Hedge funds are pooled investment vehicles that use complex investment strategies to try and generate above-average returns. Investing in hedge funds can be risky, but rewarding if the fund meets or exceeds performance expectations.
Compared to traditional mutual funds or exchange-traded funds, hedge funds typically have more barriers to entry for investors. If you’re interested in how to invest in a hedge fund, it’s helpful to understand who these funds are designed for, and the minimum requirements.
Key Points
• Hedge funds are private investment vehicles using complex strategies to seek high returns, but they carry significant risks.
• Access is limited to accredited investors, typically requiring a net worth of more than $1 million, or a relatively high income.
• Hedge funds invest in diverse assets like stocks, derivatives, and real estate, using strategies like equity long, equity short, or equity neutral.
• Investing involves understanding fund strategies, performance, and costs, and that fees are often higher than mutual funds.
• Regulatory oversight by the SEC helps ensure legal compliance, with trends showing slower growth and evolving strategies.
What Exactly Is a Hedge Fund?
A hedge fund is a private investment vehicle that accepts funds from multiple investors. The hedge fund manager directs the investment strategy to attempt to generate the best possible returns for investors.
Hedge funds can hold a variety of investments, including alternative investments. Depending on the fund’s strategy and investment objectives, a hedge fund may offer exposure to:
• Stocks
• Derivatives
• Foreign currencies
• Real estate
• Commodities
• Fixed income investments
Fund managers may utilize a range of strategies to manage fund assets. Examples of hedge fund strategies include equity long, equity short, and market neutral (basically, strategies that take different time frames into consideration, as well as prevailing market conditions), which may be chosen in anticipation of or to hedge against anticipated market movements. The strategy or strategies employed can influence the fund’s risk/reward profile. Greater risk can bring greater rewards, but it also raises the possibility of losing money.
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Getting Started in Hedge Fund Investments
Getting started in hedge fund investing isn’t exactly straightforward — it’s not the same as firing up an investment account and buying stocks online.
Hedge funds are generally viewed as high-risk investments and as a result, the Securities and Exchange Commission (SEC) regulates who can directly invest in them. Access to hedge investment funds is limited to institutional investors, pension funds, and accredited investors. However, it’s possible for unaccredited investors to gain exposure to hedge funds in their portfolio through certain mutual funds or ETFs.
• Net worth >$1 million, excluding the value of your primary residence, and
• Annual income over $200,000 individually or $300,000 with a spouse or partner in each of the prior two years, with the same income expected for current and future years
Financial professionals with Series 7, Series 65, or Series 82 securities licenses also qualify as accredited investors.
Aside from those requirements, you must be able to meet the minimum investment requirements for a hedge fund. The amount you’ll need will vary by fund, but a typical investment minimum may range anywhere from $100,000 to $2 million.
Maximizing Potential for Returns and Managing Risks
The key to making money with hedge funds while minimizing risk generally lies in two things: Market trends and the fund manager. Like other investments, hedge funds are influenced by things like changing interest rates and volatility, and hedge fund managers need to do their best to contend with those risks to try and maximize returns for investors.
Managing risk, of course, starts with doing your research. Specifically, it’s important to understand what the fund invests in, the strategies the fund manager employs, and the fund’s track record. Helpful questions to ask include:
• How is fund performance determined?
• Does the fund use leverage or speculative strategies?
• Does the fund manager have any conflicts of interest?
• How are the fund’s assets valued?
• How are fund assets safeguarded?
It may also be wise to consider the costs, as hedge funds can charge higher fees than traditional mutual funds or ETFs. An investor might pay an asset management fee of 1%-2%, as well as a higher performance fee of 20%, which is intended to motivate the hedge fund manager to generate better returns.
Note that hedge funds are generally not liquid assets and you may be required to leave your capital in the fund for a certain period. There may be limits on when you can redeem your shares, so it’s important to consider how much money you’re comfortable putting into these investments.
Regulatory and Legal Aspects
Due to their complexity, hedge funds and hedge fund investments are subject to federal regulation. Some of the laws and regulations governing hedge funds include:
• Securities Act of 1933
• Securities Exchange Act of 1934
• Investment Company Act of 1940
• Dodd-Frank Wall Street Reform and Consumer Protection Act of 20106
The SEC regulates hedge funds to ensure that they act within the scope of the law concerning registration, investment offerings, and investor protections. Hedge funds that trade in commodities or futures may also be subject to regulation from the Commodity Futures Trading Commission (CFTC).
Hedge funds are required to file Form ADV with the SEC. This document includes relevant details about the fund’s assets, its investment strategies, and potential conflicts of interest. You have the right to review a hedge fund’s Form ADV before investing to learn more about it.
Evolving Trends in Hedge Funds
Hedge funds are not static, as new trends emerge and older ones fade away. Some of the most significant trends to watch right now, according to the CAIA Association, include:
• Slower growth as the hedge fund industry reaches maturity
• Increased focus on long/short equity strategies, private debt, and private credit
• Gradual reduction in hedge fund fees
Demand for hedge funds may slow, too, should the U.S. economy enter a recession. If you’re all interested in how to invest in hedge fund markets now, or in the future, it’s worth watching these and other trends to see how this investment space will develop.
The Takeaway
Hedge funds can help you build a diversified portfolio, with the potential to generate returns. If you’re interested in how to invest in hedge funds, you’ll first need to determine whether you’re an accredited investor. If not, consider other avenues for accessing these and other types of alternative investments, such as through investing in mutual funds or ETFs. You can quickly start investing online in funds that offer exposure to venture capital, real estate, and other alternatives.
Ready to expand your portfolio's growth potential? Alternative investments, traditionally available to high-net-worth individuals, are accessible to everyday investors on SoFi's easy-to-use platform. Investments in commodities, real estate, venture capital, and more are now within reach. Alternative investments can be high risk, so it's important to consider your portfolio goals and risk tolerance to determine if they're right for you.
Invest in alts to take your portfolio beyond stocks and bonds.
FAQ
What are the requirements to invest in hedge funds as an individual?
Individual investors must typically be accredited to invest in hedge funds. That means having a net worth greater than $1 million, excluding the value of your primary residence, and an annual income of $200,000 (or $300,000 for couples).
