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Embarking on a home renovation to transform your living space is an exciting endeavor. Home improvements are also an investment that can significantly increase the value of your property, so it’s important to track expenses to be prepared for capital gains tax when you sell your home. Tracking home improvement costs can also help homeowners stick to a budget and ensure a greater return on investment.

Let’s take a closer look at how to track home improvement costs, which upgrades qualify for tax purposes, and options for financing a home renovation.

Why Track Home Improvement Costs?

Amid all the work and logistics that goes into renovations, tracking home improvement costs might not feel like a high priority. However, having documented home improvement costs can help reduce potential capital gains tax when it’s time to sell your home.

The IRS allows qualifying home improvement costs to be added to the original purchase price of the property, known as the cost basis, when calculating capital gains on a home sale. The basis is subtracted from the home sale price to determine if you’ve realized a gain and subsequently owe tax. But by adding home improvement expenses to your cost basis, the profit from the sale that’s subject to taxes decreases — lowering or even potentially exempting you from property gains tax.

Besides home improvements, other factors that affect property value, like location and the current housing market, could make a property sale subject to capital gains tax.

Here’s an example of how capital gains tax on a home sale works: A married couple that purchased a home for $200,000 in 2001 and sold it for $750,000 in 2024 would have a $550,000 realized gain. Assuming that the sellers made this home their main residence for two of the last five years, they’d be able to exclude $500,000 of the gain from taxes. The remaining $50,000 would be taxed at 0%, 15%, or 20% based on the sellers’ income and how long they owned the property.

However, the sellers spent $70,000 on home improvements during their 23 years of homeownership, so the capital gains calculation would be revised to: $750,000 – ($200,000 + $70,000) = $480,000. Tracking home improvement costs in this example exempted the sellers from needing to pay capital gains taxes.

Note that single filers may exclude only the first $250,000 of realized gains from the sale of their home. Eligibility for the exclusion also requires living in the home for at least two years out of the last five years leading up to the date of sale. Those who own vacation homes should note that the IRS has very specific rules about what constitutes a main residence.


💡 Quick Tip: A Home Equity Line of Credit (HELOC) brokered by SoFi lets you access up to $500,000 of your home’s equity (up to 90%) to pay for, well, just about anything. It could be a smart way to consolidate debts or find the funds for a big home project.

Qualifying vs Nonqualifying Improvements

The IRS sets guidelines that determine what home improvements can be added to your cost basis for calculating capital gains tax. Thus, not every dollar spent on sprucing up your home’s curb appeal or living space needs to be tracked for tax purposes. Generally, tracking costs is a good idea for any home improvements that increase your home’s value and fall outside general repair and upkeep to maintain the property’s condition.

Qualifying Improvements

According to the IRS, improvements that add value to the home, prolong its useful life, or adapt it to new uses can qualify. This includes the following categories and home improvements:

•   Home additions: Bedroom, bathroom, deck, garage, porch, or patio

•   Home systems: HVAC systems, central humidifier, central vacuum, air/water filtration systems, wiring, security systems, law and sprinkler systems.

•   Lawn & grounds: Landscaping, driveway improvements, fencing, walkways, retaining walls, and pools

•   Exterior: Storm windows, roofing, doors, siding

•   Interior: Built-in appliances, kitchen upgrades, flooring, wall-to-wall carpeting, fireplaces

•   Insulation: Attic, walls, floors, pipes, and ductwork

•   Plumbing: Septic system, water heater, soft water system, filtration system

It’s also important to track any tax credits or subsidies received for energy-related home improvements, such as solar panels or a heat pump system, since these incentives must be subtracted from the cost basis.

Recommended: How to Find a Contractor for Home Renovations and Remodeling

Nonqualifying Expenses

Owning a home requires routine maintenance and occasional repairs — think fixing a leaky pipe or mowing the lawn. And the longer you own your home, the greater the chance you reapproach past home improvements with a fresh design or modern technologies. The IRS considers regular maintenance and any home improvement that’s been later replaced as nonqualifying costs.

For instance, a homeowner could have installed wall-to-wall carpet and later swapped it out for hardwood floors. In this case, the hardwood floors would qualify, but not the carpeting.

Recommended: The Costs of Owning a Home

How to Track Your Costs

Developing a system for tracking home improvement costs depends in part on where you are in the process. Here’s how to get track home improvement costs before, during, and after a renovation project.

Before You Renovate

The average cost to renovate a house can vary from $20,000 to $80,000 based on the size of the home and type of improvements. Given this range in cost expectations, it’s helpful to create an itemized budget that estimates the cost for each improvement. It’s hardly uncommon for renovations to take more time and money than expected, so consider budgeting an extra 10-20% for the unexpected.

Your itemized budget can be leveraged for tracking home improvement costs once the project starts. Simply plug in the completion date, cost, and description for each improvement, and keep receipts, to itemize the expense as it’s incurred.

Recommended: How to Make a Budget in 5 Steps

Keep Detailed Records

Tracking home improvement costs goes beyond crunching the numbers. The IRS requires documentation to adjust the cost basis on a property. As improvements are made, catalog contractor and store receipts and take pictures before and after the work is done to document the improvements for your records. Store these records digitally in a secure and accessible location; the IRS recommends keeping records for three years after the tax return for the year in which you sell your home.

