid, and to apply, you must file the FAFSA. Learn more about the requirements for this application in SoFi’s comprehensive guide to the FAFSA.

You can qualify for two types of federal student loans for pharmacy school: Direct PLUS Loans and Direct Unsubsidized Loans.

Direct PLUS Loans

Pharmacy students can take advantage of Direct PLUS Loans, also called graduate PLUS loans or direct grad PLUS loans, to help finance graduate and professional school. The Graduate PLUS Loan comes from the U.S. Department of Education for graduate or professional students. In order to get one, your school must participate in the Direct Loan Program.

The Direct PLUS Loan is not need-based, which means you can get it no matter your income level. You can borrow up to the full cost of attendance and can use the money to pay for tuition, room and board, and fees. Your school will subtract other financial aid you receive (such as scholarships, grants, and fellowships) from the full cost of attendance and award you the difference with a Direct PLUS Loan.

The interest rate is 8.05% for Direct PLUS Loans first disbursed on or after July 1, 2023 and before July 1, 2024.

Direct Unsubsidized Loans

Similar to student loans for undergraduates, you can tap into Direct Unsubsidized Loans. You can borrow up to $20,500 per year with the Direct Unsubsidized Loan, and the interest rate is 7.05% if disbursed between July 1, 2023 and July 1, 2024 for graduate students. “Unsubsidized” means that the government doesn’t pay the interest while you’re in school and during the grace period.

It’s generally a good idea to first consider opting for the Direct Unsubsidized Loan, over a Graduate PLUS Loan. Why opt for the Direct Unsubsidized loan first?

You’ll pay more in interest for the Direct PLUS Loan (8.05% interest rate).

4. Private Student Loans

Private graduate student loans do not come from the federal government. They can come from a bank, credit union, or another financial institution and can be used to help finance college or career school. The amount you can borrow depends on the costs of your degree, but also depends on personal financial factors (such as your credit score and income).

You may have gotten advice that suggested exhausting all of your federal grant and loan options before you consider private loans because interest rates are usually higher compared to federal student loans. Additionally, private student loans don’t qualify for the same borrower protections as federal student loans, like income-driven repayment plans or deferment options. However, private student loans can be an option to consider if you need additional funding to cover your pharmacy school expenses.

Recommended: Things to know before applying for private student loans

5. PSLF Programs

The Public Service Loan Forgiveness (PSLF) Program is a federal student loan forgiveness program. More specifically, you may qualify to have the remaining balance on your Direct Loans forgiven after you have made 120 qualifying monthly payments under a qualifying repayment plan. You must work full-time for a qualifying employer in order to qualify and your employer must be a qualifying organization such as a federal, state, local, or tribal government organization or other nonprofit organization.

You must have Direct Loans or consolidate other types of federal student loans into a Direct Loan, repay loans under an income-driven repayment plan, as well as make 120 qualifying payments toward your student loans. The requirements for PSLF can be quite strict, so be sure to read the requirements closely.

For more information about PSLF programs and to learn more about your eligibility, contact your loan servicer, which is the entity that services your loan.

6. Pharmacy Internships

Pharmacy internships can be instrumental in your budding career as a pharmacist in helping you understand how pharmacies operate, learning the ins and outs of customer service, helping you dive into inventory management, and learning the professional skills necessary to become a pharmacist. You may also learn more from pharmacist professionals about leading a pharmacy team and help you bring tangible professional experience back to the classroom.

You may also want to look into pharmacy fellowships, which provide financial support in an external or internal capacity (in or out of the university environment). Assistantships also provide financial support in an academic department through teaching, research, or administrative responsibilities.

7. Work Part Time

You may want to consider working a part-time job in conjunction with pharmacy school. For example, if you attend school from 8am to 4pm, you may want to seek a part-time job after hours.

However, it’s important to consider your time constraints and whether you can succeed in your coursework. Consider your ability to manage your time before you take on a part-time job. However, for the right student, taking on a job can help pay for college tuition and give you an additional source of income. Networking opportunities and skill development can come from a part-time job, even if it doesn’t relate to pharmacy.

8. Borrow From Family

Do you have a family member who really wants to give you money for your education? You may seriously consider borrowing from your parents or a sister or brother (or whoever else wants to lend you money).

Just remember that it could strain family relationships if you fail to pay back the loan. It’s a good idea to have a plan in place to repay your relative(s) as well as create boundaries, so both parties feel good about the arrangement.