Is it possible to start investing in hedge funds with a small capital?
It’s possible to find hedge funds that have a lower minimum investment of $20,000 or $25,000. But that may still be out of reach for the average person who’s just getting started with investing. It may be easier to invest in diversified funds that hold alternatives such as hedge funds, real estate, or private equity through a brokerage.
What are the key benefits of investing in hedge funds?
The most attractive feature of hedge fund investing is that it’s possible to see returns that beat the market. It’s important to remember, however, that hedge funds don’t always outperform and in some cases, returns may lag significantly behind returns generated by the S&P 500.
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SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below:
Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.
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.
An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. This and other important information are contained in the Fund’s prospectus. For a current prospectus, please click the Prospectus link on the Fund’s respective page. The prospectus should be read carefully prior to investing.
Alternative investments, including funds that invest in alternative investments, are risky and may not be suitable for all investors. Alternative investments often employ leveraging and other speculative practices that increase an investor's risk of loss to include complete loss of investment, often charge high fees, and can be highly illiquid and volatile. Alternative investments may lack diversification, involve complex tax structures and have delays in reporting important tax information. Registered and unregistered alternative investments are not subject to the same regulatory requirements as mutual funds.
Please note that Interval Funds are illiquid instruments, hence the ability to trade on your timeline may be restricted. Investors should review the fee schedule for Interval Funds via the prospectus. Claw Promotion: Customer must fund their Active Invest account with at least $25 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.
While most investors are familiar with stocks, bonds, and cash, there is a world of investment opportunities beyond these assets.
Alternative investments are those outside of traditional assets. While they can be higher risk, alternatives can offer various potential upsides for investors, such as diversifying an existing investment portfolio, higher returns compared to stocks and bonds, and the opportunity to earn passive income.
Key Points
• Alternative investments include assets other than stocks, bonds, and cash, such as collectibles, commodities, derivatives, real estate, private equity, venture capital, hedge funds, and more.
• Alternative investments may provide portfolio diversification, as they often have a low correlation with traditional asset classes.
• Alternative investments have the potential to generate higher risk-adjusted returns compared with traditional assets, though this also comes with higher risk.
• Alternative investments tend to be illiquid, not as transparent as other financial assets, and may include the risk of total loss.
• You can invest in alternative investments through mutual funds, ETFs, interval funds, REITs, MLPs, or by working with an experienced asset manager.
What Are Alternative Investments?
Alternative investments — commonly known as alts — are those that are different from conventional investment categories such as stocks, bonds, and cash. Alts include a wide variety of securities as well as tangible assets such as commodities, foreign currencies, real estate, art and collectibles, venture capital, derivative contracts, and more.
Alts typically have a lower correlation with traditional asset classes, meaning they tend to move independently of them, and thus they may provide investment portfolio diversification. They also have the potential to generate higher returns when compared to stocks and bonds, and some are structured to provide passive income to investors. But alts typically include higher-risk assets and strategies, which can be illiquid and harder to track, owing to a lack of transparency.
Alts used to be accessible mainly to high net-worth and accredited investors, but now they’re available to a range of investors, thanks to the emergence of vehicles such as mutual funds and ETFs that include various alts and strategies.
The lack of liquidity for most alts means that determining the fair market value of these assets can be quite challenging. Often there is little by way of public data available regarding price changes or asset appreciation or depreciation, making it difficult to assess historical performance.
💡 Quick Tip: While investing directly in alternative assets often requires high minimum amounts, investing in alts through a mutual fund or ETF generally involves a low minimum requirement, making them accessible to retail investors.
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Types of Alternative Investments
The following list encompasses some common types of alternative investments and alternative strategies available to investors today.
1. Real Estate
• Summary: You can invest in real estate by owning rental property, investing in commercial real estate, industrial real estate, healthcare facilities, and more. Investors can also buy into Real Estate Investment Trusts, or REITs.
• Pros and cons: Although real estate tends to hold its value over time, there are no guarantees. Different properties can be vulnerable to a host of factors including business trends, land values, interest rate risk, and more.
• Summary: Commodities are raw materials that include agricultural products (e.g. grain, meat), precious metals such as gold, silver, copper, energy (including renewables), and more. Generally, investors participate in commodity trading using futures contracts, index funds, mutual funds, or ETFs.
• Pros and cons: Some investors consider commodities a good hedge against inflation and they have the potential to deliver a profit. However, commodities can suffer from any number of unexpected risk factors, from weather conditions to supply chain breakdowns and more.
• Summary: Private equity firms invest capital in companies that aren’t publicly traded, often with the aim of taking over the company. Because PE is a high-stakes endeavor, these opportunities are generally available to high net-worth and accredited investors. Now, however, retail investors can gain exposure to private funds through vehicles such as interval funds.
• Pros and cons: Private equity is considered a high-risk investment, but if a private company goes public or gets acquired, these investments may perform well. The risk with private equity investments is that these are often focused on distressed companies, with a complex track record, and sometimes startups (see Venture Capital below).
• Summary: VC investing is a way of putting money into startups with the hope of later gains, though there is no guarantee of a return. Investors can buy a slice of startup or private companies, through equity crowdfunding platforms (which differ from traditional crowdfunding in that investors own equity in the company) and interval funds.
• Pros and cons: Venture capital investing is considered a subset of Private Equity, as noted above. It can be risky because if the startup fails, investors may lose all of their money. On the other hand, if a startup does well, investors may see a significant profit.
• Summary: Private credit involves direct loans made to companies from non-bank entities. Private credit can be a more expensive way to borrow, but it can be faster for the companies needing capital, and for investors it offers the potential for steady interest payments.
• Pros and cons: Private credit funds tend to see greater inflows when the stock market is underperforming, and they usually pay higher rates than conventional fixed income instruments. The risk here is that most PC funds offer only quarterly redemptions — so they’re quite illiquid — and they can be vulnerable to defaults.
• Summary: Works or art and other types of collectibles (e.g., wine, jewelry, antiques, cars, rare books) can personally appeal to investors, and may grow in value over time. It’s also possible to invest in fractional shares of art, or in shares of an art-focused fund.
