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When college freshmen step foot on campus, they may go to an activity fair and see members of sororities and fraternities encouraging recruits to join. They might want to know that becoming part of Greek life can have its upsides and downsides.

Whether or not students decide to let their Greek flag fly depends on their personality, their specific situation, and their goals while they are in school. Some may find Greek life incredibly enriching, and others could decide it’s a waste of their time.

Here’s a look at what Greek life is like and pros and cons you may want to consider when deciding if joining a fraternity or sorority is right for you.

What Is Greek Life in College?

Greek life is made up of communities of students who live together, volunteer for different organizations, pursue networking opportunities, and much more. The communities consist of sororities for women and fraternities for men.

Sororities and fraternities may have various objectives, but overall they exist so that students can make meaningful connections with one another, develop leadership skills, and give back.

Roughly 15% of men join fraternities at U.S. colleges, while about 18% of women join sororities.

Students who are interested in becoming members must apply and then go through an initiation process. Once accepted, they will live with their sorority or fraternity, usually in a house on campus, and participate in activities like sports, dances, parties, and community service opportunities.

Sorority and fraternity names consist of two or three Greek letters, like Phi Kappa Theta, Sigma Pi, or Delta Zeta, a nod to the first U.S. Greek letter society, Phi Beta Kappa, founded in 1776 at the College of William and Mary as a literary, debating, and social club.

Many students only know about sororities and fraternities from pop culture references like “Revenge of the Nerds,” “Animal House,” “Legally Blonde,” and “Old School,” which depict a perennial party.

While that is certainly true in some instances — and fraternities have come under fire for their alcohol use and hazing rituals — Greek life can be much more meaningful and beneficial than these portrayals.


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Upsides of Greek Life

Joining a fraternity or sorority comes with a number of advantages. Here’s a look at some of the perks.

Friends

When new students first get to college, they may not know where to turn to make connections. If they become part of a sorority or fraternity, they could make many new friends right away, bond with them through different activities and social events, and remain friends for life.

Networking Opportunities

Students will also have the chance to network with their new peers. When they’re searching for internships or jobs, these connections can prove to be highly valuable.

Plus, if a job hunter lists their sorority or fraternity on a resume and a recruiter is a Greek life alumnus, that could open up a conversation and make a candidate stand out.

Recommended: 3 Summer Jobs Ideas for College Students

Possibly Cheaper Housing

Living in college dorms can be pricey. If students are sharing a house with many members of a sorority or fraternity, they could potentially save money.

They may also save money by having access to a full kitchen, where they can make meals instead of purchasing a meal plan or eating at restaurants all the time.

Recommended: 20 Ways to Save Money in College

Development of Leadership Skills

Sororities and fraternities need leaders who will come up with ideas for activities, pilot volunteering efforts, and recruit members.

If members step up and decide they want to become leaders, then they are taking on new responsibilities and developing crucial skills that will be valuable when they graduate from college and start to look for jobs.

Volunteering Opportunities

Fraternities and sororities are often focused on philanthropy.

Students can participate in different volunteer projects with their fellow Greek life members and contribute to making the world a better place.

Not to mention, this will look good on a resume because it shows that a student is passionate about certain causes and wants to do their part to improve the lives of others.

Recommended: College Freshman Checklist for the Upcoming School Year

Potential Downsides of Greek Life

Like a toga, Greek life isn’t a good look for everyone. Here are some possible cons.

Cost

You typically need to pay membership dues each year you are a member of a fraternity or sorority. The cost varies depending on the school and fraternity/sorority you join but, on average, you can expect to pay around $2,000 to $3,0000 for the first year.

Local and national chapter fees are not always covered in the regular monthly dues.

And if fraternities or sororities get into trouble, members could be fined as well.

Recommended: What Is the Cost of Attendance in College?

Reputation

Fraternities and sororities have gotten a bad rap from movies and TV.