9. HRSA Loans

The Health Resources and Services Administration (HRSA), an agency of the U.S. Department of Health and Human Services, improves health care for geographically isolated and vulnerable individuals.

The Department of Health and Human Services (HHS), through the HRSA, also offers several loans for health services students. For example, Health Professions Student Loans are available to individuals who study pharmacy (as well as dentistry, optometry, podiatry, or veterinary medicine). Pharmacy students who show financial need may also be able to tap into Loans for Disadvantaged Students (LDS). Health professions student loans have fixed interest rates of 5%, lower than both Direct Unsubsidized Loans and PLUS loans. They also allow 12 months of grace periods, while most other loans only offer six months of grace periods. In addition, health professions loans are subsidized, which means you don’t pay interest on the loan while you’re in school, nor do you pay additional loan fees.

However, they come with a few downsides: Not all schools participate, and there are no set borrowing limits. You also can’t tap into income-driven repayment plans or PSLF.

Private Student Loans for Pharmacy School

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

Can you use FAFSA for pharmacy school?

Absolutely! It’s generally a smart idea to file the FAFSA for pharmacy school, no matter your financial situation. The FAFSA can give you access to a range of financial aid options, including scholarships (your school will consider your eligibility based on the FAFSA results), grants, loans, and work-study. You want to be able to put together the best financial aid options for your needs, and the best way to do that involves filing the FAFSA.

Does CVS or Walgreens pay for pharmacy school?

CVS and Walgreens both offer pharmacy scholarships, like the ones we listed above, the Walmart Health Equity Scholarship and the CVS Health Minority Scholarship for Pharmacy Students. If you work for either company, you may also qualify through each company’s employee tuition reimbursement program. Check with the human resources department at each company for more details.

How much can pharmacists make after graduating?

The 2023 median pay for pharmacists was $136,030 per year, or $65.40 per hour, according to the Bureau of Labor Statistics (BLS). The job outlook for pharmacists is 3% from 2022 through 2032, which is as fast as average.

Photo credit: iStock/cagkansayin

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

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.

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.

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.

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.

SOIS-Q224-1902934-V1

Read more
Jun
04
2024
Why Was My Bank Account Application Denied?

Why You Can’t Open a Bank Account and What to Do Next

By | Budgeting & Goals, Family Finances, money | Comments Off on Why You Can’t Open a Bank Account and What to Do Next

It’s certainly a frustrating experience to be denied a checking account. The problem could be with your past banking history, an error on your bank reports, or a mistake you made filling out your application, among other reasons. Once you find out what the issue is, you can take steps to remedy the situation and hopefully get approved for a bank account.

A checking account serves as a hub for many people’s financial life. It’s where your paycheck is likely deposited and how you pay your bills. Here’s the information you need to move forward when you can’t open a bank account.

Reasons Why You Can’t Open a Bank Account

There are a few common reasons that can cause you to be unable to open a bank account.

Negative Information on ChexSystems

Typically, banks don’t pull your credit score when you apply for an account. They do, however, usually look into your prior checking account activity via ChexSystems, the most popular banking reporting agency. ChexSystems provides a score reflecting how well you previously handled your banking life. The banks use this information to decide whether to qualify you for a checking account.

Negative items on your ChexSystems report may result in you being denied a checking account. They can cause banks to consider you a high-risk customer for financial services. Negative information can include:

•  Forced account closures

•  Bounced checks or overdrafts

•  Suspected fraud or identity theft

•  Unpaid fees or negative bank balances from a current or closed accounts

•  Too many account applications submitted over a short period

These negative marks on your record can last up to five years.

Errors on Your ChexSystems Report

Just as you may have credit report errors, so too can your ChexSystems report have mistakes. This could trigger your bank account application to be rejected, even if your past checking account management was good.

You can obtain a copy of your ChexSystems report once a year or whenever your application for a bank account is denied based on the report. (Keep in mind that applying for a bank account too many times counts as a black mark against you. If you get rejected, it’s probably a good idea to investigate your banking report vs just putting in more applications.) You’ll find details below on how to access your report.

Bankruptcy

If you have filed for bankruptcy, the bank will likely find out. In fact, there is often a question about bankruptcy on an account application. The bank could decide that your past bankruptcy means you are too much of a risk to offer you a bank account.

Typically, your borrowing capacity will be significantly limited by bankruptcy, as will the number of financial institutions willing to provide you with financial services, such as a checking account.

Your Identity Can’t Be Verified

An application for a bank account may be rejected because there are mistakes on it and/or the information entered does not match the documents you submitted. For example, if you have recently moved, the verification source may not recognize your new address, or you might have answered security questions incorrectly when prompted by the verification system.

