Oct
30
2023

Finding Value Is in Season: Even the Rich Are Discount Shopping Now

By | Budgeting & Goals, Family Finances, money | Comments Off on Finding Value Is in Season: Even the Rich Are Discount Shopping Now

How America shops is shifting in a fundamental way.

Shoppers are turning to discount stores such as Dollar Tree, ALDI, and Big Lots more often, driven largely by spiking inflation, which peaked at 9.1% in June 2022. These days, shoppers are increasingly asking themselves, Why pay more? as they place a higher premium on value.

According to SoFi’s Discount Shopping Survey of 1,500 consumers fielded in August 2023, 81% of respondents are currently shopping at discount stores at least monthly, regardless of their income level.

Surely, the impetus may vary:

•   For many, discount stores are a vital tool when sticking to a tight budget.

•   For others, it might be a way to find splurges, both large and small, at the right price.

Still, though circumstances may vary, a whopping 78% of respondents are laser-focused on snagging the lowest possible prices for items on their list.

While shoppers may have been swayed by ambience and amenities at stores in the past, now it’s all about getting top value for every hard-earned dollar. Sticking to — and stretching — one’s budget is the new black. Also worth noting: Among the ranks of discount shoppers are high-earners pulling in six figures.

SoFi’s proprietary research found intriguing and unexpected facts about just who’s hitting the discount stores, what they are hunting for at these retailers, and why the face of shopping may never be the same again.

Where the Buyers Are: 74% of Respondents Dropped Into Dollar Tree

Where are discount shoppers spending their dollars?

Curious about which discount retailers are topping shoppers’ lists? According to SoFi’s Discount Shopping Survey, almost three-quarters (74%) of discount shoppers have dropped into a Dollar Tree, where the motto is “Extreme Value Every Day,” over the past year.

It isn’t just those living paycheck to paycheck who are shopping at Dollar Tree:

•   64% of the survey’s highest earners (households bringing in $150,000+) say they’ve bought items at Dollar Tree in the last 12 months.

Discount shoppers are also looking elsewhere to find where the best buys are. Over the past year:

•   65% have shopped at Dollar General

•   42% at Five Below

•   41% at ALDI

•   38% at Big Lots

•   37% at T.J. Maxx

•   35% at Ross Dress for Less

•   35% at Marshalls

Where else are moneywise shoppers queuing up? It turns out that 22% have shopped at HomeGoods, while one in five (20%) has rung up items at brand-name outlets (Nordstrom Rack, for instance).

Discount Stores: The New Social Media Darlings

Reflecting their new status as many shoppers’ go-to destination, discount stores are accumulating hefty followings. As of September 2023, the stats are:

•   ALDI USA has 955K Instagram followers; 184K on TikTok

•   Dollar Tree has 675K Instagram followers; 76.6K on TikTok

•   Five Below has 706K Instagram followers; 214.3K on TikTok

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81% Discount-Shop at Least Once a Month

18% of respondents shop at discount stores at least once a month

People aren’t just hitting the discount shops for an occasional find. Rather, SoFi’s discount shopping research uncovered that these retailers are quickly gaining traction as routine destinations for shoppers.

•   81% of respondents shop at discount stores at least once a month.

•   38% — practically four out of ten people — shop at discount stores weekly.

•   14% of respondents say you’ll find them shopping at discount stores several times a week. (These may be people who are saving money daily with their shopping habits.)

Compelling find: Close to half of high-income earners (those making $100,000+ a year) say they shop at discount stores at least weekly.

Inflation Surge Drives Shoppers to Discount Stores

63% of discount shoppers say inflation prompted them to shop at discount stores

If you’re wondering why discount shopping is surging, consider the economic state of our union. After inflation rates fell month after month for a solid year, July 2023 saw an uptick in prices that surely set some people on edge. (Inflation in July 2023 increased 3.2% from July 2022.)

What’s more, the cost of living is soaring. Social Security recipients enjoyed a cost of living adjustment (COLA) to the tune of 8.7% in 2023, one indicator of how steeply the price of, well, everything has been rising.

Indeed, consider this:

•   Nearly two-thirds of discount shoppers (63%) say inflation and rising costs have prompted them to shop at discount stores over the last 12 months.

•   In addition, nearly half of discount shoppers have ramped things up, with 49% saying they are hitting discount stores more frequently than they did before the inflation surge.

When it comes to defending one’s paycheck against price hikes, bargain-hunting is a smart maneuver. ”Inflation is real for just about all of us,” says David Bakke, a consumer finance expert and writer at personal finance blog Dollar Sanity. “My discount shopping has definitely increased. I find myself spending a lot more time at ALDI, Dollar General, and the like.”

Indeed, inflation is making over the way Americans shop. SoFi’s discount shopping data shows this significant stat:

•   40% of respondents say they “always” search for ways to save on their purchases when shopping.

•   Only 2% said they never search for ways to save.

Discount shoppers' cost-cutting tactics

Here are some of the leading tactics discount shoppers have used to cut costs:

•   41% have used couponing websites.

•   40% have subscribed to company emails.

•   31% have followed a company or brand on social media.

•   21% have joined a Facebook group or other online community.

•   18% have followed an influencer on social media who talks about discount shopping.

More Than Half Discount-Shop to Benefit Their Budget

In these challenging economic times, many consumers are embracing budgeting as a way to manage their finances. Almost six out of 10 discount shoppers (58%) say one of the biggest benefits of shopping at discount stores is the ability to stick to a budget.

This holds true for 62% of those with household incomes under $75K, as well as 46% of those pulling in $100K or more.

Other reasons to love these retailers? SoFi’s discount shopper respondents said:

•   Regular availability of discounted products (47%)

•   The convenience and accessibility of discount stores (46%)

•   The ability to find trendy or seasonal items at lower prices (45%)

Another shopping pattern that SoFi’s discount shopping survey uncovered: A significant number of discount shoppers are making most of their purchases from these lower-priced retailers:

•   36% make more than 50% of their purchases at discount stores.

•   Almost one in 10 (9%) of those with household incomes of $150,000 or more do more than 75% of their shopping at discount stores.

First on the Discount Shopping List: Groceries

What items do discount shoppers buy at discount stores?