Worse, students have died in hazing accidents throughout the years, leading colleges to take administrative action against fraternities especially.

Some fraternities and sororities do emphasize parties and drinking, which is all fun and games until someone begins to flunk out, becomes addicted, is involved in an assault, or is injured.

It’s best, of course, to socialize responsibly and always make academic studies the priority.

Time Commitment

Because Greek life involves so many events, and members are expected to participate, joining a sorority or fraternity means a huge time commitment.

Spending too much time on Greek life activities and not enough on studying or working at internships could have a negative impact on a student’s future.

Recommended: College Planning Guide for High School Students

Determining Whether or Not to Join Greek Life

Joining a fraternity or a sorority can be a great decision, especially for freshmen who may not know anyone on campus. If they are a part of Greek life, then they will stay busy, make friends, network, and contribute.

On the flipside, if they are in a campus family that is constantly throwing parties and not interested in enriching members’ lives in a meaningful way, then joining might not be a good idea.

If you’re concerned about being able to afford the cost of joining a fraternity or sorority, keep in mind that there are a number of ways to cover the cost of college tuition and living expenses, including grants, scholarships, subsidized and unsubsidized federal student loans, and private student loans.


💡 Quick Tip: It’s a good idea to understand the pros and cons of private student loans and federal student loans before committing to them.

The Takeaway

A sorority or fraternity can provide camaraderie and enduring connections, and enhance a call for service and leadership. It can also be time consuming, expensive, and distracting. Greek life isn’t for everyone, but some will find it a life-changing college choice.

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.

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

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

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.

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.

SOIS0723039

Declaring a major in college is a big decision, but the choices don’t stop there. Once students know their area of study, then comes the selection of courses. And, generally, you can’t just sign up for classes willy-nilly. Students typically need to start at one point before they can progress to another. This is where upper and lower division courses come into play.

Like levels in a video game, students have to start with beginner lessons before they can take on advanced challenges. Here’s a closer look at what lower division and upper division courses are and how they differ.

Types of Courses Students Can Take

When signing up for their first semester of classes, college students might notice that there are many more offerings than they had in high school.

In addition, core classes are different, and requirements will vary based on a student’s course of study.

While a college student can take everything from astronomy to architecture, here’s how courses are typically designated:

•   Lower division
•   Upper division
•   Major courses
•   Minor courses
•   General education courses

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Degree Requirements

Every college major will have different courses, electives, and requirements that are necessary for graduating.

In addition to core requirements, students might need to take general education courses. These courses are required for all students, no matter their area of study. (Some will “CLEP out of” some or all gen ed courses. The College-Level Examination Program® offers 34 exams that cover intro-level college course material. Others might pass AP or International Baccalaureate exams to get college credit.)

Students won’t get to graduate just by taking classes for four years. They’ll need to meet the requirements of the major (and minor, if applicable) they’ve selected.

Each course has a number of credits, and students usually will need to accumulate a number of credits to qualify for their degree.

Degree requirements will vary based on what a student studies, but each will come with a mix of lower division and upper division courses to round out the educational experience.

Recommended: 5 Ways to Start Preparing For College

What Is a Lower Division Course?

Lower division courses are the building blocks of an undergraduate’s major. College beginners might have restrictions in the courses they can enroll in.

Unless they bring in AP, IB, or college credits, they’ll need to take (and pass) lower division courses in their major before being able to sign up for upper division courses.