Here are other reasons your identity might not be verified:

•  Your submission had an error or typo (perhaps in your Social Security number)..

•  Your credit profile may contain erroneous information.

•  Your credit report could be frozen if there is suspicion of fraud or identity theft.

•  Your documents may have expired.

•  Your documents may be unreadable.

•  You may have submitted a phone number that is not associated with your address.

•  Your proof of identity, such as a copy of your driver’s license or passport, and the information typed into an application don’t match.

Get up to $300 when you bank with SoFi.

No account or overdraft fees. No minimum balance.

Up to 4.30% APY on savings balances.

Up to 2-day-early paycheck.

Up to $2M of additional
FDIC insurance.


What to Do After You’ve Been Denied Opening a Bank Account

If you’ve been denied a checking account, you may well want to apply elsewhere immediately. But a word of warning: Doing so could cause your application to be rejected because you are requesting too many new accounts too often. To maximize your chances of success, take the following steps before you reapply.

1. Find Out Why Your Application Was Denied and Ask the Bank to Reconsider

By law, the bank should tell you why your application was denied. Regardless of the bank’s information from a reporting agency, the bank makes its own decisions when approving account applications. You may be able to overturn the bank’s decision depending on the circumstances. It’s probably worthwhile to make that request.

For instance, in the case of a typo on your application information or a very old issue with an unpaid overdraft fee, you might be able to get the bank to reconsider.

2. Check Your Banking Report

You can obtain a copy of your ChexSystems report once a year and whenever you are denied a bank account if the report is the cause of your rejection. Visit the ChexSystems’ website or call 800-428-9623.

3. Look for Errors and Fraudulent Activity

Read the report from ChexSystems carefully, looking for fraudulent activity or mistakes in information such as your name, address, phone number, or Social Security number. For any errors, contact the agency, and be ready to provide supporting information to ensure the issue gets corrected.

4. Clean Up Your Report

Look at the negative actions on your report and fix them; you can file a dispute for anything erroneous by going to the ChexSystems website. Pay off any debts and unsettled fees. Ask to have the negative activity removed. Otherwise, it can stay on your report for up to five years.

Consider Alternative Solutions

If you have been denied a bank account and can’t quickly resolve the issue, here are a couple of workarounds to consider:

Second-Chance Checking Account

Some banking institutions offer a second-chance account to those denied a traditional checking account. A second-chance account typically provides limited services. It may set a cap on debit card usage, not provide paper checks, and not enable overdraft protection. Nevertheless, this kind of account can help improve your financial life if managed responsibly.

Also worth noting: These accounts often come with higher-than-usual fees, but you may be able to upgrade a second-chance account to a regular checking account within a year or two if you pay the fees and maintain a positive balance. These accounts can help you on your path to building a solid banking history.

Prepaid Debit Cards

If you need a way to spend on daily expenses and pay bills without a bank account, prepaid debit cards could be a good solution. You load a dollar value onto these cards (they’re available at many retailers, such as gas stations and supermarkets), and you can then tap or swipe to use the funds.

Make sure you’re aware of any fees you might incur when using or reloading your card, and know that the usage of these cards isn’t reported. In other words, it won’t build your credit score or your banking history in any way. But it can be a valuable stop-gap measure when you don’t have a bank account and need a convenient way to transfer funds.

Recommended: How Often Should You Monitor Your Checking Account?

The Takeaway

Having your application for a bank account denied is an upsetting experience that can definitely limit your financial life. The root of the problem could be that ChexSystems or another consumer reporting agency has indicated that you are a high-risk customer. Or your application could be rejected because mistakes were made or your identity couldn’t be verified. By taking steps to remove errors and repair damage, you’ll be on the road to get the account you need to keep your financial life humming along.

When you’re ready to apply for a checking account again, check out what SoFi has to offer.

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.


Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.30% APY on SoFi Checking and Savings.

FAQ

Why am I getting denied to open a bank account?

There are several reasons you could be denied a bank account, including mistakes on your application, negative activity on your checking account history, or errors on your ChexSystems or similar report.

Can you get a bank account if you have committed fraud?

If you have committed fraud, you will likely have a negative history with ChexSystems, and you will likely have your bank account application declined. However, you might get a second chance checking account. If you maintain a positive balance and pay the monthly fees, you can probably upgrade to a regular checking account within a year or two.

Can a bank refuse to let you open an account?