• Pros and cons: Investing in art or collectibles may provide a hedge against inflation or other market factors. That said, the price of upkeep, insurance, and maintenance can be considerable. And while some pieces may gain value over time, art and collectibles can also be subject to changing trends and tastes. Fraud is another risk to consider.
7. Hedge Funds
• Summary: Hedge funds offer investors access to alternative investing strategies, like arbitrage, leveraged trades, short-selling, and more. Hedge funds aren’t as heavily regulated as other types of funds, so they’re able to make riskier investments and lean into aggressive strategies, with the goal of delivering outsized returns.
• Pros and cons: While hedge fund managers sometimes deliver a significant profit, they charge high fees and investment minimums that often put them beyond the reach of mainstreet investors. Today, investors may be able to access mutual funds, ETFs, funds of funds, or other vehicles that employ similar alternative strategies.
8. Farmland/Timberland
• Summary: Like many types of real estate, farmland and timberland tend to hold their value over time, as long as they remain productive. This type of property can be similar to commodities in that there is potential profit in the products that come from the land (e.g. produce and timber).
• Pros and cons: Owners of farmland can lease out the land to earn income, which can be profitable for investors. The potential downside of investing in farmland and timberland are the environmental and weather-related risks that can impact both the value of the land and its productivity.
9. Infrastructure
• Summary: Infrastructure refers to the physical structures that economies depend on: roads and highways, bridges and tunnels, energy pipelines, and more. Municipal bonds are one way to invest in infrastructure, as are some types of REITs (real estate investment trusts).
• Pros and cons: As a non-cyclical type of asset, infrastructure investments may offer the benefit of less exposure to market risk factors, steady cash flows, and low variable costs. The risks of infrastructure investments include political and environmental factors that can impact or delay the execution of a project.
10. Foreign Currencies
• Summary: Foreign currencies are an example of an alternative investment that can be highly liquid, and thus easier to trade.
• Pros and cons: Currency trading is known for its volatility, and currency traders often make leveraged trades, assuming a high degree of risk. Retail investors may find it potentially less risky to invest via mutual funds, ETFs, foreign bond funds, and even certain types of CDs (certificates of deposit), although the underlying volatility of most currencies will influence the performance of these investments as well.
💡 Quick Tip: Newbie investors may be tempted to buy into the market based on recent news headlines or other types of hype. That’s rarely a good idea. Making good choices shouldn’t stem from strong emotions, but a solid investment strategy.
Advantages and Disadvantages of Alternative Investments
In sum, alternative investments are certainly worth considering given their potential advantages, but it’s important to keep in mind the possible disadvantages to make the best choices in light of your own goals and risk tolerance.
Advantages
• May offer the potential for higher risk-adjusted returns.
• Are typically not correlated with traditional stock and bond markets, so they may help diversify a portfolio and mitigate risk.
• May have the potential to deliver passive income.
• Some alts may hedge against inflation or interest rate fluctuations.
• May appeal to an individual’s personal interests: e.g., art, wine, memorabilia.
Disadvantages
• Are often higher risk, or can be subject to greater volatility.
• Can be less liquid than traditional investments due to limited availability of buyers and lack of a convenient market.
• Often limited to high net-worth and accredited investors.
• May have higher minimum investment requirements and higher upfront fees.
• May have less available public data and transparency about performance, making it difficult to determine a financial asset’s value.
As mentioned above, alternative investments used to be limited to institutional investors and high net-worth investors, but they’re now available to average investors through mutual funds, ETFs, and sometimes even through companies’ IRAs.
If you’re thinking about adding alternative investments to your portfolio, finding the right brokerage and/or asset manager can help you incorporate alts into your portfolio in the way that makes sense for your long-term plan. SoFi, for example, is working with knowledgeable asset fund managers in the alts space to provide access to mutual funds across a variety of categories.
Once you’ve identified the types of alternative investments that would suit your goals, your risk tolerance, and your plan (e.g., you might prefer commodities to owning art), you can look for the funds that would help you buy into these alternative asset classes.
Here are some of the more traditional methods to invest in alternatives:
ETFs
An exchange-traded fund, or ETF, is an investment vehicle that enables investors to buy a group of stocks, bonds, commodities, or other securities in one bundle, thus promoting investment diversification and efficiency. They’re widely available, usually through major investment fund companies.
Interval Funds
These closed-end funds are not traded on the secondary market and have limitations on redemptions (among other risks and restrictions). But because the funds are highly illiquid and have infrequent redemptions, fund managers may use alternative investments to pursue higher yields.
MLPs
A master limited partnership, or MLP, is a business partnership that’s publicly traded on an exchange. While an MLP may sound like a company, these partnerships have a different type of structure and are restricted to natural resources and energy-related products and sometimes real estate.
MLPs can provide the liquidity of stocks, but the tax treatment can be complex — and they are higher risk than regular equities.
Mutual Funds
A mutual fund is an investment vehicle that pools money from many investors in order to invest in different securities. Mutual funds may hold any combination of stocks, bonds, money market instruments, or cash and cash equivalents.
They may also include alternative investments, such as real estate, commodities, or investments in precious metals.
REITs
A real estate investment trust, or REIT, is a way of investing in shares of different types of real estate within a single fund. REITs invest in companies that own, operate, or finance a wide variety of real estate types.
Things to Consider When Investing in Alts
Alternative investments are complex, and while the risk may be worth the potential reward for some investors, there are some additional caveats to bear in mind about these assets.
How Are Alternative Investments Taxed?
Unlike conventional asset classes, which are typically subject to capital gains tax or ordinary income tax, different alts can receive very different tax treatments, even when investing in these assets via a mutual fund or ETF. When investing in alts, it’s wise to involve a professional to help address the tax-planning side of the equation.
What Role Should Alts Play in Your Portfolio?
Remember, because alts don’t generally move in sync with traditional asset classes, they may offset certain risk factors. And while alts come with risks of their own, including volatility and lack of transparency, within the context of your portfolio as a whole, alts, and funds that invest in alts, may enhance returns. Some alts can provide passive income as well as gains.
It’s important to know, however, that alternative investments are higher risk, tend to be more illiquid, and less transparent. As such, alts should typically only be one part of your portfolio to complement other assets. Some advisors, for example, recommend up to a 10% allocation for alternative investments, though this number can vary.