In general, here’s what student can expect in lower division classes :

•   Introductory material Typically, lower division courses teach the building blocks of concepts that students will use more down the line. For example, a biology major might start the course requirements with a lower division Introduction to Biology lecture before moving on to more challenging material.
•   Younger students Generally, students will find more freshmen and sophomores in their lower division courses.
•   A larger class Depending on the size of the school, lower division classes are often larger because they may cover a broad swath of material that applies to multiple majors and areas of study. A lower division class might even have more than one section a semester because so many students need to take it. In these larger lectures, participation might be limited, and attendance might not even count toward a grade.
•   A stricter structure Students might find that lower division courses vary by the book (or syllabus). Each class, a professor covers exactly what was detailed in the syllabus — nothing more, nothing less. Similarly, test questions might come straight out of lecture notes or assigned readings. Often this is done to ensure that students know the basics by heart before moving on to more challenging courses in their major.
•   Evaluation by test Due in part to their larger class sizes and structure, students can often expect multiple-choice tests in lower division courses.

Of course, every college’s policies on classes are different, but for the most part, students can expect to take lower division courses as they begin their academic career.

Lower division courses may be required by a major or minor, or they might be a general education course all students are asked to take.

Recommended: Community College vs College: Pros and Cons

What Is an Upper Division Course?

If lower division courses are the foundation an education is built on, upper division courses are the structure on top.

Lower division courses sometimes count as prerequisites for upper division classes. That means an undergraduate must take, and pass, a lower division class before enrolling in an upper division course.

Here’s what a student might experience in an upper division course:

•   In-depth curriculum Upper division classes are a deeper dive into areas of study or more complex topics. Once students master a lower division class, they’ll be challenged with harder concepts in an upper division class. Upper division classes are more likely to have words like “advanced” in the title.
•   Older students Third- and fourth-year students are more likely to be in these courses, typically because they’ve taken the prerequisites.
•   Smaller classes Whereas lower division classes may be large lectures, upper division classes start to get smaller, in part because the curriculum is more specialized. The deeper a student gets into a major, the more in-depth classes become.
•   A fluid structure Upper division courses likely have a syllabus and required reading, but the day-to-day structure of the class may be less lecture-focused. In fact, some classes are seminars where students are encouraged to contribute ideas in a discussion format, often resulting in a participation grade.
•   Varied evaluations Depending on the class focus, testing may look different than that of a lower division course. Students may be asked to write in-depth research papers or create large presentations to show their learning. If tests are in use, they might rely less on multiple-choice questions.

Since upper division courses include more complex teachings, professors might expect students to show what they’ve learned in a more complex way. That might mean essays to prove an argument, or demonstration of critical thinking skills that don’t rely purely on lecture notes or readings.

Recommended: The Ultimate Guide to Studying in College

Numbering Systems for Division Courses

A simple way to tell if a class is a lower or upper division course is using a school’s numbering system for classes.

Most college courses will have a three- to five-digit number. The number is unique to the course, and can help students know what they’re getting into before they sign up in terms of difficulty.

While numerical systems will change from college to college, they might follow these general formulas:

•   1-199 At UCLA , for example, all undergraduate courses are assigned a number between 1 and 199. Any class with a number between 1 and 99 is a lower division course, and any class with a number between 100 and 199 is an upper division class.
•   100-499 Other schools, like the University of Arizona , might start the numbering higher. All lower division classes are numbered from 100 to 299. Anything 300 to 399 is an upper division course. The University of Massachusetts uses a similar system, where every 100 is a different year of school (100s are for freshmen, 200s for sophomores, etc.)

The numerical system for a college course probably won’t help students compare classes across different universities, but it can be a useful guide in plotting academic schedules within one school and major.


💡 Quick Tip: Even if you don’t think you qualify for financial aid, you should fill out the FAFSA form. Many schools require it for merit-based scholarships, too. You can submit it as early as Oct. 1.

Finding a Way to Pay

Figuring out how to pay for college can feel like an upper division course in and of itself. After completing the Free Application for Federal Student Aid (FAFSA), you may find that you are eligible for grants, scholarships, and subsidized or unsubsidized student loans. However, you may still fall short of all the funding you need.

That’s where private student loans can come in. These loans are available through private lenders, including banks, credit unions, and online lenders. Rates and terms will vary depending on the lender. Some students may need a cosigner to qualify for private student loans due to a lack of credit history and income.