Yes; banks can decide whether or not they want to offer an account to an applicant. They might deny an account if you have negative activity (such as unpaid overdraft fees and account closures) on your ChexSystems report or if there’s a mistake on your application. Banks are, however, required by law to explain why they reject your application.

Photo credit: iStock/skynesher

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.30% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. 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 (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.30% 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 Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.30% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

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

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

Interest rates are variable and subject to change at any time. These rates are current as of 10/8/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

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.

SOBK-Q224-1897302-V1

Read more
Jun
03
2024
College Graduation Rates: How Many People Graduate College?

College Graduation Rates: How Many People Graduate College?

By | Going to College, Student Loans, student_loan | Comments Off on College Graduation Rates: How Many People Graduate College?

It may seem to you that droves of college students collect diplomas every year, but how many students actually start college and graduate — at the same college?

The most recent data from the U.S. Department of Education National Center for Education Statistics (NCES) reported in 2020 that the overall six-year graduation rate for bachelor’s degree-seeking full-time undergraduate students at four-year degree-granting institutions in fall 2014 was 63%.

Graduation rates refer to the percentage of a school’s students who complete their program within 150% of the published time for the program. It’s important not to confuse graduation rates with retention rates, which refer to the percentage of students who continue at a particular school the next year. In other words, the retention rate is the percentage of students who finish their first year and return for a second year.

We’ll walk through what the college graduation rate can tell you about a school, why it’s important, as well as outline a good graduation rate. We’ll also break down graduation rates by state and colleges (from lowest to highest), discuss some reasons that students might not graduate, and how to overcome some of these obstacles.

What Does the College Graduation Rate Tell Us?

As a prospective student, understanding the difference between graduation rates and retention rates allows you to be better prepared to compare these percentages against the schools on your list. Comparing the graduation rate of your first-choice college gives a definite indication of whether the schools fall above or below the average. It’s a quick way to find out how many students finish their degrees “on time” and also tells you the type of institutions that deliver the highest graduation rates. Based on available statistics, private, nonprofit institutions graduate students at a higher rate.

Why Is Knowing the Graduation Rate Important When Selecting a College?

When you’re researching colleges, many different things matter to different students. Athletes may want to know more about their individual athletic programs. English majors may want to know how many professors are published writers.

However, among all the different factors you can research, graduation rate remains one of the most important for all prospective students to understand.

Why? The graduation rate serves as a gauge for many things — student satisfaction and happiness in addition to indicating how many students graduate in a timely manner. However, it’s not the only metric you want to consider when you choose a college. Other priority considerations include teacher-to-student ratio, retention rate, loan default rates, and selectivity.

Two trusted websites compile information on graduation rates: College Navigator and College Results Online.

•  College Navigator : College Navigator compiles information from about 7,000 colleges and universities in the United States. College Navigator breaks down both retention rates and graduation rates on its site, and you can also access these rates by race/ethnicity and gender.

•  College Results Online : College Results Online also lists both rates and retention rates for institutions. You can also cross-index certain peer institutions against each other to compare graduation and retention rates.

What Is a Good Graduation Rate for a College?

The best graduation rates in the U.S. are from schools that have a graduation rate in the 90th percentile, which many of the Ivy League schools have. For example, let’s take a look at a few six-year graduation rates based on College Navigator data:

•  Harvard University: 98%

•  Yale University: 96%

•  Cornell University: 95%

However, you can still find high graduation rates within highly selective liberal arts colleges:

•  Amherst College: 95%

•  Davidson College: 93%

•  Claremont McKenna College: 92%

It’s important to remember that since these highly selective schools only admit students with top-tier credentials, they naturally attract some of the most driven students on the planet, resulting in a high graduation rate.

So, what is a good graduation rate for a college? Does this mean that a college in the 80th or even 70th percentile isn’t a good school or that it isn’t the right school for you? Absolutely not. As mentioned before, other factors play into the mix as well, based on your personal preferences and interests. The right fit for you may be a school with a 70% graduation rate. The better the fit, the more likely you will graduate on time.

Lowest Graduation Rate College in the United States

Unfortunately, the college with the lowest graduation rate in the U.S. isn’t a highly popularized statistic. However, if, during your own research, you see a school that graduates at or below 60%, you may want to probe your admissions counselor at the college for the reasons why rates are so low and find out more about how the college plans to improve.