The Takeaway
Alternative investments have the potential for high returns and may offer portfolio diversification. The scope and variety of these investments means investors can look for one (or more) that suits their investing style and financial goals. Unlike more conventional investments, alts tend to be higher risk, more expensive, and subject to complex tax treatment.
It’s important to research and do due diligence on any alternative investment option in order to make the best purchasing decisions and reduce risk. While some alternative investments are less accessible, others can be purchased through vehicles such as mutual funds and ETFs.
Ready to expand your portfolio's growth potential? Alternative investments, traditionally available to high-net-worth individuals, are accessible to everyday investors on SoFi's easy-to-use platform. Investments in commodities, real estate, venture capital, and more are now within reach. Alternative investments can be high risk, so it's important to consider your portfolio goals and risk tolerance to determine if they're right for you.
Invest in alts to take your portfolio beyond stocks and bonds.
FAQ
Are ETFs considered alternative investments?
Generally no. For the most part, exchange-traded funds (ETFs) are passive investments — meaning they track an index — and typically that index is for a conventional asset class like stocks or bonds. That said, some ETFs track niche parts of the market, including certain types of alternative strategies, including options, long-short strategies, managed futures, real estate investment trusts (REITs), and more.
Are alternative investments worth it?
For some investors, choosing to add alts to their portfolio might be worth it because alternative assets can add diversification (which can help manage risk), and alts may enhance returns over time. But alts also come with their own set of risk factors, including the fact that some alternative assets are illiquid, and are not regulated like other financial products.
How do alternative investment funds work?
Alternative investment funds work in a range of ways. A mutual fund focused on alternative strategies, like derivatives, is likely to be actively managed and employ techniques like leverage or short selling. Before investing in an alternative fund, it’s wise to make sure you understand the underlying strategy, assets, and fees.
What are the key characteristics of alternative investments?
Alternative investments may offer portfolio diversification with low correlation to traditional assets, potentially higher returns, and may provide protection against inflation or interest rate fluctuations. However, they can be illiquid, may have redemption restrictions, and determining their real-world value can be challenging due to limited transparency and public data.
An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. This and other important information are contained in the Fund’s prospectus. For a current prospectus, please click the Prospectus link on the Fund’s respective page. The prospectus should be read carefully prior to investing.
Alternative investments, including funds that invest in alternative investments, are risky and may not be suitable for all investors. Alternative investments often employ leveraging and other speculative practices that increase an investor's risk of loss to include complete loss of investment, often charge high fees, and can be highly illiquid and volatile. Alternative investments may lack diversification, involve complex tax structures and have delays in reporting important tax information. Registered and unregistered alternative investments are not subject to the same regulatory requirements as mutual funds.
Please note that Interval Funds are illiquid instruments, hence the ability to trade on your timeline may be restricted. Investors should review the fee schedule for Interval Funds via the prospectus. SoFi Invest®
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
SoFi Invest encompasses two distinct companies, with various products and services offered to investors as described below:
Individual customer accounts may be subject to the terms applicable to one or more of these platforms.
1) Automated Investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser (“SoFi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC.
2) Active Investing and brokerage services are provided by SoFi Securities LLC, Member FINRA (www.finra.org)/SIPC(www.sipc.org). Clearing and custody of all securities are provided by APEX Clearing Corporation.
For additional disclosures related to the SoFi Invest platforms described above please visit SoFi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform.
Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by email customer service at https://sofi.app.link/investchat. Please read the prospectus carefully prior to investing.
Shares of ETFs must be bought and sold at market price, which can vary significantly from the Fund’s net asset value (NAV). Investment returns are subject to market volatility and shares may be worth more or less their original value when redeemed. The diversification of an ETF will not protect against loss. An ETF may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences. Fund Fees
If you invest in Exchange Traded Funds (ETFs) through SoFi Invest (either by buying them yourself or via investing in SoFi Invest’s automated investments, formerly SoFi Wealth), these funds will have their own management fees. These fees are not paid directly by you, but rather by the fund itself. these fees do reduce the fund’s returns. Check out each fund’s prospectus for details. SoFi Invest does not receive sales commissions, 12b-1 fees, or other fees from ETFs for investing such funds on behalf of advisory clients, though if SoFi Invest creates its own funds, it could earn management fees there.
SoFi Invest may waive all, or part of any of these fees, permanently or for a period of time, at its sole discretion for any reason. Fees are subject to change at any time. The current fee schedule will always be available in your Account Documents section of SoFi Invest.
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.
Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.
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.
A chartered alternative investment analyst, or CAIA, is a financial professional who specializes in offering advice about alternative investments. The CAIA Association offers the CAIA Charter Program for financial professionals who are interested in expanding their financial knowledge to include alternatives such as real estate, private equity, and hedge funds.
Obtaining a CAIA designation requires the successful completion of two exams and membership in the CAIA Association. A securities license is not needed for CAIA certification, though you will need to have at least a bachelor’s degree and adequate work experience to earn it.
Key Points
• The CAIA Charter Program specializes in alternative investments like real estate, private equity, and hedge funds.
• The successful completion of two exams and CAIA Association membership are required for certification.
• Exams cover topics like professional standards, ethics, and the various types of alternative investments.
• CAIA certification can enhance career prospects and distinguish financial advisors.
• Approximately 13,000 CAIA charterholders exist worldwide, working in diverse financial roles.
Advantages of Obtaining a CAIA
Professional designations generally have a time and cost component to acquire — meaning that you’ll likely need to pay some fees and put in some study time to earn them — and it’s no different with the CAIA certification. It’s important, then, to consider what kind of return on investment you might enjoy. Adding a CAIA credential to your professional resume may yield several benefits.
• A CAIA charter can help you distinguish yourself from other financial advisors you compete with.
• Gaining additional knowledge in the area of alternative investments could enable you to expand the services you offer as a financial advisor, potentially increasing your revenues in the process.
• You can use what you learn in the CAIA Charter Program to better serve your existing clients and offer more comprehensive advice when constructing a diversified portfolio.
• CAIA certification may give you an edge if you’re hoping to get promoted within your current firm, or get hired at a different one.