Catch Up After the Fact

Tracking home improvement costs after the work has been completed is doable, but it requires more effort. If your renovations required any building permits, your municipality should have records on file.

For other projects, start by searching your email for receipts and records can help find a paper trail and track down documentation. Reach out to contractors you worked with for copies of missing receipts or invoices. If you paid with a check or credit card, you can browse through your previous statements or contact the bank for assistance.

Consult a Tax Pro

Taxes are complicated. If you have any doubts about what improvements qualify, consult a tax professional for assistance. Homeowners who used their property as a home office or rented it for any duration could especially benefit from a tax pro. Any property depreciation that was claimed in previous tax years may need to be recaptured if the home sale price exceeds the cost basis.

Home Improvement Financing Options

Renovations and upgrades to your home can be expensive. Many homeowners use a combination of savings and financing to pay for home improvements.

•   HELOC: A Home Equity Line Of Credit lets homeowners tap into their existing equity to fund a variety of expenses, such as home improvements. With a HELOC, you can take out what you need as you need it, rather than the full amount you’re approved for, which is often 75%-85% of your home’s value. You only pay interest on the amount you draw.

•   Cash-out refinance: Some owners take out a new home loan that allows them to pay off their old mortgage but also provides them with a lump sum of cash that they can use for home repairs (or other expenses). How much cash you might be able to take will depend on the amount of equity you have in your home.

•   Personal loan: An unsecured personal loan could be a good option for quick funding that doesn’t require using your home as collateral. The interest rate and whether you qualify are largely based on your credit score.

•   Credit card: Financing a home improvement with a credit card can help earn cash back or rewards on your investment. However, these perks should be weighed against the risk of higher interest rates. If using a 0% interest credit card, crunch the numbers to ensure you can pay off the balance before the introductory offer expires.


💡 Quick Tip: You can use money you get with a cash-out refi for any purpose, including home renovations, consolidating other high-interest debts, funding a child’s education, or buying another property.

The Takeaway

Tracking home improvement costs from the start can help stick to your project budget and lead to significant tax savings when it comes time to sell your property. A HELOC is one way to fund home improvements, and may be especially useful to borrowers who aren’t sure how much money they will need for home projects. If you’re unsure whether a home improvement qualifies under the IRS rules around capital gains tax on home sales, consult a tax professional.

SoFi now offers flexible HELOCs. Our HELOC options allow you to access up to 90% of your home’s value, or $500,000, at competitively low rates. And the application process is quick and convenient.

Unlock your home’s value with a home equity line of credit brokered by SoFi.

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Photo credit: iStock/Cucurudza

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.

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

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

^²SoFi Bank, N.A. NMLS #696891 (Member FDIC), offers loans directly or we may assist you in obtaining a loan from SpringEQ, a state licensed lender, NMLS #1464945.
All loan terms, fees, and rates may vary based upon your individual financial and personal circumstances and state.
You should consider and discuss with your loan officer whether a Cash Out Refinance, Home Equity Loan or a Home Equity Line of Credit is appropriate. Please note that the SoFi member discount does not apply to Home Equity Loans or Lines of Credit not originated by SoFi Bank. Terms and conditions will apply. Before you apply, please note that not all products are offered in all states, and all loans are subject to eligibility restrictions and limitations, including requirements related to loan applicant’s credit, income, property, and a minimum loan amount. Lowest rates are reserved for the most creditworthy borrowers. Products, rates, benefits, terms, and conditions are subject to change without notice. Learn more at SoFi.com/eligibility-criteria. Information current as of 06/27/24.
In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.

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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When a couple decides to divorce, what happens to the house will depend on several factors, including state law. The partners might continue to jointly hold the property, sell the home, or one could buy the other out.

Getting divorced is usually not an easy situation. Setting aside the major impact on one’s emotional life and family, it can be challenging to tackle what happens to the home and the mortgage, which often represent the biggest asset a married couple owns.

Here, you’ll learn the answer to important questions about divorce and your home, including:

•   When you get divorced, what happens to the house?

•   How does assumption of a mortgage after divorce impact taxes?

•   How can your credit score be affected in a divorce with a mortgage?

Who Gets the House in a Divorce?

In an ideal divorce scenario, spouses will agree on how all property will be divided (and address other major concerns, such as child custody and debt responsibilities). If you and your spouse are able to agree to all terms of the separation without needing litigation, you can get an uncontested divorce much more affordably.

But what happens to the house when you get divorced and can’t agree on things? That often comes down to where you live. State law can play a key role in the outcome.


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

Divorce and State Laws

When you get married, it is your state, not the federal government, that awards marriage licenses. Just think about the classic marriage ceremony line, “By the power vested in me by the state of XYZ.”

That means, state laws, rather than federal laws, will impact property division and debts in a divorce. In general, you’ll be in one of two types of states:

•   Common law property

•   Community property

The type of state you live in will dictate how the judge will approach the division of assets in a divorce proceeding.