Average College Graduation Rate in the United States

When digging a bit more into the 2020 NCES report, it states that the average college graduation rate (more specifically, the six-year graduation rate) was:

•   63% at public institutions

•   68% at private nonprofit institutions

•   29% at private for-profit institutions

Overall, 60% of males and 67% of females graduate within six years, and females had a higher six-year graduation rate at the following types of institutions:

•   Public institutions (66% female vs. 60% male)

•   Private nonprofit institutions (71% female vs. 64% male)

However, at private for-profit institutions, males had a higher six-year graduation rate than females (31% vs. 28%).

How does the U.S. Department of Education arrive at this data? The NCES uses Integrated Postsecondary Education Data System (IPEDS), a system of interrelated surveys conducted annually by NCES through institutions.

The IPEDS graduation rate is calculated like this:

Graduation Rate =
Number of students who completed their program within a specific percentage of normal time to completion / Number of students in the entering cohort

College Graduation Rates by State

Here are the college graduation rates by state, according to World Population Review :

State

 College Completion (or Higher)
Massachusetts 44%
Colorado 41%
New Jersey 40%
Maryland 40%
Virginia 39%
Connecticut 39%
Vermont 38%
New York 37%
New Hampshire 37%
Washington 36%
Minnesota 36%
Illinois 35%
Utah 34%
Rhode Island 34%
Oregon 34%
California 34%
Kansas 33%
Hawaii 33%
Nebraska 32%
Montana 32%
Maine 32%
Delaware 32%
Pennsylvania 31%
North Carolina 31%
Georgia 31%
Wisconsin 30%
Texas 30%
North Dakota 30%
Florida 30%
Arizona 30%
Alaska 30%
South Dakota 29%
Missouri 29%
Michigan 29%
Iowa 29%
South Carolina 28%
Ohio 28%
Idaho 28%
Wyoming 27%
Tennessee 27%
New Mexico 27%
Indiana 27%
Oklahoma 26%
Alabama 26%
Nevada 25%
Louisiana 24%
Kentucky 24%
Arkansas 23%
Mississippi 22%
West Virginia 21%

Number of College Graduates in the 21st Century

In the past 20 or so years, the number of college graduates has increased. According to information published by Education Data , in 2001 approximately 1.24 million students graduated from college with a bachelor’s degree. In 2022, that number reached 2.02 million.

Reasons Why College Students Don’t Graduate

When looking at graduation rates, let’s turn the tables a bit and take a look at a few reasons why students might not graduate. Depending on the student, these could include things like the high cost of tuition, trying to balance work and school, or poor academic performance.

Cost

The increasing price tags aren’t a new reason that students leave school. When it gets too expensive, they may feel they have no way out. According to the National Association of School and Financial Aid Administrators (NASFAA) , an analysis of 2,000 colleges and 10 theoretical students found that 48% of families with annual incomes above $160,000 could afford the colleges on the list. Those with a family income over $100,000 could afford more than one-third of the colleges. Finally, the theoretical students from lower-income backgrounds could only afford up to 5% percent of the colleges.

Recommended: What is the Average Cost of College Tuition? 

Balancing Work and School

Many undergraduates work part-time jobs to help pay their way through college. Students often get stuck in the quagmire of trying to keep up with both work and school, which can be a challenging balancing act. Many seasonal jobs for college students exist, which means you might be able to get a job during the summer instead of working during the school year.

Recommended: 3 Summer Job Ideas for College Students

Transferring

Transferring colleges sometimes means some credits get lost in translation. When transfer students are forced to retake classes, it not only costs more financially, but they also have to spend extra time pursuing their degree. This sometimes means that students often face trouble getting enough credits to graduate.

Poor Grades

Sometimes, students simply can’t make the grades. Even if it happens during just one semester, it can cause students to shy away from college altogether. In particular, first-generation college students, those who are low-income students, as well as minority students, are vulnerable and question whether they really belong in college.

Being Denied a Student Loan

Being denied a student loan or other types of financial aid can be a huge deterrent to continuing on in college. However, remember that there are ways around it — including seeking a loan through a different lender.

Recommended: I Didn’t Get Enough Financial Aid: Now What?

Overcoming the Obstacles as a College Student

What can you do to overcome the obstacles and successfully graduate from college? Let’s find out. We’ll list a few things you can do to help you stay the course:

•  Get organized with everything — school work, athletics, homework, and more.

•  Get support from family and friends.

•  Create healthy habits. Eat nutrient-dense meals, get enough sleep, and stay healthy.

•  Carefully consider the best ways to pay for college and focus on managing your money.

•  Get to know professors and academic support professionals at your college or university.

•  Work on your time management skills so you have the time you need for important assignments.