• You can use your skills to build your brand reputation and network. For example, you might offer to lead a seminar on the benefits of alternative investments at a nationally recognized conference.
A CAIA designation might be right for you if you’re hoping to broaden your knowledge base where alternative investments are concerned. Examples of financial professionals who may be good candidates for CAIA certification include risk managers, portfolio managers, traders, consultants, and fiduciary advisors.
Start trading funds that include commodities, private credit, real estate, venture capital, and more.
Preparing for the CAIA Exam
The CAIA exam is actually two levels of examinations, both of which you’ll need to complete unless you qualify for a waiver. You’re eligible to obtain CAIA certification by taking just one exam if you’re a CFA charterholder. CFA is short for “certified financial analyst,” and is a professional designation offered by the CFA Institute.
In terms of what the exams cover, there are two topic groups. Level I topics include, but are not limited to:
• Professional standards and ethics
• Introduction to alternative investments
• Real assets
• Private equity
• Private debt
• Hedge funds
• Digital assets
• Additional strategies in alternative investing3
Level II exams cover:
• Emerging topics in alternative investments
• Universal investment considerations
• Modeling
• Institutional asset owners and investment policies
• Risk and risk management
• Methods for alternative investments
• Accessing alternative investments
• Due diligence and selecting managers
• Volatility and complex strategies3
Exams are offered twice per year, in March and September. The CAIA Association writes and prepares the curricula covered by both exams.
When you register for the CAIA exam and pay the registration fee you’ll get access to digital exam prep materials. You must pay a one-time enrollment fee of $400 for each exam, at the time of publication, as well as a $1,395 registration fee per exam. If you need to retake an exam, the fee is $795.
It’s possible to find CAIA study courses online. Courses may be self-paced or include live instruction. Note that these courses are not endorsed by the CAIA Association. Candidates are encouraged to commit at least 200 hours to study prep for each level before attempting the exams.
As far as the exam format goes, Level I and Level II are slightly different. Both exams include a multiple-choice component. Level I features 200 multiple-choice questions, while Level II has 100 multiple-choice questions. The Level II exam also has a constructed response section, which requires you to answer questions in essay format. You’ll have two hours per section, four hours total, to complete both exams.
Historical Pass Rates
CAIA exam pass rate numbers from March 2024 put the pass rate for the Level I exam at 46%, and the pass rate for the Level II exam at 59%. Since 2011, pass rates for the exam have been on a downward trend. Before 2011, the typical pass rate for the exams was around 70%.
The CAIA Association does not specify what constitutes a passing score for the CAIA exam. It’s generally recommended that candidates aim for a final score of 70 or better on both exams in order to position themselves for the best chance of passing.
CAIA vs. CFA
Chartered financial analysts or CFAs conduct research and analyze financial data, then use what they learn to make portfolio recommendations to clients who might be using a brokerage for online investing. A CFA may work with individual investors, institutional investors, or a mix of both. CFAs may offer advice on alternative investments but they may be less knowledgeable about them than a CAIA.
To obtain a CFA designation, you’ll need to pass three levels of exams, which become progressively more difficult. You must also meet minimum education and work experience requirements, and be able to provide professional letters of reference.
As for which is better, CAIA vs. CFA? It depends on your career goals. If you’d like to specialize in alternative investments, then a CAIA credential could help you attract clients with those particular needs. For example, you might have clients who are interested in investing in art, fine wines, or hedge funds.
On the other hand, you may lean toward a CFA designation if you’d like to offer advice for a broader range of investments, or even consider earning both designations.
The CAIA Charter
The CAIA Charter is how the CAIA Association refers to the CAIA designation or credential. Approximately 13,000 financial professionals worldwide have earned a CAIA certification and are considered charterholders.
The CAIA Association was founded in 2002 by the Alternative Investment Management Association (AIMA) and the Center for International Securities and Derivatives Markets (CISDM). The Association’s mission is to raise industry standards among financial professionals who work with alternative investments.
The Takeaway
If you’re working in financial services you might weigh the merits of a CAIA designation. And if you’re interested in exploring alternative investments for your portfolio it could make sense to seek out a CAIA professional.
Ready to expand your portfolio's growth potential? Alternative investments, traditionally available to high-net-worth individuals, are accessible to everyday investors on SoFi's easy-to-use platform. Investments in commodities, real estate, venture capital, and more are now within reach. Alternative investments can be high risk, so it's important to consider your portfolio goals and risk tolerance to determine if they're right for you.
Invest in alts to take your portfolio beyond stocks and bonds.
FAQ
How difficult is the CAIA exam?
Based on current pass rates and historical trends the numbers suggest that its level of difficulty is something to take seriously. Taking practice tests can be a helpful way to prepare for the exam and get a sense of where you might land score-wise.
What jobs can I get as a CAIA charterholder?
CAIA professionals can work in many different roles, in varied settings. Possible job titles you could get with a CAIA credential include investment analyst, investment consultant, portfolio manager, risk manager or risk analyst, and investment advisor.
How many CAIA charterholders are there?
According to the CAIA Association, there are approximately 13,000+ CAIA charterholders worldwide. Charterholders are located in more than 100 countries globally.
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Veterans have access to various scholarship and grant opportunities that can lessen the financial burden of pursuing ongoing education. These unique financial aid programs are sometimes also available to military families, which may include dependents or spouses of veterans.
If you’re a veteran who’s enrolling in college or have a dependent in your family who’s collegebound, we’ve created this guide to scholarships and grants for veterans to get you started.
Key Points
• Military scholarships are often available to veterans, active duty service members, and their dependents, such as spouses and children.
• These scholarships help cover tuition, fees, and other educational expenses, reducing the financial burden of higher education.
• Some scholarships require a commitment to continue serving in the military or working in specific fields post-graduation, like health care or public service.
• Military scholarships often have streamlined applications, but may require proof of service or military affiliation.
• In addition to military scholarships, students can apply for traditional scholarships, grants, and federal and private student loans to help cover the cost of college.
Best Scholarships for Military Veterans
There are many scholarship programs available for military veterans and their dependents, all of which have different eligibility and application requirements. Below are just a handful of scholarships for veterans, or their dependents or spouses, that offer awards that are $2,000 or higher.