It’s no secret that food prices can trigger sticker-shock, and that’s not just for luxuries like a pumpkin spice latte. Overall, food prices are ratcheting up 5.9% this year, per the USDA’s numbers, which may explain why consumers are hitting the low-cost stores for items they might otherwise buy at a standard supermarket.

According to the SoFi discount shopping research, groceries are the most common purchase made by discount shoppers: 78% buy groceries at discount stores.

And no wonder: These stores often have an array of staples and snacks, from coffee to cookies, and some are putting a health spin on things, as with Dollar General’s “Better for You” selections. Shopping at discount stores can be a solid way to save money on food.

“I shop at discount grocer ALDI,” says Melissa Cid, consumer savings expert with MySavings.com. “Chips, peanuts, cookies, yogurt, and ice cream are 25% to 50% cheaper than at traditional grocery stores.”

After food, the next most popular items:

•   Fashion and apparel: 58%

•   Beauty and skin care: 49%

•   Home decor: 40%

I shop at discount grocer Aldi.

11% Splash Out When Discount Shopping

Think shoppers are only grabbing cereal, socks, and a bottle of shampoo? Not necessarily.

Yes, many people are hunting for lower-priced essentials at the discount stores, but super-low prices are also leading to big-ticket purchases, for some. According to SoFi’s survey:

•   11% of discount shoppers say the most expensive item they’ve purchased at a discount store in the past 12 months cost $250 or more.

Here is what shoppers say are some of the priciest items they purchased at a discount store:

•   18% say it was a fashion/apparel item.

•   16% say it was an electronic item.

•   13% say it was a home decor item.

“Tech gadgets and home essentials top the list of items that I purchase from discount stores,” explains Thomas Paddock, an Amazon FBA Six-Figure Seller and the founder of Learn Retail Arbitrage, an online selling resource. “These categories often carry substantial markups in conventional retail outlets. Discount stores can offer high-quality items at a more
reasonable cost.”

There is, however, a bit of a gender gap when it comes to shopping for certain items at discount stores:

•   36% of men have purchased electronics vs. 27% of women.

•   67% percent of women have made clothing purchases vs. 44% of men.

•   Nearly 3x as many men (22%) have made sports/outdoor purchases vs. women (8%).

Finding Fashion at Discount Shops? Yes, Says Gen Z

How Gen Z discount shops

The SoFi discount shopping stats reveal that 67% of young people (aged 16-24) have purchased fashion and apparel items at a discount store within the last year.

Given that Gen Z is broadly recognized as the first digitally native generation, it’s probably no surprise that social media may have led many of them to these style purchases:

•   30% of respondents aged 16-24 have followed an influencer on social media who talks about discount shopping, vs. 18% of total respondents.

And the presence these retailers have on social media channels is significant. On Instagram, as of September 2023, T.J. Maxx has 2+ million followers, Nordstrom Rack has 1+ million followers, and Ross Dress for Less has 537K followers. All three have tens of thousands of followers on TikTok.

Almost 50% of Shoppers Seek Seasonal Wares

Seasonal and holiday shopping is (very) big business in the U.S., with Halloween spending, for instance, totalling $10.6 billion in 2022.

“Here today, gone tomorrow” items are part of the allure of discount stores, where goods can be found at a rock-bottom price. Consider these numbers from the SoFi survey:

•   45% of discount shoppers say one of the biggest benefits of discount stores is the availability of lower-priced trendy or seasonal items.

•   65% of discount shoppers are hunting for clearance or end-of-season items.

•   70% of women look for clearance and end-of-season deals at discount stores vs. 56% of men.

More Than Half of Discount Shoppers Spend Serious Time Bargain-Hunting

Discount shoppers spend serious time bargain-hunting

The new wave of smart shoppers are dedicated bargain-hunters. They will invest hours to get a great deal. In fact, more than half (51%) will spend between one and three hours extra to find savings or specific items at discount stores. A dedicated 4% are willing to spend five hours or more. (Of these, 63% have a household income of less than $50,000.)

Discount Shoppers Also Prioritize Availability

60% of discount shoppers with household income of $150,000

Low prices are the leading reason for the popularity of discount shopping, but availability of desired products is another big incentive:

•   52% head to these retailers for the specific items they know they can find there.

Whether it’s a favorite energy bar or shower gel, items that are part of a person’s usual shopping list are a big draw for discount shoppers.

This is especially true of the deep-pocketed respondents to the SoFi survey. Why spend top-dollar on your favorite matcha beverages or other small luxuries when you can buy them for much less?

•   60% of the highest earners (household income of $150,000 or more) say one of the reasons they shop at discount stores is for specific items they know they can find there.

There are a good number of impulse buyers among the aisles though:

•   Almost one in five (19%) discount shoppers say they don’t go to the stores looking for any particular item. Rather, they “go in without a plan and buy things that speak to them.”

As for the rest of the respondents to SoFi’s survey:

•   More than half of discount shoppers (51%) say they know what they need when they go to a discount store, but are open to buying items not on their list.

•   More than a quarter (26%) say they buy what they need and exit ASAP.

•   Only 3% say they just browse and rarely actually purchase anything.

And the Biggest Frustration With Discount Shopping Is…

Obviously, there is much to love about discount shopping, as detailed above. But, yes, there are a couple of pain points. Here, the two biggest downsides:

•   38% of discount shoppers say the items they want aren’t always available. That suggests that consumers would buy even more at these retailers if they could find everything they are hunting for.

•   22% say that the biggest downside is that the items are of a lower quality.

It seems that getting what you want, when you want it, may matter even more than an item’s quality.

That said, Thomas Paddock of Learn Retail Arbitrage contends that you can find good quality if you shop smart. “Contrary to general assumptions, not every item in a discount store is of inferior quality. Many times, these are overstock products or emerging brands,” he says. “Discount stores can be an avenue to discover value.”

The Takeaway

As inflation increases, shoppers of all income levels are finding that discount stores can serve their needs. Of the 1,500 consumers surveyed for SoFi’s Discount Shopping Survey in August 2023, 81% say they are visiting discount stores (think Dollar Tree, ALDI, and Five Below) at least once a month. Popular purchases are food, fashion, personal care, and home decor items.

What frustrates discount shoppers when seeking their budget buys? Lack of availability first and foremost, followed by lower quality of some goods.

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Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.20% APY on SoFi Checking and Savings.