•  Take care of your mental health. If you are struggling to balance the many priorities of being a college student, reach out to family or friends for help. If you need additional support, contact your campus’ health and wellness center to see what counseling resources are available to students.

•  Investigate transfer options early on if you attend a community college so you know how to make the transition smoother.

Recommended: FAFSA Guide

Ways to Fund College

Making sure you have a concrete plan to pay for college is one of the best ways to make sure you successfully graduate. Let’s walk through a few tips for making sure you have all your ducks in a row.

•  Fill out the Free Application for Federal Student Aid (FAFSA®).
This is the first step in applying for federal financial aid, including grants, scholarships, and low-interest-rate federal student loan options.

•  Search for scholarships. Ask the college or university you plan to attend about scholarships they offer. Don’t forget to search around in your community as well.

•  Get a work-study job. If you qualify for work-study this can be an opportunity to earn a bit of money for college expenses. This is a federal program in which you earn money and your school pays you for that work via a check, usually every week, every two weeks, or every month.

•  Look into private loans. If you need to fill the gap between scholarships, grants, and federal student loans, look into private loans to help you make it across the graduation stage. These may lack the borrower protections afforded to federal student loans (like deferment options or income-driven repayment plans) and are therefore generally only considered after other financing sources have been exhausted.

Recommended: The Differences Between Grants, Scholarships, and Loans

The Takeaway

A school’s graduation rate is a reflection of the percentage of students that graduate within 150% of the published time frame. This is different from a school’s retention rate which is a measurement of how many students remain at a school from year to year. A school’s graduation rate can be an informative benchmark as you evaluate and compare schools during the application process.

If you are a current college student, you can do a lot to make sure you stay the course, including taking care of yourself, using scholarships and grants to your advantage, getting academic help, and making sure (if needed) that you have the right private loans to make it all happen.

Ready to find private student loans to make sure you get to throw your cap at graduation? Visit SoFi and learn more about private student loans and the low rates we have to offer. Our friendly experts can also help you decide your best course of action.

Photo credit: iStock/digitalskillet

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

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.

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.

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.

SOIS-Q224-1903055-V1

Read more
Jun
03
2024
How to Pay for Cosmetology or Esthetician School

Paying for Cosmetology or Esthetician School

By | Building Your Career, Life & Career, student_loan | Comments Off on Paying for Cosmetology or Esthetician School

Looking good comes with a cost. Ask cosmetologists. The average price of beauty school is $15,000 to $20,000 a year.

A career in cosmetology can be rewarding. You get a creative outlet and a chance to help others look their best. It also offers flexibility for a good work-life balance. But the licensing process can add up.

Cosmetology and esthetics programs are offered through community, technical, and vocational colleges — accredited institutions that qualify for financial aid. Accreditation broadens the range of financial aid options. Prospective students can consider interest-free payment plans, financial aid from schools, scholarships, grants, and loans from the government or private entities. Read on for more detailed information on the types of financial aid that pay for cosmetology school, and what options don’t.

Esthetician vs Cosmetology School

Esthetician (or aesthetician) licenses specialize in skincare treatment, recommendations, and analysis. Treatments include facials, massages, and waxing. With this license, you can work at spas, salons, or doctor’s offices, such as plastic surgeons or dermatologists.

Cosmetology covers the creative styling of hair, skin, and nails — but also provides basic training in treatments. Students can get an esthetician license through a cosmetology program. A career in cosmetology can lead to work as a makeup artist, hair stylist, or manicurist. License holders typically work in salons, spas, the entertainment industry, and hotels or resorts. The table below outlines some of the differences between an esthetics license and a cosmetology license.

Field

 Esthetics License

Cosmetology License
Average School Tuition $7,433 average of top ten US schools $16,000
Subjects Techniques and science behind skin care treatments. Specific subjects include skin anatomy, facial and makeup techniques, hair removal, and medical office esthetics. Hair, skin, and nail care and styling. Specific subjects include dermatology, makeup, and haircutting.
2024 Median Salary $40,300/year $29,201/year
Job Growth 2022-32 9% (Faster than US average) 8% (Faster than US average)
Types of Jobs Skin care specialist (esthetician), makeup artist Hair Stylist, nail technician, makeup artist, barber

Be sure that your school is state-approved. You can search for schools through your local government’s licensing process. Also, it’s helpful to know whether your certificate is transferable to other states and which states accept it. This way, your time and resources aren’t lost.