Note that prenuptial and postnuptial agreements can impact the application of these laws and the assumption of a mortgage (and other property) in a divorce.

Common Law Property States

In a common law property state (also called separate property state), a married couple can own assets separately, like a car. Some spouses may choose not to open a joint bank account; some may keep their earnings and their debts separate.

Living in a common law property state means one spouse can even make a major purchase, such as a house, solely in their name, with only their name on the deed. However, that doesn’t mean that partner would necessarily automatically get the house in a divorce. Instead, common law property states use equitable distribution.

When engaging in equitable distribution, the judge will do their best to fairly distribute all assets. One spouse may get the house, but the other could get a mix of various assets roughly equivalent to the property.

Equitable distribution does not necessarily mean a 50/50 split. Instead, the judge will consider factors such as:

•   How long you’ve been married

•   How much each spouse earns, as well as future earning projections

•   Your age and health

•   Whether one spouse has another property to live in.

From these and other factors, the judge will attempt an equitable distribution of all assets that is fair, but not necessarily equal. The judge does not consider fault during these proceedings, even if one spouse is deemed responsible for the divorce, say, due to infidelity.

Most states are common law states, but you can check with a divorce attorney or your state’s website to understand the unique divorce laws where you live. Here’s a list of common law states:

•   Alabama

•   Alaska

•   Arkansas

•   Colorado

•   Connecticut

•   Delaware

•   Florida

•   Georgia

•   Hawaii

•   Illinois

•   Indiana

•   Iowa

•   Kansas

•   Kentucky

•   Maine

•   Maryland

•   Massachusetts

•   Michigan

•   Minnesota

•   Mississippi

•   Missouri

•   Montana

•   Nebraska

•   New Hampshire

•   New Jersey

•   New York

•   North Carolina

•   North Dakota

•   Ohio

•   Oklahoma

•   Oregon

•   Pennsylvania

•   Rhode Island

•   South Carolina

•   South Dakota

•   Tennessee

•   Utah

•   Vermont

•   Virginia

•   West Virginia

•   Wyoming

Community Property States

Only a handful of states are considered community property states, which strive for an even split of all assets. When you get married in a community property (also called shared property) state, you own all assets acquired during the marriage together, no matter who purchased an item or took on a debt.

In such states, property must be divided 50/50. Because you can’t split a house down the middle, the court will work to find other ways to ensure equitable distribution of assets. (For instance, if one spouse gets a home with $30,000 of equity, the other spouse must receive $30,000 of equity in some other way.)

Here’s a list of community property states:

•   Arizona

•   California

•   Idaho

•   Louisiana

•   Nevada

•   New Mexico

•   Texas

•   Washington

•   Wisconsin.

Option 1: Sell the House and Split the Profits

The first and most obvious option for spouses to consider when getting a divorce is to sell the house and split the profits. If neither spouse wants to retain the house, this is ideal — both spouses can walk away with something to fund their next move, whether it’s an apartment, condo, or another house.

Of course, that can be easier said than done. Selling a house can be a lot of work, so you’ll need to get on the same page about who’s doing what to get the house ready, work with a real estate agent, and maintain the mortgage and other costs until it’s sold.

This may be your only option if neither you nor your spouse can afford (or wants to keep) the house on your own. Getting used to living on a single income can be a tough transition and require smart budgeting after divorce.

Pros

•   It’s an easy way to split profits 50/50.

•   If the market is good, both spouses could benefit.

•   No one has to live in a house with difficult memories.

Cons

•   Selling a house requires a lot of work.

•   The market may not be favorable.

•   Children from the marriage may not be ready to say goodbye to their home.

Option 2: Maintain a Joint Mortgage

Spouses who are able to remain civil and trust each other may consider keeping a joint mortgage for one of two reasons:

•   Spouses can take turns living in the house and spending time with kids. This means kids don’t have to go back and forth from two places and can keep some routine in their lives in what’s an otherwise turbulent time for them.

•   Spouses with a nice house in a great market can earn and split profits by renting out the home or using it as a vacation rental.

Pros

•   There’s no complicated paperwork to transition an asset or difficult process to sell the house.

•   Kids can retain a sense of normalcy by living in the home with their parents.

•   In a good market, spouses can earn a profit by renting out the house together.

Cons

•   Eventually, you’ll still likely want to sell the home. You’re simply putting it off now by retaining the mortgage.

•   Ending a marriage is tough; there’s a cost of divorce, both financially and emotionally. Things might be civil now, but that can always change — and owning property together could be difficult.

•   Without profit from the sale of the home, spouses may have difficulty finding a new place to live after the divorce.

Recommended: How to Prepare Financially for a Divorce

Option 3: One Partner Buys Out the Other

In an uncontested divorce, spouses may agree that one person can keep the house and the other will receive something else to be financially fair — money or other assets, usually.

But this can also be worked out in the courts during a divorce settlement. For instance, a spouse may choose to let their partner retain the house in exchange for not having to make alimony payments. Or the spouse not assuming the mortgage in the divorce may simply get the rest of the assets.