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SoFi members with direct deposit activity can earn 4.20% 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 4.20% 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 4.20% 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 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

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Oct
27
2023

Which Insurance Types Do You Really Need? Here Are 6 to Consider

By | Family Finances, Insurance | Comments Off on Which Insurance Types Do You Really Need? Here Are 6 to Consider

These days, you can insure almost anything. Did you know, for example, that Julia Roberts has insurance for her teeth, and before Daniel Craig filmed a James Bond movie, he insured his entire body? While you probably don’t need to insure any of your body parts for millions of dollars, you might find yourself wondering when you should buy life insurance, or whether renter’s insurance is really necessary.

To help you decide on the right type and amount of coverage, we’ve broken down which kinds of insurance you will most likely need (other than health insurance, of course).

1. Life insurance

Life insurance is about more than just financing your funeral. It also allows your family to keep paying the bills if something happens to you.

People often think they don’t need life insurance if they don’t have dependents. But if you have debt such as student loans that someone has co-signed, your life insurance can be used to pay off your loans.

It’s common for employers to offer life insurance as part of their benefits package, but it’s worth noting that the life insurance your employer offers may not be enough, especially if you have dependents. Ideally, your life insurance payout should be enough to invest and yield returns that could replace your income annually. For example, if you assume that you’ll get a 5% return on the money you invest, you would need $1 million in coverage to replace a $50,000 income.

Here’s an overview of some of the most common life insurance options you might consider.

Term Life Insurance

Term life insurance is the simplest and most common form of life insurance. It covers your life for a specific period of time, and pays only if your death occurs during the term. This timeframe is typically anywhere from one to thirty years, the longer the term the higher the premium. Term life insurance can be more affordable than other types of life insurance.


💡 Quick Tip: Term life insurance coverage can range from $100K to $8 million. As your life changes, you can increase or decrease your coverage.

Whole Life Insurance

Whole life insurance covers you for your entire life. If you make consistent payments toward your policy, you’ll build a cash reserve for your family upon your death.

Universal Life Insurance

In exchange for premiums, universal life insurance can provide coverage for as long as the policyholder is alive, and some policies also accrue cash value. When the policyholder dies, their beneficiaries typically receive a tax-free death benefit in the amount specified by the policy.

Indexed Universal Life Insurance

Indexed universal life insurance (IUL) gives policyholders the option to put money towards either a fixed account or an equity index account. Index accounts with universal life policies often include well-known indexes and can be a good option if you’d like to accumulate tax-deferred cash as well as maintain a set amount of money in a fixed account.

2. Disability Income Insurance

Disability income insurance, also referred to as disability insurance, replaces a portion of your salary if you become disabled. Some employers don’t offer disability insurance, but even if yours does, you may want to consider a supplementary policy to top up the amount that you receive.

Depending on the policy, disability insurance kicks in when you become partially, completely, temporarily, or permanently disabled. Keep in mind that there is often a waiting period before benefits start, which could range from one month to a year, depending on your policy and whether you have short-term or long-term disability insurance. The longer the waiting period on your policy, the cheaper your premiums often are.

If you have to take a job that pays less because of a disability, some policies may pay you part of the difference.

Note that disability insurance is expensive, often between 1% and 3% of your salary, and many organizations offer it as a benefit. If you’re evaluating offers between two employers, it’s worth factoring in how valuable this type of insurance is to you.

3. Long-Term Care Insurance

If you’re considering a nursing home, day care, home health aide, or other type of long-term care, be prepared to pay. A Genworth survey found that the average price of a private room in a nursing home is $9,034 a month. A typical assisted living facility charges around $4,500 a month, while a home health aide runs $5,148 a month.

To ensure you can foot the bill, the American Association for Long-Term Care Insurance recommends buying a policy in your mid-50s to qualify for the best premiums. Benefits kick in when someone isn’t able to take care of everyday activities or suffers from severe cognitive impairments. Policies vary by the specific level of impairment, the type of services provided, and the length of time the covered person lives after becoming impaired.

Depending on your policy, your benefits may not start until up to 90 days after impairment, and some may require that you receive paid care in the meantime.

Recommended: 8 Popular Types of Life Insurance for Any Age

4. Car Insurance

If you own or lease a car, car insurance is a must. But there are different kinds to consider.

Collision and comprehensive insurance will cover damage to your car and can help replace it if it’s been stolen.

Liability insurance covers you if you get sued after causing an accident. There are three maximum liability limits you can get in a car insurance policy: bodily injury per person in a given accident, bodily injury for all injuries in a given accident, and personal property damage in a given accident. Each state requires different insurance minimums by law.

However, you may want higher limits than the minimum. You may be able to save money on collision and comprehensive coverage by getting a higher deductible of $500 or $1,000. If you drive a car that’s worth less than $1,000, you may want to consider dropping collision and comprehensive, though you’ll still need liability.


💡 Quick Tip: Saving money on your fixed costs isn’t always easy. One exception is auto insurance. Shopping around for a better deal really can pay off.

5. Homeowners or Renter’s Insurance

Homeowners insurance covers damages to your home or theft of personal possessions. It also includes liability insurance to cover accidents that happen on your property. However, it excludes things like floods, earthquakes, and the (hopefully unlikely) event of war.

You should have at least enough insurance to cover the replacement value of your home and possessions. This usually means getting guaranteed (or extended) replacement cost coverage. That’s different from actual cash value coverage, which covers you for the current value of your possessions.

If you’re renting instead of buying, renter’s insurance is similar, but only covers your possessions and personal liability for damages. It’s worth having in case you leave the water on and accidentally flood your kitchen. The minimum deductible for tenant or homeowner’s insurance is usually $500, but according to the Insurance Information Institute, raising the deductible could save you money.

One important element for both of these is liability insurance. This helps protect you against lawsuits, and covers things like people slipping and falling on your property. One hundred thousand dollars of liability coverage is a fairly standard amount.

Recommended: How Much Homeowners Insurance Do You Need?

6. Umbrella Liability Coverage

Umbrella coverage is essentially extra liability insurance, and most importantly, it protects you and your assets in the event of a lawsuit. It covers you beyond the limits of your car or home liability coverage. For example, umbrella coverage will protect you from libel, slander and false imprisonment.