• Pat Tillman Foundation Scholarship: The Pat Tillman Foundation Scholarship is a merit-based scholarship program that’s available to active duty and veteran military service members, including their current or surviving spouses. The average recipient receives approximately $10,000 per academic year and awards are renewable as long as you maintain eligibility requirements.
• Folds of Honor Scholarship: The Folds of Honor Scholarship is available to dependents and spouses of a qualifying service member. Dependents must be enrolled in an accredited institution, a certificate- or license-granting technical, or a trade school program. The scholarship offers $5,000 per academic year, which is disbursed in amounts up to $2,500 per term. Awards are renewable, but recipients must reapply for each academic year.
• AMVETS Scholarships:AMVETS Scholarships are a need-based program that’s open to veterans, active duty, and National Guard and Reserve service members and their families. The maximum award is $12,000. Applicants must be studying toward an undergraduate degree and meet other eligibility requirements.
• Military Order of the Purple Heart Scholarship: Recipients of a Purple Heart who are members of the organization and their families — including spouses, children, grandchildren, and great-grandchildren — can apply for this scholarship program. Scholarship amounts vary each year and are based on available funding.
Another scholarship option is SoFi’s scholarship sweepstakes. It offers one $2,500 scholarship award per month over a 12-month period. Entry is available to SoFi members who are at least 17 years old and enrolled in an accredited, nonprofit, Title IV four-year college or university in the U.S. You can enter once per monthly scholarship period. Awards are sent directly to the winner’s school and can be used toward your cost of attendance.
Grants for Veterans
Grants are another type of college financial aid which doesn’t need to be repaid. Some grants require applicants to meet specific eligibility criteria. If your military family fits the program’s application requirements, a grant award can help make college costs more accessible.
Below are two grants veterans or their family members may qualify for.
The Iraq and Afghanistan Service Grant
The Iraq and Afghanistan Service Grant is a federal grant that’s offered by the U.S. Department of Education. It’s uniquely available to students whose parent or guardian died in active duty while serving in Iraq or Afghanistan, post-9/11. The available award is equal to the maximum Federal Pell Grant during the award year; in 2024-25 the amount is $7,395.
To qualify, veteran dependents must meet the Federal Pell Grant eligibility requirements but must not have received a Federal Pell Grant award in the same year. Additionally, recipients must have been under 24 years old or at least a part-time college student at the time of their parent or guardian death.
General Henry H. Arnold Education Grant
The General Henry H. Arnold Education Grant is provided by the Air Force Aid Society (AFAS). Children under 24 years old who are dependents of qualifying U.S. Air Force or U.S. Space Force members, as well as legally married spouses of Air Force or Space Force service members, can apply. Award amounts vary based on the recipient’s financial need.
Applicants must have graduated high school and be enrolled in an undergraduate program at an accredited school that participates in federal aid programs. You must maintain a cumulative minimum GPA of 2.0 and not be a graduate or professional student, veteran, or military branch member, including the National guard or Reserves.
Veterans Affairs Educational Benefits
Veterans have earned a slew of education benefits that can help them — and under some programs, their families — financially pursue higher education or career training. The list of programs you might have access to through Veterans Affairs (VA) include:
• Montgomery GI Bill for Active Duty
• Montgomery GI Bill for Selected Reserve
• Post-9/11 GI Bill
• Reserve Educational Assistance Program
• Post-Vietnam era Education Assistance Program
• National Call to Service
• Survivors’ and Dependents’ Educational Assistance
Depending on your service background, you might be eligible for multiple VA education benefit programs. Additionally, you can receive financial support to help pay for books and supplies, test fees for licenses or certifications, national exam fees, and more.
Financial aid grants aren’t just for veterans and their families. Service members can also apply for grant programs while in active duty.
One option to explore is the Federal Pell Grant, which is available to undergraduate students who demonstrate exceptional financial need and are enrolled in a U.S. school. As a federal financial aid program, applying for a Pell Grant only takes submitting a Free Application for Federal Student Aid (FAFSA). If you qualify, the maximum Pell Grant award for the 2024-25 academic year is $7,395, though this award might vary year over year.
Can I Get a Scholarship if My Grandfather Was in the Military?
GI Bill benefits are reserved for the service member’s education or that of their spouse or children. However, grandchildren of military service members also have access to some scholarships for veterans.
For example, the AMVETS Scholarship is also available to grandchildren of veterans and active duty U.S. military members. Grandchildren of active duty National Guard or Reserves members are also eligible.
What Qualifies You as a Veteran for FAFSA?
Unlike the criteria for veteran status under the VA, the FAFSA defines veterans as a service member who served in active duty for a minimum of one day and was released.
The condition for release must not be dishonorable discharge. Time spent by service members in basic training — except those in the National Guard and Reservists — also qualifies as active duty under the FAFSA.
The Takeaway
Utilizing your VA education benefits, including all eligible GI Bill benefits, is the first step you can take to help pay for college costs. Applying for scholarships for veterans, or for dependents or spouses of veterans, can make higher education or career training accessible for you and your family.
In addition to military scholarships, you can apply for traditional scholarships and grants to help pay for college. You can also apply for federal student loans and private 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
Does the VA offer college scholarships?
Yes, the VA offers college scholarships through programs like the Post-9/11 GI Bill and Survivors’ and Dependents’ Educational Assistance (DEA). These scholarships help cover tuition and education costs for veterans, active duty service members, and their dependents, providing financial support for higher education and career advancement opportunities.
Can veterans apply for FAFSA?
Yes, veterans can apply for the FAFSA. In fact, some grants and scholarships for veterans require a submitted FAFSA for the award year as part of their application requirements.
What is it called when the VA pays for college?
The VA benefit that pays for service members’ college and training expenses is called the GI Bill. The Department of Veteran Affairs website offers a helpful GI Bill Comparison Tool that lets you see and compare GI Benefits across approved institutions.
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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.
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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.
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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Top 15 First-Generation Scholarships for Students
Being the first one in your family to go to college is a big deal and an accomplishment to be celebrated. But navigating the process of applying for college, and figuring out how to pay for it, can be more challenging for a student whose parents didn’t attend college. First-generation students are often more likely to qualify as low-income and face financial obstacles when it comes to affording college.