To ensure equitable compensation, the spouse not getting the house could even receive monthly payments from the spouse who retains the mortgage over a set amount of time. Divorce attorneys can get creative with these arrangements to find a solution both partners are happy with.

Pros

•   There’s no urgency to sell the house.

•   The spouse who wants to keep the house can retain it.

•   The spouse who doesn’t want to keep the house gets compensated fairly in another way.

Cons

•   This isn’t necessarily an easy decision if both spouses want to keep the house.

•   Because home values can go up or down, the split may not be equitable in the long run.

•   A fight over the house in court could make the divorce more acrimonious (and difficult for any children involved).

Tax Implications

Fortunately, there aren’t major tax implications if you get the house in a divorce. The IRS does not treat property transfers between spouses — even those divorcing — as a sort of financial gain or loss. Instead, you’ll treat the property as gift income for taxes, but the property value is not taxable.

As with most aspects of taxes, there are always exceptions. Reach out to a tax accountant, or review IRS guidelines if you have questions.

Credit Score Implications

Property distribution in a divorce won’t directly impact your credit score either. That said, if you are the spouse who does not retain the house, your name will no longer be on the mortgage loan. That affects your credit mix and length of credit history, which can impact your score in the long run.

Similarly, if you are the spouse who is assuming a mortgage after divorce, but you suddenly find that you’re struggling to make on-time payments because of your new financial situation. You could risk damaging your score by falling behind on payments.

And what if a spouse stops paying a mortgage during a divorce, when your name is still on the loan? That can indeed hurt your credit score, so it’s crucial that you and your spouse work together to make sure you’re making these and other shared payments every month.

Recommended: Am I Responsible for My Spouse’s Debt?

How Refinancing Can Help

If you are the spouse who keeps the home in a divorce, the court may require you to refinance to get your ex’s name off the mortgage.

Doing this can be great not just for the convenience of getting their name off the loan. You may be able to work with a lender to obtain a more manageable monthly payment based on your single income. Depending on your credit and the current market conditions, you might even get a lower interest rate.

In this case, refinancing a home mortgage could be an advantageous move for you.


💡 Quick Tip: Have you improved your credit score since you made your home purchase? Home loan refinancing with SoFi could get you a competitive interest rate with lower payments.

The Takeaway

Divorce can often be a tough and tumultuous time. One of the big financial decisions to make is what happens to the house when your union ends. The state you live in may impact how the court rules in the division of assets. You may both continue to hold the property jointly, sell it, or one partner might buy the other one out. And if you end up with the house, you may need to (or want to) refinance your mortgage to make payments more manageable. Working with a divorce lawyer may be your best bet for navigating all these difficult questions and decisions.

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

SoFi Mortgages: simple, smart, and so affordable.

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Photo credit: iStock/Sundry Photography

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

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

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

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

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

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

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The chance to study abroad offers unique opportunities and experiences you simply can’t get at home. Taking some time to attend a college or university in another country can be personally and professionally enriching, and even life-changing. These factors can make studying abroad absolutely worth it.

But going to school in a foreign country isn’t for everyone. Being away from home and loved ones can lead to homesickness and the feeling you’re missing out (FOMO) on important family or college events back on your home turf. Depending on where you study, there could be a language barrier that can be frustrating and the cost could be higher than staying at your home university.

If you’re thinking of attending school in another country, there are numerous factors to consider. Read on to learn about how studying abroad works, its benefits and costs, and how to decide whether or not it’s worth it.

What Does It Mean to Study Abroad?

College study abroad programs allow a student to pursue undergraduate or graduate study in another country. Each year, more than 300,000 American students study, engage in internships, or volunteer abroad for academic credits, according to the U.S. Department of State. Study abroad college programs typically last one semester or a full year, but can be as short as a couple of weeks.

You may be able to study abroad through your home university’s study abroad program. This is often the most straightforward route, since it will be easy to earn credits that will directly apply to your degree requirements.

However, there are other ways you can spend a semester or year attending college in a foreign country. One is by directly enrolling at a foreign university where you may be able to use those course credits towards your degree at your home college or university. Another option is to go through a third-party study abroad provider such as Academic Programs International (API), the Council on International Education Exchange (CIEE), or the American Institute for Foreign Study.


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

Why Study Abroad Is Worth It

Going to school in another part of the world can be an incredible opportunity. Here’s a look at some of the benefits of studying abroad.

It Can Change the Way You See the World

Studying in another country allows you to become a more well-rounded and worldly individual. Immersing yourself in a different culture, set of customs, and traditions can broaden your horizons and expand your worldview. Meeting and interacting with an international mix of people can help you gain other perspectives and a deeper understanding of global issues. It also helps foster tolerance, empathy, and more open-mindedness.

Learn a Foreign Language

There’s only so much of a second language you can learn in a classroom. A great way to gain fluency in a foreign language is by living in that country and conversing with the locals. Even if your abroad program offers classes in English, living in a foreign country can help you become proficient or fluent in another language. This, in turn, can expand your employment possibilities and attractiveness to employers, and might allow you to work abroad after college.