Often it is more economical to get an umbrella policy rather than getting excess home or car liability coverage. It’s a good idea to coordinate car, home, and liability coverages. After all, you wouldn’t typically have a $100,000 deductible on your umbrella policy if your car and homeowner’s insurance have $100,000 of coverage.

The first $1 million in umbrella coverage typically costs about $150 to $300 a year, which is often less than what most people would pay for additional coverage in that amount. As your income grows and you accumulate assets, you may want to consider raising the limit.

The Takeaway

Insurance can offer peace of mind and a degree of financial security. But the type and amount of coverage you need will depend on a number of factors, including your lifestyle, health, budget, and financial goals.

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

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

Photo credit: iStock/urbazon

Auto Insurance: Must have a valid driver’s license. Not available in all states.
Home and Renters Insurance: Insurance not available in all states.
Experian is a registered trademark of Experian.
SoFi Insurance Agency, LLC. (“”SoFi””) is compensated by Experian for each customer who purchases a policy through the SoFi-Experian partnership.

Coverage and pricing is subject to eligibility and underwriting criteria.
Ladder Insurance Services, LLC (CA license # OK22568; AR license # 3000140372) distributes term life insurance products issued by multiple insurers- for further details see ladderlife.com. All insurance products are governed by the terms set forth in the applicable insurance policy. Each insurer has financial responsibility for its own products.
Ladder, SoFi and SoFi Agency are separate, independent entities and are not responsible for the financial condition, business, or legal obligations of the other, SoFi Technologies, Inc. (SoFi) and SoFi Insurance Agency, LLC (SoFi Agency) do not issue, underwrite insurance or pay claims under LadderlifeTM policies. SoFi is compensated by Ladder for each issued term life policy.
Ladder offers coverage to people who are between the ages of 20 and 60 as of their nearest birthday. Your current age plus the term length cannot exceed 70 years.
All services from Ladder Insurance Services, LLC are their own. Once you reach Ladder, SoFi is not involved and has no control over the products or services involved. The Ladder service is limited to documents and does not provide legal advice. Individual circumstances are unique and using documents provided is not a substitute for obtaining legal 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.

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

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Oct
26
2023
Discretionary Income and Student Loans: Why It Matters

Discretionary Income and Student Loans: Why It Matters

By | Fresh Out of School, Student Loans, student_loan, Terminology | No Comments
Editor's Note: On July 18, a federal appeals court blocked continued implementation of the SAVE Plan. Current plan enrollees will be placed into interest-free forbearance while the case moves through the courts. We will update this page as more information becomes available.

Knowing what your discretionary income is (and how to calculate it) can help you make decisions about how to best repay your federal student loans. The U.S. Department of Education calculates discretionary income as your adjusted gross income in excess of a protected amount.

The “protected amount” is typically a percentage of the federal poverty guideline appropriate to your family size. The Saving on a Valuable Education (SAVE) Plan, for example, defines discretionary income as any adjusted gross income you have above 225% of the federal poverty guideline appropriate to your family size.

When it comes to individuals who are considering repaying federal student loans with the SAVE Plan or the Income-Based Repayment (IBR) Plan, discretionary income can be a major factor in how much they’ll owe each month. That’s because the federal government typically uses a borrower’s discretionary income to determine their monthly payments.

Below we’ll discuss different IDR plans and the ins and outs of discretionary income, so you can figure out a repayment strategy that works for you and your budget.

Key Points

•   Discretionary income, calculated by subtracting a protected amount from adjusted gross income, is crucial for determining monthly student loan payments under federal repayment plans.

•   The SAVE Plan defines discretionary income as income above 225% of the federal poverty guideline, potentially allowing for $0 payments for borrowers under specific income thresholds.

•   Income-driven repayment plans can lower monthly payments but may extend loan terms significantly, resulting in more interest paid over time compared to standard repayment options.

•   Borrowers must recertify their income and family size annually, affecting their monthly payment amounts based on changes in financial circumstances.

•   Refinancing student loans with private lenders can lower payments but forfeits access to federal benefits like income-driven repayment plans and potential loan forgiveness.

What Is Discretionary Income?

As mentioned above, the Department of Education calculates discretionary income as your adjusted gross income in excess of a protected amount defined by a federal IDR plan.

Discretionary income under the SAVE Plan, for example, is any adjusted gross income you have above 225% of the federal poverty guideline appropriate to your family size. You’ll have a $0 monthly payment under the SAVE Plan if your annual income doesn’t exceed the protected amount of $32,805 for a single borrower and $67,500 for a family of four in 2023.

If you don’t qualify for a $0 monthly payment on the SAVE Plan, your monthly payment beginning in July 2024 is set at 5% of discretionary income for undergraduate loans, 10% for graduate loans, and a weighted average if you have both.

Discretionary income as defined by the Education Department is different from disposable income, which is the amount of money you have available to spend or save after your income taxes have been deducted.

How Is Discretionary Income Calculated?

Here’s how federal student loan servicers may calculate your discretionary income:

•   Discretionary income under the SAVE Plan is generally calculated by subtracting 225% of the federal poverty guideline from your adjusted gross income (AGI).

•   Discretionary income under the Income-Based Repayment (IBR) Plan is generally calculated by subtracting 150% of the federal poverty guideline from your AGI.

If you’re filing jointly or you have dependents, that will impact your discretionary income calculations. For married couples filing together, your combined AGI is used when calculating discretionary income. Under an income-driven plan, filing with a spouse can drive up your income-driven monthly payments because of your combined AGI.

So, let’s say you’re in a one-person household and have a 2023 AGI of $40,000. If you are considering the SAVE Plan, you would subtract 225% of the 2023 poverty guideline ($32,805), to get an official discretionary income of $7,195. Monthly, that is a discretionary income of about $600, and your monthly payment beginning in July 2024 is set at 5% of discretionary income for undergraduate loans, 10% for graduate loans, and a weighted average if you have both.

Borrowers are generally expected to make required loan payments when due. The 2023 debt ceiling bill officially ended the three-year Covid-19 forbearance, requiring federal student loan interest accrual to resume on Sept. 1, 2023, and payments to resume in October 2023.


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What Income-Driven Repayment Plan are You Eligible For?

There are now two federal IDR plans that have different eligibility criteria and terms. (There are two others that are no longer accepting new enrollments.) These income-driven repayment plans can reduce monthly payments for people with incomes below a certain threshold.