Scholarships, which are financial awards that don’t have to be paid back, are a great way for students to cover the various costs of their education. When you’re a first-generation college student, you have access to a multitude of scholarships created especially for you.
Read on to learn about 15 of the top scholarships for first-generation college students and tips on finding even more of these financial awards.
Key Points
• First-generation scholarships are designed specifically to assist students who are the first in their families to attend college, providing unique financial aid opportunities.
• Applicants can qualify based on financial need, academic performance, or a combination of both, ensuring access for a variety of students.
• Many first-generation scholarships are available to students across different fields of study, making them versatile options.
• Top first-generation scholarships include the Ronald E. McNair Post-Baccalaureate Achievement Program, the First in the Family Scholarship, and the Federal TRIO Programs.
• Other ways first-generation students can pay for college include grants, federal student loans, and private student loans.
Are You the First in Your Family to Attend College?
When it comes to explaining what a first-generation college student is, there’s no clear cut definition. However, according to The Higher Education Act of 1965, a first-generation student refers to a student whose parents, or in the case of a single-parent household, one parent, who didn’t earn a bachelor’s degree.
While this is a widespread guideline, colleges or universities can set their own criteria. For example, sometimes a first-generation student is considered someone who is the first to attend school in the U.S., meaning their parents could have earned their degrees in another country.
The Ultimate List of First-Generation College Student Scholarships
Scholarships help students better afford school, and in some cases even do away with the need to take out a federal or private student loan. At the very least, it can limit the amount of money you have to borrow.
These 15 scholarships are specifically set up for students who are the first in their family to go to college. Some are merit-based, some are need-based, and some are a combination of both. There are also first-generation scholarships geared towards minority students and underrepresented segments of the population.
Read on for first-generation scholarships to consider and, where applicable, the prize amount, number of awardees, and deadline date.
1. Coca-Cola First Generation Scholarship
The Coca-Cola First Generation Scholarship, funded by the Coca-Cola Foundation , allocates funds in the form of grants to a number of colleges each year. There’s no direct application process through the Coca-Cola Foundation because schools distribute these prizes directly through their financial aid offices.
To find out if a college is a recipient of this money, the Coca-Cola Foundation advises students to contact the college’s financial aid department.
2. Fontana Transport Inc. Scholars Program
The Fontana Transport Inc. Scholars Program is for first-generation high school seniors who are underrepresented, are in financial need, and are passionate about furthering their education as a way to help themselves, their family, and their community. This scholarship of up to $5,000 is awarded to one winner, and the deadline is March 14, 2025.
To qualify, applicants need to pursue a full-time undergrad degree at any four-year accredited college or university in the U.S. Applicants of this scholarship must plan to study in one of the following areas: transportation management, math, science, engineering, architecture, environmental design, pre-med, psychology, or Spanish language/literature.
3. First Generation Civil Rights Fellowship Program (FirstGEN)
FirstGEN , or the First Generation Civil Rights Fellowship Program, is a program for first-generation undergraduate students who intend to pursue a career in the field of social justice. This paid summer program lasts from June to August, and recipients of the fellowship will serve as a summer intern with one of FirstGEN Fellowship’s partners: Lawyer’s Committee for Civil Rights Under Law, Asian Americans Advancing Justice (AAJC), or the National Immigration Law Center (NILC).
Over the course of their summer internship, FirstGEN fellows gain experience advocating for civil rights, participating in training and professional development seminars, and becoming part of a group of emerging leaders in the FirstGEN Alumni Network.
Fellows receive a $1,500 stipend, and the estimated deadline is January 20, 2025.
4. Institute for Study Abroad (IFSA) First-Generation College Student Scholarship
This scholarship offers a financial award for first-generation college students who want to study abroad. The IFSA First-Generation College Student Scholarship awards up to $2,500 to help offset upfront costs of studying abroad including airfare, visa/passport, and housing.
Application deadlines for summer, fall, or year terms are March 1, and October 1 for January and spring terms.
5. Boyd J. Cameron Memorial Scholarship
First-generation college students can apply for the Boyd J. Cameron Memorial Scholarship . The $1,000 prize is specifically for those students who are pursuing a degree in business. Application deadline is February 1, 2025.
6. OCA-UPS Gold Mountain Scholarship for Rising College Seniors
Applicants for OCA-UPS Gold Mountain Scholarship must be first-generation high school seniors who identify as either Asian-American or Pacific Islander, and who will be attending college right after high school graduation.
To be eligible, students don’t have to be a U.S. citizen, and the scholarship is open to DACA and undocumented students, as long as they can provide a Social Security number or an Individual Taxpayer Identification Number. Awards are $2,000 each.
7. The Kim and Harold Louie Foundation Scholarship
Students who are the first in their family to attend college are eligible to apply for The Kim and Harold Louie Foundation Scholarship . Award amounts vary, but the organization anticipates giving out approximately $100,000 in annual scholarships.
The scholarship is specifically for those who will be enrolling as a freshman in a college or university in the U.S., but it’s not just limited to high school seniors. Students who decided to take a gap year or adults returning to school are also allowed to apply. Scholarship recipients should have displayed academic merit, outstanding personal achievement, leadership qualities, and/or participation in community service.
Deadline for this scholarship is March 15, 2025.
8. Sharon and Mila Kohute Scholarship
Female first-generation high school seniors or college undergraduates who live in Ohio, Pennsylvania, West Virginia, or Virginia are eligible to apply for the Sharon and Mila Kohute Scholarship .
The aim of this need-based award is to help give women, who may be part of a cycle of generational poverty, the opportunity to attend college. This scholarship is awarded annually to two winners, each of whom receive $1,000 to use toward their education.
9. Editor World First-Generation Scholarship
If you’re a first-generation student about to enroll, or are currently enrolled, at a trade school, college, or university in the U.S., you’re eligible to apply for the Editor World First-Generation Scholarship . The $500 scholarship is awarded to one undergraduate first-generation student who could use some assistance with educational costs.