Broaden Your Social Network

Even if you participate in a study abroad program run by your home university, you’ll have an opportunity to meet new people — both from the U.S. and abroad. The connections you make can turn into life-long friendships and provide social contacts who may be helpful for networking after graduation.

Increase Your Self-Confidence

Living on your own in a foreign country, where you don’t have a built-in safety net, can foster more independence and self-reliance. Navigating everyday life somewhere unfamiliar gets you out of your comfort zone and you’ll most likely have to learn to problem-solve and make decisions on your own. Choosing to study abroad can result in more self-confidence than if you had stayed at your home school all four years.

Recommended: Using Student Loans for Living Expenses and Housing

Costs Could Be The Same Or Lower

Depending on the type of program and location you choose, the cost of study abroad could be comparable to your home university. If you choose your school’s study abroad program, the tuition may be the same as if you stayed stateside. If the cost of living is lower (or the exchange rate is favorable to the U.S.dollar) where you travel to, you could potentially end up spending less.

Generally, directly enrolling in a foreign institution is cheaper than study abroad programs run by American universities or third-party providers. In many cases, you can also use your financial aid package to study abroad.

When Study Abroad Isn’t Worth It

While studying abroad offers numerous perks, there are also some drawbacks. When mulling over whether or not you should study abroad, here’s some potential cons to keep in mind.

Risk of Homesickness

Living and studying in another part of the world can result in feeling intensely homesick. Even though you might have new friends and be surrounded by others, being far from your loved ones and long-time friends may cause you to feel lonely and depressed. If you’re especially close to your family, you may experience FOMO because you’re not able to get home for events, like birthdays, weddings, or family gatherings that occur while you’re abroad.

Recommended: A Guide to Making Friends in College

Language and Culture Barriers

In a foreign country, everything will likely be different — the food, the language, the architecture. Even the local customs and social norms may be different. While this can be a positive (and a reason to go), you might find it hard to acclimate and constantly feel like a stranger in a strange land.

Costs May Be High

While studying abroad may seem like a priceless opportunity, it can come with a hefty price tag. Semester abroad programs through a third-party provider can run between $15,000 and $22,000 depending on location. These programs usually include housing and sometimes meals.

Aside from tuition, you will need to budget for other expenses like housing (if it’s not included), meals, airfare, transportation, entertainment, and books and supplies.

If your financial aid package, including federal student loans, isn’t enough to cover the tab, some private student loans can help fill in funding gaps. However, private loans don’t offer the same borrower protections (like income-driven repayment plans) as their federal counterparts.


💡 Quick Tip: Even if you don’t think you qualify for financial aid, you should fill out the FAFSA form. Many schools require it for merit-based scholarships, too.

International Credits May Not Transfer

If you go on a study abroad program run by your college or a major third-party provider, you likely won’t have any issues transferring credits, but this could be a problem if you enroll directly in a foreign university. Non-transferring credits could make it harder to graduate on time.

What to Know About Academics When Studying Abroad

Academically, studying alongside international students can offer a more diverse educational experience by exposing you to new insights, viewpoints, and ideas.

Studying abroad also gives you the opportunity to learn from professors who may use different teaching methods than American professors, such as greater use of group discussions or project-based learning. Plus, you may have the chance to take field trips to historical sights and museums as part of the curriculum.

Studying abroad also comes with some academic limitations. All majors may not be available as part of a study abroad program, even if your home school has an affiliation with a foreign university. For some students (particularly those with STEM majors), studying abroad could make it harder to complete all of their degree requirements within four years, leading to higher education costs.

The Takeaway

There’s a lot to take into consideration when thinking about whether or not you should study abroad, including cost, whether or not course credits are transferable, and how it will feel to be far from home for an extended period of time.

For many students, studying abroad is definitely worth it. Plus, there are scholarships, grants, and other financial aid options available to help offset the expenses. Ultimately, whether study abroad is worth the cost depends on your individual circumstances, goals, and priorities.

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

Is it a good idea to study abroad?

Studying abroad can be a fantastic opportunity for personal, academic, and professional growth. It allows you to immerse yourself in a new culture, gain a broader perspective, and develop valuable skills, such as independence and adaptability. It can also enhance your resume, making you more competitive in the job market.

However, it’s important to consider language barriers, cultural differences, and potential homesickness. Overall, if you’re open to new experiences and willing to step out of your comfort zone, studying abroad can be a life-changing experience.

Is study abroad worth the cost?

While studying abroad can increase the cost of your college education, many students find the experience to be invaluable. The benefits of studying abroad, such as personal growth, cultural immersion, and enhanced academic and career opportunities, often outweigh the financial costs. Plus, there are scholarships, grants, and other financial aid options available to help offset the expenses.

Ultimately, whether study abroad is worth the cost depends on your individual circumstances, goals, and priorities.

What are the pros and cons of studying abroad?

Studying abroad offers numerous advantages, such as experiencing a new culture, gaining independence, expanding your network, and improving language skills. It can also enhance your academic and career prospects, as employers often value the skills and experiences gained from studying abroad.

But there are challenges as well, including language barriers, cultural differences, homesickness, and the financial cost. It’s essential to weigh these pros and cons carefully and consider how studying abroad aligns with your personal and academic goals.