It should be noted that federal IDR plans don’t apply to private student loans. They’re only an option for federal student loans.

Income-Driven Repayment Plans for Federal Student Loans

The federal Department of Education offers the following IDR options for eligible federal student loan borrowers:

•   Saving on a Valuable Education (SAVE) Plan

•   Income-Based Repayment (IBR) Plan

All IDR plans generally use discretionary income to determine monthly payments. So, if there is a change in a borrower’s income or family size, their monthly payment could increase or decrease, depending on the change. Borrowers enrolled in an income-driven repayment plan are typically required to recertify their income and family size each year.

The SAVE ICR plan is open to anyone with eligible federal loans. Under this repayment plan, the amount owed each month is always tied to a borrower’s discretionary income. This could mean that if an individual’s income increases over time, they may end up paying more each month than they would under the 10-year Standard Repayment Plan.

For the IBR plan, eligibility is determined based on income and family size. As a general rule, to qualify, borrowers must not pay more under IBR than they would under the 10-year Standard Repayment Plan. Under this plan, the amount owed each month will never exceed what a borrower would owe under the Standard Repayment Plan.

The PAYE and Income-Contingent plans stopped accepting new enrollments in July 2024.

Pros and Cons of Income-Driven Repayment Plans

IDR plans come with trade-offs. While they can lower your monthly payment and help free up your cash flow now, they may extend the life of your loan. The standard student loan payoff plan is based on a 10-year repayment timeline. An income-driven repayment plan can extend your payment timeline to up to 25 years.

This means you’ll be paying off the loan longer and possibly paying more in interest over time. If you stay on an income-driven repayment plan, the government might forgive any remaining balance after 20 or 25 years of payments — or as little as 10 years for SAVE Plan enrollees with original principal balances of less than $12,000. But the amount that is forgiven may be taxed as income.

How Does Discretionary Income Affect Student Loan Payments?

Income-driven repayment plans generally use your discretionary income to dictate the amount you’re required to repay each month. In the case of borrowers enrolled in the SAVE Plan, any required payments beginning in July 2024 are set at 5% of discretionary income for undergraduate loans, 10% for graduate loans, and a weighted average if you have both.

Recommended: How Is Income Based Repayment Calculated?

How Else Can Borrowers Lower Their Student Loan Payment?

Another potential way for borrowers to reduce their student loan payment is by refinancing student loans. When you refinance your student loans, you take out a new loan with new terms from a private lender. The new loan is used to pay off your existing student loans.

Depending on your financial profile, refinancing could result in a lower interest rate or a lower monthly payment depending on which terms you choose. You may pay more interest over the life of the loan if you refinance with an extended term.

Refinancing federal student loans with a private lender also forfeits your access to federal IDR plans, Public Service Loan Forgiveness, and Teacher Loan Forgiveness.


💡 Quick Tip: When rates are low, refinancing student loans could make a lot of sense. How much could you save? Find out using our student loan refi calculator.

The Takeaway

The government uses discretionary income to calculate your federal student loan monthly payments under a qualifying IDR plan. The SAVE Plan may not provide the lowest monthly payment for eligible borrowers with high salaries.

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


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

SoFi Student Loan Refinance
SoFi Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org). SoFi Student Loan Refinance Loans are private loans and do not have the same repayment options that the federal loan program offers, or may become available, such as Public Service Loan Forgiveness, Income-Based Repayment, Income-Contingent Repayment, PAYE or SAVE. Additional terms and conditions apply. Lowest rates reserved for the most creditworthy borrowers. For additional product-specific legal and licensing information, see SoFi.com/legal.


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.

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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25
2023
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15 Creative Ways to Save Money

By | Budgeting & Goals, Financial Independence, money | No Comments

You may not think of saving money as being a creative pursuit, but with a little effort, you can find fresh (and even fun) ways to help you stash away some cash. This can make the pursuit more engaging and motivating.

Perhaps your goal is to save for the down payment on a house or build up your kid’s college fund or simply take a great vacation next year. You can try some clever methods to make saving money more interesting and maybe a bit exciting.

Read on to learn such tactics as partnering up with a savings buddy and tapping your DIY skills. You’ll also learn ways to make the most of the cash you sock away. Get set to save more.

15 Creative Ideas to Save Money

You are probably familiar with some of the usual tactics for saving money, such as comparison shopping and clipping coupons. If you’re ready to mix things up and try some less common tactics, consider the following 15 quirky but effective ideas.

1. Identifying Your Saving Goals

2. Finding a Saving Buddy

3. Seeking Out Free Activities

4. Getting Creative and DIY

5. Gamifying Savings

6. Swapping Goods and Trading Skills

7. Increasing Income

8. Switch Your Bank

9. Split Your Direct Deposit into Checking and Savings

10. Change Your Due Dates for Bills

11. Save Every $5 Bill

12. Take Advantage of Cash Back Credit Cards

13. Round Up Your Purchases Automatically

14. Consolidate Credit Card Debt with a Personal Loan

15. Automate Your Savings into an Investment Account


💡 Quick Tip: An online bank account with SoFi can help your money earn more — up to 4.20% APY, with no minimum balance required.

1. Identifying Your Saving Goals

Not sure how to make saving money fun or prioritize it? You could start by identifying your goals. Are you saving up for a big purchase, like a down payment on a house? Are you saving for your child’s future education?

Once you’ve figured out what you want to accomplish, you could determine a target amount of money you’d like to save. While this number might change over the course of your savings journey, you can always readjust your plan.

If you have an idea of how much money you’d like to work toward saving, you can consider diving deeper into your finances to pinpoint realistic objectives. You can use a tracking and budgeting tool, such as SoFi Financial Insights, to get a big-picture snapshot of your money and drill down on ways to save.

Once you’ve reviewed your individual financial circumstances and have a better idea of your savings goal(s), you could try these fun ways to save money.

2. Finding a Saving Buddy

With the right company, even the most mundane tasks can be enjoyable. You could talk about your savings goals with your friends and family members to potentially identify a saving buddy with similar objectives.

An ideal saving buddy will be supportive of your financial goals, offer good advice, and have a positive money mindset.