Below are organizations that can help you find accredited and state-approved programs:

•  Accrediting Commission of Career Schools and Colleges (ACCSC)

•  Accrediting Council for Continued Education & Training (ACCET)

•  Council on Occupational Education (COE)

•  National Accrediting Commission of Career Arts and Sciences (NACCAS)

Typical Cost of Beauty Schools

Beauty school programs are generally more affordable than the average four-year program. According to the College Board’s Annual Trends in College Pricing report, during the 2023-2024 school year, the average cost of tuition at a four-year nonprofit institution was $41,540. Cosmetology students, in contrast, can expect to pay around $16,000 to complete a degree in their field. But beauty school students still borrow $7,100 per year on average.

Esthetician School

Requirements for esthetics licenses vary by state. Connecticut is the only state that does not require a license.

Students can expect to complete 300 to 1,500 hours depending on state program requirements. Most states require students to pass a state-issued exam to obtain a license after completion of a program. For example, Washington requires students to complete a program of not less than 750 hours and to fill out a license application.

Students can also specialize in esthetics as part of their overall cosmetology program.

Cosmetology School

Each state requires a cosmetology license in order to practice. While requirements differ, most states require three things: you must be 16 or older, hold a high school diploma, and have completed a state-licensed cosmetology program.
Some states also require an exam in order to obtain a license. And some require regular license renewals.

While states can issue a license that covers all cosmetology specialties, some require separate licenses in specializations such as barbering or manicures.

Programs range anywhere from 1,000 to 2,100 hours across states, and usually include retail and business admin training to supplement. Specializing in a field, such as nail care, requires additional hours. Finally, programs are hands-on — meaning students have limited online options.

To find out your state’s requirements, the National-Interstate Council of State Boards of Cosmetology has a registry of state offices. ​​

Possible Funding Source #1: FAFSA®

Does FAFSA pay for cosmetology school? Yes! But, students who apply must be enrolled in an accredited program to be eligible.

The first step to applying for government financial aid is filling out a Free Application for Federal Student Aid (FAFSA) form. New forms are released each year on October 1st — and the sooner you complete one, the more likely federal grants will be available.

Information provided on the FAFSA helps to determine your eligibility for federal student aid. The government, states, and colleges also use it to determine the amount of financial aid to award you. Schools you list in your form will review your FAFSA and put together an aid offer. If your school’s financial aid does not cover the entire cost of tuition, you can use the FAFSA to apply for federal grants and student loans.

Not familiar with setting up FAFSA? This FAFSA guide provides an overview of the form and the aid options available through the FAFSA. Here’s a brief explainer on some of the aid types that may be available to students.

Pell Grants

The government awards Pell Grants to students from lower-income families and who have not previously earned a degree. Unlike loans, they do not need to be repaid.

The Pell Grant’s 2024-2024 maximum is $7,395 and students may be eligible for up to twelve terms. The amount is determined by the following:

•  Expected Family Contribution (EFC), or the amount your family can pay

•  Cost of Attendance (COA), finalized in your school offer letter

•  Full-time or part-time status as s student

•  Length of your school’s academic year

Schools will disburse the federal grant to you directly, apply it to your tuition, or both. In order to receive Pell Grants, students must stay enrolled in their respective program of study and fill out the FAFSA form each year.

Direct Subsidized and Unsubsidized Loans

The Department of Education also offers Direct Loans. Cosmetology students may be eligible for either subsidized or unsubsidized loans. The government pays for the interest rate of subsidized loans as long as you’re enrolled in a program, for the first six months after leaving school, and during qualifying deferment periods. Interest rates for unsubsidized loans are not covered. Subsidized loans are awarded based on financial need, while unsubsidized loans are not.

Applying for a federal loan offers these key advantages:

•  Low fixed interest rates

•  Flexible repayment plans

•  Possibility of forgiven loans

•  Deferment and forbearance options

Parent PLUS Loans

PLUS loans are available to parents of undergraduate students or graduate or professional students. They offer some of the advantages of federal Direct Loans, but offer higher borrowing limits.

Parents can apply for Parent PLUS Loans on behalf of their children, as well. Unlike other federal student loans, these types require a credit check and are not based on financial need.

Possible Funding Source #2: Scholarships

A good place to start your scholarship search is with your school. Their aid letter will outline scholarships awarded from its program. You can contact them to see if there are additional scholarships you can apply for at the school.

Professional associations also offer scholarships based on need or merit. The below beauty industry associations have lists of scholarships.