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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.

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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College study abroad programs offer students an extraordinary chance to explore a new part of the world while earning credit toward a degree. Each year, more than 300,000 American students study, engage in internships, or volunteer abroad for academic credits, according to the U.S. Department of State.

Despite the culturally rich and memorable experience this offers, the cost of studying abroad can be a barrier to many students. On average, study abroad programs cost between $15,000 and $22,000 per semester.

Read on to learn more about the costs involved in spending a semester or year abroad, how financial aid can help, plus other ways to make studying abroad more affordable.

Average Cost of Study Abroad Programs

The cost of studying abroad depends on two main factors — where you go and whether you enroll directly through your host university or use a third-party provider.

Generally, enrolling in a third-party study abroad program is more expensive. It provides you with more hand-holding and guidance in the pre-planning stages and while you’re living and studying overseas.

Average study abroad costs through a third-party provider can range anywhere from $15,000 to $22,000 per semester depending on location. These programs usually include housing and sometimes meals. Depending on the country, the cost of tuition could be significantly lower if you directly enroll in a foreign university.

If your home school has its own study abroad program, the tuition may be the same as it is stateside, though they may tack on some extra fees.

The cost of studying abroad goes beyond tuition, however. You will need to budget for other expenses like housing (if it’s not included), meals, airfare, transportation, entertainment, and books and supplies.


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

What the Cost to Study Abroad Covers

Here’s a breakdown of some of the key costs involved in studying abroad.

Getting There

You’ll need a round-trip plane ticket to get to and from your study abroad program, which can cost anywhere from several hundreds to thousands of dollars, depending on what part of the world you travel to. On top of your flight costs, you’ll need a passport. A new U.S. passport costs $165 and can take up to 10 weeks to process.

Many countries also require American students to get a travel visa in advance when visiting the country for studies. Costs vary widely by country. A student visa from Australia costs around $450, while one from South Africa runs about $36. Some countries, like Germany, don’t require U.S. visitors to get a student visa for studying abroad.

Recommended: 11 Ways to Make College More Affordable

Tuition and Living Costs

Typically, the price of a study abroad program will include tuition and fees at your host school, as well as some form of housing. If you directly enroll in a foreign university, you’ll need to pay tuition and housing separately. Either way, food is generally an additional expense.

Here are some examples of how much it can cost to study and live abroad:

In you go to Italy:

•   Average cost of a semester (including housing) through a third-party provider: $17,000-$21,300

•   Average cost of a semester (without housing) through direct enrollment: $1,500-$6,000

•   Average monthly cost of living (including rent): $1,200-$1,700

If you go to Costa Rica:

•   Average cost of a semester (without housing) through direct enrollment: $1,500-$3,000

•   Average cost of a semester (including housing) through a third-party provider: $8,500-$11,500

•   Average monthly cost of living (including rent): $1,100-$1,400

Recommended: How to Budget as a College Student

Local Transportation

Transportation expenses likely aren’t covered in the cost of your program. You might decide to take public transportation and purchase a metro pass, or rely on rideshare services. Either way, you’ll likely encounter some form of transportation cost while you’re abroad.

You may also want to take excursions to other cities or countries during time away. So it’s a good idea to factor in some extra funds for airfare/train tickets, food, and lodging for nearby travel. Keep in mind that financial aid won’t cover voluntary travel expenses beyond the cost of your initial round-trip flight.

Recommended: What to Do When Financial Aid Isn’t Enough

Insurance

Many U.S. universities require students studying abroad to enroll in a health emergency insurance plan to make sure they have adequate coverage for medical issues and emergencies. At New York University, for example, students studying abroad must be covered under the NYU sponsored Study Away health insurance plan, which costs around $72 per month.

Other Fees

Your home school may charge you a study abroad administrative fee. At Washington State University, for example, this fee runs around $300 for one semester abroad (for in-state students). At the University of Iowa, it runs around $1,140 for one semester abroad (for in-state students). You can check with your school’s education abroad office to see how much you might be charged.

In addition, the study abroad program you choose may come with optional costs, like class field trips, short excursions, or cooking classes with a local chef.

Recommended: How to Work Abroad After College

How to Pay for Study Abroad

If you’re worried about the high cost of studying abroad, there is good news: Much of your existing financial aid can likely be used for study abroad costs. Here’s a look at how to find funding for study abroad.

Grants and Scholarships

To find out what financial aid you qualify for, you’ll want to fill out the Free Application for Federal Student Aid (FAFSA). In addition to FAFSA-based scholarships and grants, there are many scholarships targeted specifically at students studying abroad, which you can uncover using a scholarship search engine. Third-party companies that facilitate study abroad programs also often have their own scholarships.

Federal Student Loans

Federal student loans (which may be subsidized or unsubsidized) can be used to pay for study abroad expenses, provided the school you’re attending abroad is eligible to participate in the Direct Loan program.

Federal study abroad loans for U.S. students can be used to pay tuition and fees, room and board, and other eligible expenses. Any leftover funds are disbursed to you, which you could use for travel to your destination country or basic living expenses. However, federal loans may not cover all the costs of studying overseas.