Checking in with your buddy regularly could help keep you both stay on track and you can celebrate each other’s accomplishments. This person might also be able to talk you down if you’re on the verge of making a big impulse buy. If you’re stressed about how to make saving money fun, you could brainstorm creative tactics with your saving buddy and implement them together.

3. Seeking Out Free Activities

Saving money does not have to be synonymous with missing out on exciting opportunities around you. You could enjoy free activities offered in your area.

Perhaps your local park offers free theater performances or concerts in the summer, or your area bookstore hosts interesting literary panels and author discussions with no attendance fee. Think about the resources provided by your local library, such as book clubs, language exchange programs, craft nights, and movie screenings.

This can be a great option to pricey movie or concert tickets. And here’s a way to save money on streaming services: You could try a free service like Hoopla or Kanopy, which are offered at no cost to library card holders.

4. Getting Creative and DIY

Here’s another clever way to save money: Adopt a DIY (do-it-yourself) attitude. You could create things using materials you already own instead of buying new products. You can save money on food by meal-prepping for the week ahead; think about recipes that incorporate ingredients you already have in your pantry.

You could make your own household cleaners out of vinegar, lemon rinds, and herbs or face masks using fresh ingredients like avocado, tea, honey, and oatmeal. There are ways to reuse materials that might otherwise be thrown out or recycled: Newspapers and coupon booklets could make fun wrapping paper, for instance.

5. Gamifying Savings

If you’re looking to break up the monotony of saving, you could consider incorporating games and challenges into your overall savings plan. A friendly competition with your saving buddy could be seeing who can save the most money every week, month, and/or year.

Creating small rewards for reaching your goals might be an incentive, too. (Bonus points if these rewards are free!) No-spend weeks, where you refrain from spending any money for seven days, also might help with saving. If you succeed at that, you might want to ramp up to a 30-day no-spend challenge. You can tailor this to cut down on all discretionary spending or just a single category, such as dining out.

6. Swapping Goods and Trading Skills

Getting serious about saving money doesn’t mean you need to give up “luxuries” such as exercising, new clothes and accessories, or home goods. Trading skills and swapping goods are two potential examples of how to make saving money fun while not depriving yourself of the things you want.

You could go to your favorite yoga studio and ask if they have a work-trade program where you can do administrative duties in exchange for classes. A clothing swap with your friends could refresh your closet at no cost.

You might also consider an informal exchange with skilled friends. For example, if you’ve been eyeing an original painting from your artist pal but don’t have the funds to pay her, you could offer your website design services (or some other helpful skills) for the painting.

7. Increasing Income

Sometimes, cutting down on expenses might not be the most effective way to reach a savings goal. It might be easier, in some cases, to make a bit more money than to reduce costs, especially if you are spending more than 50% of your income on non-discretionary expenses like groceries and debt payments. (That’s the figure established by the popular 50/30/20 budget rule, that half of your take-home income goes toward necessities.)

You could reflect on your particular skills and/or hobbies to see if there is a way to translate one of them into an income stream. For example, if you love to knit, you could start an online store for your yarn creations. Or you could offer your writing or editing services in a freelance capacity. A successful low-cost side hustle could help bring additional money into your bank account and add more fun and enjoyment in your life.

Recommended: 39 Passive Income Ideas to Build Wealth

8. Switch Your Bank

If your financial institution seems to be charging you endless fees and offers little interest on your savings account, consider switching banks.

You might consider an online bank. Because these institutions don’t have brick-and-mortar locations to fund, they can pass those savings along to customers in the form of lower or no fees and higher interest rates.

You might also consider a credit union instead of a big name bank. Credit unions are run as financial co-ops, meaning each member has a stake in business. As nonprofits, they are designed to serve their members, typically paying higher interest rates on deposits and charging lower fees.

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9. Split Your Direct Deposit into Checking and Savings

If you have regular paychecks, one of the easiest ways to start saving a bit more money is to guarantee some automatically ends up in a separate savings account, making it that much harder to spend. If you have a checking account, odds are you have a savings account too, or at least access to one.

Maybe you find it hard to remember to put some money away into savings or harder still to force yourself to part with it. If so, splitting your direct deposit into two accounts helps make sure your savings grows every paycheck, without you needing to worry about transferring the money. Check with your HR department or your online pay system to see if you can add a bank account and designate a certain amount of each paycheck to go into your savings account as part of your direct deposit.

Most banks also have the option to set up recurring transfers yourself between your accounts. If you don’t have the option to split up your paycheck or would prefer not to, your bank can likely automate your savings with a transfer the day after you get paid. You won’t have to think twice about stashing money away.

💡 Quick Tip: As opposed to a physical check that can take time to clear, you don’t have to wait days to access a direct deposit. Usually, you can use the money the day it is sent. What’s more, you don’t have to remember to go to the bank or use your app to deposit your check.

10. Change Your Due Dates for Bills

Having extra money in your savings account doesn’t help if you are constantly pulling from it to pay bills.

If you are overdrafting frequently or borrowing from savings, especially at certain times of the month when big payments are due, consider this unique way to save money: Change the due dates of some of your bills. Sometimes spreading out your larger payments — like credit card bills or student loans — throughout the month can help when those more inflexible due dates, like rent, roll around.

By changing the date of some of your bills, you will hopefully avoid overdraft or NSF fees. This will encourage you to not touch your savings account, as opposed to pulling from it every time your checking account balance gets precariously low.

11. Save Every $5 Bill

This is a classic adult remix of the piggy bank you had as a kid. Only this time, instead of squirreling away quarters, take every $5 you get and put it in a separate drawer at home. Keep all of these $5 in the back of a closet somewhere, tucked away and out of sight.

Once you get into the habit of identifying $5 as “no spend” bills, you’ll find it can really be a creative way to save money — depending on how much cash you use in a typical day, of course.

The benefit of this method is that $5 isn’t really enough to miss if you are just putting away a bill or two, but that at the end of the year, it can easily add up to enough cash to help with holiday shopping, a loan payment, or even a nice charity donation without having to touch your savings in the bank.

12. Take Advantage of Cash Back Credit Cards

Need another clever way to save money? Simply put, if you have a credit card that has a decent rewards program, you can likely get your rewards in cash. While getting cash back won’t boost your savings directly, it can allow you to spend rewards points instead of your savings.

However, if you tend to carry over a balance on your credit card, cash back cards may not be a good solution for you right now.