10. National Society of Collegiate Scholars First in the Family Scholarship
The National Society of Collegiate Scholars (NSCS) has partnered with GEICO to offer many scholarships, including the First in the Family Scholarship . This particular scholarship is created for those first-generation students who are honor society members at one of more than 300 colleges and universities in the U.S., including Washington D.C. and Puerto Rico.
Eight students will be chosen for a $2,500 NSCS scholarship. To be eligible to apply for one of the NSCS First in the Family scholarships, students must be a member of NSCS and show proof of a 3.0 GPA. Deadlines for this scholarship vary.
11. José Ventura and Margarita Melendez Mexican-American Scholarship Fund
The $1,000 scholarship will go to two individuals, and applicants will be asked to submit a short essay about why they’re passionate about being a first-generation, Mexican-American college graduate. The application deadline is December 2, 2024.
12. Kadzai Law Group First-Generation College Student Scholarship
First-generation U.S. citizens or permanent residents who are attending an accredited college or institution in the U.S. can apply for the Kadzai Law Group First-Generation College Student Scholarship . The scholarship awards one student with $2,500, and is open to both undergraduate and graduate students.
Applicants will have to submit a three- to five-minute video discussing challenges facing a first-generation student and how the experience either will provide benefits for you (if you’re a first-time freshman) or has provided benefits for you. The deadline for applying for this award is April 2, 2025.
EducationDynamics Minority $10,000 First-Generation Scholarship awards one $10,000 scholarship to a minority student who is the first in their family to attend college. Those applying need to be at least 17 years old and pursuing an associate degree, a bachelor’s at any accredited post-secondary institution of higher learning, or a certificate program. This year’s deadline was August 30, with winners being notified on or about November 15, 2024.
14. RSM US Foundation First-Generation Scholarship
The management and financial consulting company RSM US Foundation offers a First- Generation Scholarship to five students, with up to $30,000 each in scholarships, paid $10,000 annually over three consecutive academic years.
Applicants for the RSM US Foundation First- Generation Scholarship must be an undergraduate student who doesn’t have an immediate family member that received a bachelor’s degree. It’s important to note that with this scholarship, students are still eligible even if their immediate siblings have, or are currently pursuing, a bachelor’s degree.
Other requisites include being a legal resident of any of the 50 states and Washington D.C., and being at least 18 years old. They must also be a full-time student in their first, second, or third year at an accredited college or university, have a 3.0 or above GPA, and be pursuing a bachelor’s degree in a business or technology program.
The application period is from December 1, 2024 to February 28, 2025. Selections are made annually in April.
15. Ronald E. McNair Post-Baccalaureate Achievement Program
The goal of the McNair Scholars Program is to prepare undergrads who have demonstrated strong academic potential for doctoral studies via involvement in research and other scholarly activities.
Participants in the Ronald E. McNair Post-Baccalaureate Achievement Program, part of the Federal TRIO Programs, include first-generation college students with financial need along with members of a group traditionally underrepresented in graduate education. The McNair Scholars Program exists to increase graduate degree awards for underrepresented students in society.
Other Ways First-Gen Students Can Find Scholarships
Many states also have their own first-generation scholarship opportunities for students. You can find out about these opportunities through your state’s education agency, the college’s financial aid office, your academic advisor, or if you’re a high school student, through your guidance counselor.
General First-Generation Scholarship Opportunities
First-generation students may be able to get a scholarship through the federal government’s Federal TRIO Programs (TRIO). TRIO are outreach and student services programs created to identify and provide services for people from disadvantaged backgrounds. These programs are there to serve and help first-generation college students, low-income individuals, and those with disabilities to move forward through the academic pipeline from middle school to doctorate programs.
TRIO programs help with giving students academic support and the tools to enroll and succeed in college. The previously mentioned Ronald E. McNair Post-Baccalaureate Achievement Program is one of the eight standing TRIO projects, along with some of the others including Upward Bound and Talent Search.
Do You Get Money for Being a First-Generation College Student?
Yes, you definitely can. With an understanding of many of the challenges first-generation students face when it comes to affording and applying to college, the federal government, along with many states, educational institutions, foundations, and organizations, offer specific scholarships for these students.
Can You Get a Scholarship for Being a First-Generation American?
First-generation American students are definitely eligible to apply for first-generation college scholarships. While many scholarships require the student to be a U.S. citizen, the parents may not have to be.
What Benefits Do First-Generation College Graduates Get?
As indicated above, there are a slew of scholarships only for those who are the first in their family to attend college, which means more opportunities to secure free money.
Some colleges and universities are more financially friendly for first-generation students, offering free application fee waivers and cost-free books and computers. Schools may also have specific support and social groups to help new first-generation students adjust to college life.
On a more individual level, first-generation college students can be inspiring for others in their family to follow in their footsteps, exhibit a stronger work ethic and determination to succeed because of the effort it took to get there, bring a unique perspective to other students and instructors, and be a catalyst for social change by championing educational equity.
The Takeaway
First-generation college students face certain hurdles compared to students who aren’t the first in their family to go to college. These obstacles include the difficulty in affording higher education and not having a parent to help navigate the application process and the transition to college life.
Fortunately, there are many scholarships created for first-generation students and other possibilities to get assistance for college, graduate school, and even doctoral programs. In addition to scholarships, first-generation college students can apply for grants, federal student loans, and private 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
Can being a first-generation college student be an advantage during the admissions process?
While being a first-generation college student doesn’t guarantee you’ll be admitted to your school of choice, your particular background and circumstances can help you to stand out. Many scholarships ask you to submit an essay or personal statement, and here is where you can delve into why going to college is so important to you and the particular struggles a first-generation college student may face.
Why do colleges care about admitting first-generation students?
First-generation college students can be an asset to any university because they add diversity and promote inclusiveness. Colleges have become increasingly more aware of the issues of inequity when it comes to the student body, and are interested in trying to do their part to give certain students a leg up and an opportunity for economic and career advancement.
How can colleges verify if I’m a first-generation student?
One of the initial questions on a college application is about the educational history of the applicant’s parents. Information can also be obtained through background checks. It’s best to be truthful about being a first-generation student to insure your admission won’t be rescinded.
Photo credit: iStock/David Schaffer
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.
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.
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.