💡 Quick Tip: Federal student loans carry an origination or processing fee (1.057% for Direct Subsidized and Unsubsidized loans first disbursed from Oct. 1, 2020, through Oct. 1, 2024). The fee is subtracted from your loan amount, which is why the amount disbursed is less than the amount you borrowed. That said, some private student loan lenders don’t charge an origination fee.

Private Student Loans

If you max out the amount you can borrow in federal loans, you can turn to private student loans to finance the remaining costs. Approval for private student loans typically hinges on your credit history. You may need a cosigner for approval if you haven’t established a credit history or your credit score is lower than the minimum score the lender requires.

Private student loans offer more borrowing power than you can get with the U.S. government, but don’t offer the same protections (like income-based repayment plans). Rates are also typically higher.

Affordable Study Abroad Programs to Check Out

Here a sampling of study abroad programs that often offer affordable prices:

•   CIS Abroad (worldwide programs)

•   World Endeavors (worldwide programs)

•   International Studies Abroad (ISA) (worldwide programs)

•   Maximo Nivel (programs in Central and South America)

The Takeaway

Spending a summer, semester, or full year abroad can significantly enhance your college experience. But it can also significantly increase the cost, coming in at upwards of $15,000 per semester. Fortunately, there are funding options available to help students manage the cost of study abroad, including scholarships, grants, and 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.

FAQ

What’s the cheapest country to study abroad in?

Some of the cheapest locales to study abroad in include:

•   Kyrgyzstan

•   Malaysia

•   Central Asia

•   Hungary

•   Poland

•   Kenya

•   Brazil

•   Mexico

•   South Africa

•   Portugal

Does FAFSA cover study abroad?

Yes. If you qualify for student aid through the Free Application for Federal Student Aid (FAFSA), your awarded aid funds can typically be used toward study abroad costs. The school you attend while studying abroad must participate in federal aid programs, however, and your FAFSA aid might not cover the entire cost of studying in another country.

Is a year too long to study abroad?

Not necessarily. How long you should study abroad is a personal preference and based on your budget. The latest 2023 Open Doors U.S. Study Abroad Survey found that 49% of study abroad students go for the summer term, 30% go for one semester, 2.4% go for one year.

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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. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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

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

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

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Going to college is a costly proposition. On top of tuition and fees, you’ll also need to come up with funds for food, housing, and other living expenses. It can be helpful to develop a rough estimate of what expenses you can expect in college well before you head off to campus and come with a monthly student budget.

The question is, how much money do college students spend per month?

The answer will depend on several factors, including location, extracurricular activities, whether you’re commuting or living on campus, and lifestyle preferences. According to the College Board, students can expect to spend around $2,932 a month (or $26,390 for a nine-month period) on living expenses for the 2024-25 school year.

To break that number down, let’s take a closer look at how much college students spend on food, housing, and other expenses.

Financial Considerations for College Students

The first step towards creating a college student monthly budget is to complete the Free Application for Federal Student Aid (FAFSA). This will give you access to federal financial aid, including grants, scholarships, work-study, and student loans. Colleges may also use the FAFSA when allocating their own scholarships and grant awards to students.

Financial aid is intended to be used for college-related expenses, such as tuition and fees, textbooks and supplies, and room and board. However, it may not fully cover the cost of attending college. To cover any gaps in funding, you may need to tap multiple sources of money, such as savings, summer jobs, and taking out private student loans.

To help students figure out exactly how much money they’ll need for college, schools typically post the average cost of attendance on their websites. These listings will usually include the average cost of housing, food, books/supplies, transportation, and personal expenses for students attending that school.


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

What Do College Students Spend Money On?

Budgeting in college will look different for every student. Some college costs will get paid up front (like tuition, fees and, in some cases, room and board), while other expenses will need to be paid on a monthly or daily basis. To estimate how much spending money you’ll need, let’s take a closer look at what college students spend money on each month, and how much they typically spend in each category.

Food

Food eats up about 30% of a college student’s monthly budget, according to the College Board. To build out a college student food budget, you’ll need to consider whether you’ll be on the school’s food plan, if you’ll do some cooking, and how often you’ll likely eat out.

On average, college students spend $670 on food per month, according to the Education Data Initiative. To break that total down further, students spend, on average, $410 a month eating off-campus and about $260 a month on groceries for cooking meals at home.

College students can choose to pay for a meal plan that provides an allotted number of meals from campus dining halls or restaurants. (Freshman are often required to purchase a meal plan). Meal plans have the benefit of being a fixed and predictable cost. The average meal plan costs $450 a month.

Housing

How much do college students spend per month on housing? Monthly housing costs will vary depending on location and whether a student lives on or off campus.

According to the College Board’s 2023 Trends in College Pricing Report, average room and board ranged from $9,970 at public two-year institutions to $14,650 at private four-year institutions for the 2023-2024 academic year. Note that room and board includes both housing and food costs, so let’s unpack the housing portion further.