•  Professional Beauty Association

•  National-Interstate Council of State Boards of Cosmetology

•  American Association of Cosmetology Schools

The U.S. Department of Labor also offers a free scholarship finder .

Finally, ethnicity-based groups, employers, or your parent’s employers may also offer tuition assistance and scholarships.

Possible Funding Source #3: Working Part Time

Since cosmetology programs are shorter in duration, working part-time to help pay for college is feasible. Try getting work in your field as an assistant or admin at an office. That way, you can learn while getting paid — and even get a foot in the door.

Studying and working is a fine balance. It depends on how much time you can commit. If studying fills up most of your week, you may not be able to focus on studying for the career you hope to work in and may also hurt your score needed to pass exams needed to work in the industry.

You can even find working cosmetologists to get advice on how to do both.

Possible Funding Source #4: Private Student Loans

After exhausting all other avenues of aid, private student loans can help cover the difference. A private undergraduate student loan can be offered through banks, credit unions, and online lenders. They can be applied to a range of programs, even applied towards paying for CDL school.

Lenders will perform a credit check to determine your interest rate and how much you are eligible for. Students who don’t have credit scores will need a cosigner, usually a parent.

Possible Funding Source #5: School-Specific Financial Aid

Financial aid availability depends on your school.

Aveda Institute Maryland, for example, offers financial assistance for current and former military servicemen. Paul Mitchell Schools also offer three forms of military financial aid. One includes a My Career Advancement Account Scholarship Program for military spouses.

Delgado Community College in New Orleans provides financial assistance on a first-come, first-serve basis. Students must complete a FAFSA, online scholarship form, and accept or decline their aid offer letter.

Possible Funding Source #6: School-Specific Payment Plans

College tuition payment plans are an option. Instead of paying tuition upfront at the beginning of the year, students pay tuition in installments.

Payment plans are an excellent alternative to taking out loans since plans are generally interest-free. Check with your school for eligibility requirements and deadlines for enrollment periods.

The Board of Cooperative Educational Services in Western Suffolk, Long Island, and Alexander Paul Institute of Hair Design offer no-interest payment plans.

Explore Private Student Loans With SoFi

Cosmetology and esthetician careers require state-approved schooling and licenses. These accredited programs are covered by federal financial aid, and some schools offer financial aid. Zero-interest payment plans can also be a huge help to pay for a program.

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

Can FAFSA be used for beauty school?

Yes. States require students to participate in state-approved accredited beauty schools to obtain a license. Students enrolled in post-secondary programs at accredited institutions qualify for financial aid.

Do you work and earn money while in cosmetology school?

Students typically cannot work in their field without a license, unless it’s an unrelated job in the industry. Find out if your school participates in the Federal Work-Study Program. These programs are available to part-time or full-time students with financial needs. Students will usually find jobs at their school or private for-profit employers that have agreements with your school. The jobs are typically relevant to your field of study.

Are beauty schools accredited? How do you select a good program?

Yes, beauty schools can be accredited for post-secondary education. Always check to make sure your program is accredited to avoid predatory schools with poor programming. Consider starting your search with state license departments. The National-Interstate Council Of State Boards Of Cosmetology has a directory of all 50 states’ centers.

Photo credit: iStock/petrovv

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

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.

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.

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.

SOIS-Q224-1902624-V1

Read more

CATEGORIES

  • All
  • No categories
Close modal

See what SoFi can do for you and your finances.

Select a product below and get your rate in just minutes.

Student Loan
Refinancing

Personal
Loans

Online
Investments

Other

Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. To qualify, a borrower must be a U.S. citizen or other eligible status, be residing in the U.S., and meet SoFi's underwriting requirements. Not all borrowers receive the lowest rate. Lowest rates reserved for the most creditworthy borrowers. If approved, your actual rate will be within the range of rates at the time of application and will depend on a variety of factors, including term of loan, evaluation of your creditworthiness, income, and other factors. If SoFi is unable to offer you a loan but matches you for a loan with a participating bank, then your rate may be outside the range of rates listed above. Rates and Terms are subject to change at any time without notice. SoFi Personal Loans can be used for any lawful personal, family, or household purposes and may not be used for post-secondary education expenses. Minimum loan amount is $5,000. The average of SoFi Personal Loans funded in 2023 was around $33K. Information current as of 2/26/24. SoFi Personal Loans originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org). See SoFi.com/legal for state-specific license details. See SoFi.com/eligibility for details and state restrictions.

✝ To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.

©2024 Social Finance, LLC All rights reserved.
TLS 1.2 Encrypted
Equal Housing Lender