13. Round Up Your Purchases Automatically

There are plenty of apps available to round up your purchase to the nearest dollar and then save the change for you. Your bank may offer this kind of savings tool, which can be an easy way to save money automatically.

The amount these apps save for you is small, so you aren’t likely to notice $1 or even a few cents when it transfers, but it can add up to hundreds stashed away per year.

14. Consolidate Credit Card Debt with a Personal Loan

If your credit card debt is preventing you from saving as much as you would like, you might use a personal loan as a creative way to shake up your finances.

If you owe money on more than one credit card or have a high balance relative to your credit limit, the rates on a personal loan could help lower your monthly payments. Often, taking out one personal loan to pay off credit cards can help you with savings in the long run. While you’ll still be paying off the personal loan, the interest rate is likely to be significantly lower than that of the credit cards. That means you can probably pay off the total sooner, leaving more cash free for savings.

15. Automate Your Savings into an Investment Account

It’s the age-old financial advice worth repeating here: If your company offers a match on your 401(k) savings, take advantage of it! If your company match is 6%, you should set your contribution for at least 6% to get the most out of your retirement funds.

It can be simple to creatively save money using the following technique. Most company wealth management accounts can be set to automatically deduct contributions from your paycheck, but you can schedule other automatic investments too. You can make scheduled, recurring transfers between your bank account and your wealth management account.

You get to select the dollar amount, the date and the frequency you want. This is a great way to put your savings to good use — send it into an investment account. There are plenty of other technologies available to help make this easy, too.

Why Is Making Saving Money Fun Important?

Trying tactics like the ones above can help make it fun to save money. That’s important for a couple of good reasons. Shaking up your savings routine can make socking away cash seem fresh and more engaging, meaning you are more likely to get the job done. Basically, it can rev up your motivation to save money.

Also, when you find a technique that is fun, such as a no-spend challenge, it can help encode the new savings behavior in your routine. If it’s enjoyable, you are more likely to keep up the good work.

How Can You Make the Most of the Money You Save?

When you save money, you likely want it to grow over time, not just sit there. One good way to do that is to stash your money in an interest-earning account. This will be especially effective if the financial institution where you save charges low or no fees and doesn’t have high minimum opening deposit or balance requirements.

You might look for a high-interest or high-yield savings account. These can pay a significantly higher rate than standard savings accounts, and your money will be accessible and likely insured by the Federal Deposit Insurance Corporation, or FDIC, or NCUA (the National Credit Union Administration).

Optimizing Your Savings

Beyond the creative ways to save that you just learned, there are other important ways to optimize your savings.

•   Budgeting wisely can help you better understand your personal finances. It can help you get a grip on your earnings, spending, and savings. When you see where your money goes, you can tweak your spending to help funnel more towards savings.

•   Putting a spending limit on your credit card (or cards) can help you rein in spending, which can reduce high-interest credit card debt and allow you to save more.

•   Lastly, it you are struggling to put away money, one dramatic move that can help you save more is to move to an area with a lower cost of living. Whether that means moving across town or across the country, it could make a major difference in your finances.

The Takeaway

Putting away money for your future does not need to be a boring task; there are countless fun ways to save money that could be customized to your specific financial needs and wants. From finding a savings buddy to gamifying your saving, creative tactics can help enhance your motivation and your ability to put away cash.

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 4.20% APY on SoFi Checking and Savings.

FAQ

What is a clever way to save money?

There are several clever ways to save money. Automating savings so you don’t have to remember to transfer funds is one good tactic; so is giving yourself a no-spend challenge, finding free activities, and doing a skills swap to reduce spending.

How can you save $1000 in 30 days?

To save $1,000 in 30 days, you can try a spending freeze, a savings challenge, and/or use a card that gives you cash back. Make sure you are keeping the money you save in a high-yield savings account.

What is the 50 30 20 rule?

The 50/30/20 budget rule is a popular technique for managing your money. It advises spending 50% of your take-home pay on the needs of life (housing, food, healthcare, etc.), 30% on the wants in life (such as dining out, Ubers instead of public transportation, travel, and so forth), and 20% goes into sayings.

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SoFi members with direct deposit activity can earn 4.20% 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 4.20% 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 4.20% 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 10/31/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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

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.

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

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25
2023

Ultimate College Application Checklist

By | Going to College, Student Loans, student_loan | Comments Off on Ultimate College Application Checklist

If you’ve getting ready to apply to college, look on the bright side: It can be a good way to apply the skills you’ve learned in school to get organized and nail this project. It’s also a time to shine and show off your achievements over the past few years.

That said, like any big project, applying to college has a lot of moving parts and can feel intimidating at times. To help you break it down, it can be wise to use a college application checklist. Doing so can help you stay on track as you move ahead with navigating the next step in your education.

What follows is just that: a college application checklist and details on how to apply to the schools you’re interested in. As you’ll see, it can all boil down to 5 key steps. You’ve got this!

Key Points

•   Organizing a college application system is essential for staying on top of deadlines and requirements, including setting up folders for each school.

•   Standardized test scores may not be required by many colleges; however, checking individual school requirements is necessary before deciding to take them.

•   Collecting letters of recommendation should begin early, allowing ample time for writers to craft personalized letters that reflect the student’s achievements.

•   Completing the FAFSA is crucial for accessing federal financial aid and scholarships, and it should be submitted as early as possible to maximize funding opportunities.

•   Staying engaged in school and maintaining good grades during the application process is important, as colleges will review final transcripts before making admissions decisions.

Tips for Getting Organized

Before you dive into your To Do list, take some time to get organized. Applying for college can definitely be complicated and time-intensive. Creating a system, including a college application checklist, can help prevent important details and dates from slipping through the cracks.

Before you start printing out forms and stashing brochures, label a folder for each school and list important information on the front, such as:

•   College name

•   Application deadline

•   Type of deadline (early decision, early action, regular decision, or rolling admission)

•   Application fee

•   Application requirements (form, essay, recommendations, etc.)

Choose a single system to monitor all submissions and deadlines, and make sure your parents can also access the information.

One method of organization could be to file the folders by deadline dates rather than school names to ensure you get all documents to each school on time.

Keep copies of important documents, such as recommendation letters and student housing information, in each folder. Most early decision or early action deadlines are in November, while regular decision applications are usually due in January.