The cost of living in a dorm or residence hall usually varies based on the occupancy per bedroom and number of people in a suite or apartment. You can expect to pay more for a single bedroom than a double or triple that you’ll share with other students. For example, the cost of a single occupancy room at UCLA was $15,114 for the 2023-2024 academic year; living in a double or triple cost $11,446 and $8,475, respectively.

How much students spend on off-campus housing is influenced by the cost of living by state and city, and whether they’ll live alone or with roommates. The average monthly housing cost in California ranges from $1,360 to $2,649 per month, while the average cost for Pennsylvania is between $872 and $1,259 per month.

Transportation

From getting to class to traveling home for holidays and breaks, students need to factor transportation costs into their monthly budget. How much should college students spend a month on transportation?

If you’ll be living on campus, you likely won’t need to spend a lot, since classes may be within walking distance and colleges typically provide some form of transit services, like shuttle buses, to connect academic buildings. Students living off campus may require a car to get to class, which can significantly add to transportation costs. Filling up at the pump alone costs $164 a month for the average driver in the U.S..

Transportation costs will also vary by where you go to school — and how far away it is from home. At the University of North Carolina at Chapel Hill, for example, students (including those living on and off campus) spend an average of $976 per academic year on transportation. At the University of Texas at Austin, student transportation costs run $1,682 per academic year on average.

Recommended: The Financial Benefits of Community College

Miscellaneous

Your monthly college expenses will likely go beyond the big categories, like food, housing, and transportation. Some possible miscellaneous costs you may want to including in your college budget:

•   Entertainment (e.g, going to the movies, concert tickets)

•   Cell phone plan

•   Cable/internet
Prescriptions/medical expenses

•   Clothing

•   Gym membership

•   Hobbies

•   Personal grooming

•   Gifts for friends/family

•   Travel for fun (such as weekend/spring break trips with friends)

To keep your miscellaneous and personal costs from getting too high, you’ll want to keep an eye out for student discounts and take advantage of free activities offered through your college.

Is College Worth It?

There are many reasons to go to college — exploring career paths, growing your social network, having fun, and learning life skills — but the return on investment (ROI) is a key consideration when comparing schools and programs. To determine your ROI, you’ll need to look at the cost of going to college and its impact on your potential future earnings.

For the 2023-2024 academic year, the average cost of tuition and fees for a public four-year college was $11,260 as an in-state student and $29,150 for out-of-state students. Meanwhile, the average sticker price for attending a private four-year college was $41,540.

When you multiply annual college costs by four years, the final tally is no small sum. And while graduates with bachelor’s degrees typically earn more than those without, you likely won’t recoup your investment right away. So is college worth it?

According to a report by the Institute for Higher Education Policy , for the majority of students (especially those attending a public institution), having a college degree leaves them better off financially in comparison to peers who did not go to college. Their analysis found that 83% of schools (serving 93% of undergraduates) provide an ROI within 10 years. That means that within 10 years, students recoup what they would be making with a high school diploma plus the cost of their college degree.

In short, college may well be worth it.


💡 Quick Tip: Would-be borrowers will want to understand the different types of student loans that are available: private student loans, federal Direct Subsidized and Unsubsidized loans, Direct PLUS loans, and more.

Pros and Cons of Going to College Online

Online college and virtual learning opportunities have become more common following the Covid-19 pandemic. On a per credit basis, online college tuition isn’t always cheaper. However, a virtual college student’s monthly budget often has lower expenses for room and board than students who live on or close to campus.

Here’s a look at some potential advantages and drawbacks to going to college online.

Pros

•   Flexible schedule: Classes are often designed to accommodate students with work or family responsibilities.

•   Convenience: Students can learn from anywhere — no commuting or relocating required.

•   Lower living expenses: When attending college virtually, you can live anywhere (even at home), which can save money on housing.

Cons

•   Fewer majors available: Degree programs and majors that require hands-on learning like lab exercises are unlikely to be offered online.

•   Limited networking: Virtual students have less opportunities to engage with professors and classmates.

•   Increased screen time: A greater reliance on technology for lectures and coursework can mean a lot of time spent in front of a computer.

How Can I Increase My Chances of Getting a Job After College?

You can increase your chances of getting a great job after college by preparing for the job hunt well before graduation.

One key strategy is to complete a college internship either during the semester or over the summer. This can provide valuable work experience while allowing you to try out different careers and job sectors. Internships are typically part-time commitments during the academic year and may be full-time during summer break. Some internships are paid, while others count as college credit. Applying and interviewing for an internship is also an opportunity to hone your interview skills before entering the post-grad job market.

You can also better your chances of getting a good job after college by taking advantage of on-campus resources. College career services offices can often provide job leads, networking opportunities with alumni and employers, and assistance preparing for interviews. It’s also a good idea to ask a professor for a letter of recommendation — a common requirement for job applications — while still enrolled in school.

The Takeaway

A college student’s monthly budget will depend on multiple factors, including geographic location, whether they live on or off campus, the type of institution, and personal habits. After tuition and fees, housing and food often represent the largest budget categories for college students. Covering the cost of college often involves tapping a mix of funding sources, including scholarships, grants, savings, and 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.

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Photo credit: iStock/martin-dm

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. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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

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

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