Make a note of any schools that have extra forms or a particular department within the college that has its own set of requirements. The university likely has a list of scholarship deadlines, which may be different from its application deadline.

College application deadlines tend to be set in stone, and admission officers may even frown upon those who wait till the last minute to submit their applications. It can be helpful to set reminders on your phone, computer, or the kitchen calendar.

Schedule reminders for at least a month before the real deadline so there’s plenty of time to ask questions, make adjustments, and get your application in well before the deadline. This can help you avoid that night-before-the-deadline discovery that you are missing a form.

Consolidate tasks whenever possible. If you need a recommendation for an extracurricular activity for two different schools, don’t ask the softball coach and the band conductor. Pick one and ask for a reference letter that can be easily customized for both schools.

Even the simplest college application is typically made up of multiple forms. You can use a physical filing system or cloud-based storage to store forms, recommendation letters, and more. As you gather materials, divide everything into folders for each college and label PDFs with short, descriptive names (MusicRecommendation, not “scan008877605.pdf”).


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

College Application Checklist

If you’re looking for a section to print out and check off as you go, this is it: your applying to colleges checklist. Then read on for details on how you might go about accomplishing these tasks.

•   Create a filing system for schools organized by the application deadline

•   Set reminders for application deadlines

•   Gather test scores (SAT®, ACT®, etc.) if prospective schools require them

•   Ask for 3 or more letters of recommendation

•   Write personal essay (if needed)

•   Fill out the Free Application for Federal Student Aid (FAFSA®)

•   Research scholarships

1. Take Standardized Tests (Or Not)

First on your college application process checklist is to consider whether you need standardized test scores. A majority of colleges and universities no longer require standardized tests like the SAT and ACT for school applications — check with the schools you plan to apply to. If you want to play it safe and you have the time, you may want to take the test just in case.

Generally, students must register for tests about a month in advance. It will take a couple of weeks for scores to be distributed, and colleges receive scores about 10 days after students. So if your college application deadline is in January, you should schedule your test by October. Perhaps you’ll want to take it earlier if you want to give yourself enough time to retake the test if you’d like to try to get a higher score.

2. Request Letters of Recommendation

Next on your college application requirement checklist: Many colleges request 2 to 3 letters of recommendation. According to the College Board, these should be “written by someone who can describe your skills, accomplishments, and personality.” It’s wise to ask people who know you well and are enthusiastic about this prospect. You may want to request an extra letter or two, to accommodate letter-writers who miss their deadline or beg off at the last minute.

When asking for a recommendation letter, keep in mind that teachers and coaches are usually very busy and likely being asked by multiple students. If possible, give them at least a month to write a reference letter. Really, the earlier the better. Some schools require recommendations from teachers in specific subjects, so be mindful of specific requirements.

3. Check for Special Deadlines

You’ll want to consider other deadlines as well, such as applications for special dorms, department-level scholarships, registering for summer activities, and more. These things can end up coloring the college experience just as much as which university you get accepted to.

In many cases, dorms are available on a first-come, first-served basis. Applying early can help you get the specific type of dorm you want, such as co-ed, separated by gender, or substance-free.

4. Fill Out the FAFSA

While you’re gathering all the information for college, you’ll probably be thinking about how to pay for it. For this item on your college admission checklist, you’ll likely want to start with the Free Application for Federal Student Aid or FAFSA®, the form that parents and students must complete to be eligible for federal student loans and aid. Many colleges also use the FAFSA to decide if a student qualifies for its own grants and scholarships.

A university may offer both need-based and merit-based aid. Need-based aid is determined by a family’s income and circumstances, while merit-based aid is determined by academics, athletics, and other talents. The FAFSA helps colleges determine how much need-based federal aid a student qualifies for.

The FAFSA application is generally available starting in October but the 2024-2025 form will be available in December; the due date varies by state. Try to apply as early as possible because some financial aid is awarded on a first-come, first-served basis.

A common misconception is that the FAFSA is a one-time deal. In reality, the FAFSA must be filled out every year to account for any changes in income or other circumstances. For example, if one of your parents gets laid off from their job, you might qualify for more need-based aid.

For some students, federal aid (including federal student loans) isn’t enough to cover the full cost of attendance. If that’s the case, it may be time to look into some additional sources of funding.

Recommended: College Search Tool

5. Additional Funding Options

Some families are able to fill the gap between tuition costs and student aid with savings. Parents may take out loans in their own name to help children pay for college as well.

Other students are able to pay for a portion of their tuition with scholarships or grants. Scholarships and grants may require applicants to invest some time writing an essay or meeting other requirements. Any funds that are received can be a useful way to cover education costs since they don’t need to be repaid.

There are quite a few scholarship databases you can search to find those that fit your background and interests.
If you’ve exhausted your aid opportunities and are still looking to fill a gap, private student loans are an option to consider. While they don’t come with the same benefits as federal student loans (such as income-driven repayment plans and loan forgiveness options), they can be used to help pay for education expenses.

Unlike most federal student loans, the private student loan application process generally requires a credit check*. Some students may find they need a cosigner, which is someone who would be held responsible for the loan in the event the primary borrower fails to make payments.


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

Stay Engaged in School

Once you’ve completed your college application checklist and your college applications are on their way, your last semester in high school can feel kind of pointless. Not true! Colleges will want to see those grades and know what you’ve been up to. If you’ve lost motivation, are cutting class, or let your grades slide, they’ll know it. And if you’re still taking AP exams, those results can determine whether you get credit for certain college courses.

So stay involved and send a follow-up letter listing any additional awards and achievements. This is your chance to show off what you’re capable of even when the pressure’s off.

Speaking of pressure, take time to relax — before, during, and after the application process. Plan some fun activities that don’t involve watching your inbox for acceptance letters. And congratulate yourself on making it this far.

The Takeaway

The college application process can be demanding. After all, the application itself is usually just one of many concerns. There may also be standardized tests to take, letters of recommendation to collect, personal essays to write, housing to consider, and financial aid applications to complete. It can be wise to use an applying to colleges checklist. The earlier you complete the tasks on it, the less stressed you’ll be — and that can be reflected in the quality of your application. Stay on top of all deadlines, and set reminders well in advance so you never have to pull an all-nighter. Save those for college.

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


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

Checking Your Rates: 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.

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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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