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.

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

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

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.

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.

SOIS0723038

While applying to college, students and parents may consider a variety of factors before enrolling. Those factors could include a school’s academic programs, location, sports programs, tuition, and potential financial aid.

But there is one more thing families may want to think about: A college or university’s endowment. Not familiar with the term?

Here’s helpful information about university endowments, how they work, how they are managed, which schools have the largest ones, and how those university endowments could potentially benefit students.

What Is an Endowment?

A university endowment refers to the amount of money a college or university receives via donations from its alumni or other interested parties. This money is then invested by the academic institution to help grow its savings and to provide funding for the future.

Some schools can have endowments well into the billions made up of potentially hundreds or thousands of individual gifts.


💡 Quick Tip: When shopping for a private student loan lender, look for benefits that help lower your monthly payment.

Types of Endowments

Not every university uses the same endowment system. Typically, a university has one of four types of endowments. Those include unrestricted endowments as well as term, quasi, and restricted endowments.

An unrestricted endowment means the university may choose to spend or distribute the donations it receives however it wishes. With a restricted endowment, the academic institution must hold the principal of the invested donation in perpetuity.

The earnings from the invested assets can be used, but only at the donor’s specifications at the time of giving. For example, if a donor gives a $25,000 donation specifically earmarked for a scholarship, any principal earnings must be used on the scholarship.

A term endowment means a university can use the principal after a period of time has passed or if a specific event occurs, while a quasi-endowment generally allows academic institutions to use both the principal as well as income at their discretion from the donation.

Recommended: Finding Free Money for College

How Does University Endowment Giving Work?

If a person wants to donate to their alma mater, or just give to the academic institution of their choice, they can do so at any time. With a standard donation, however, the donor typically does not have much, if any, control over how the funds are spent.

So, if a person does want control, they may prefer to give via endowment. Colleges and universities typically set a minimum when it comes to endowment gifts, and those minimums can be quite hefty.

For example, Michigan State University’s law program endowments begin at $50,000. Other universities set different minimum funding levels for different types of endowments.

At the University of Illinois, a person can give $25,000 for a named scholarship that provides financial support for a student or student’s tuition and fees. A donor could even provide the university with $5 million for a named deanship, which will be used for unrestricted support for the department at the discretion of the Dean.

Recommended: How to Pay for College With No Money Saved

Who Manages a University Endowment?

Every school decides how to best manage its own endowment. Some colleges and universities hire internal staff to manage their endowments while others hire outside firms and professional investors to oversee the money.

There may be an endowment manager or a committee or team that works to manage the funds. They will generally work with the university to decide its goals for the endowment, such as making as much income as quickly as possible, or going for more long term sustainable growth. Then, decisions about how and where to invest the money are made to help the endowment meet its goals.


💡 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

Which Universities Have the Largest Endowments?

According to US News and World Report, Harvard University in Massachusetts has the largest endowment at around $53 billion. Yale University in Connecticut comes in a distant second with roughly $42 billion, and Stanford University comes in third with $32.8 billion.

Princeton University in New Jersey comes in at number four with $37 billion and Massachusetts Institute of Technology in Massachusetts rounds out the top five with $27.4 billion.

University of Pennsylvania, Texas A&M University, University of Michigan—Ann Arbor, University of Notre Dame, and Washington University in St. Louis, make up the remaining top 10 with endowments ranging from $13.7 to $20.5 billion.

However, these schools can be considered major outliers on the endowment scale. In 2022, the National Association of College and University Business Officers analyzed 678 university endowments and found the average fund balance was $1.2 million.

Recommended: 11 Strategies for Paying for College and Other Expenses

How Are University Endowments Used and Why do They Matter?

University endowments can be used for a variety of financial needs including hiring new professors, building new buildings or upgrading new ones, and can even be used for fellowships or scholarships.

Many schools also use their endowments to distribute financial aid. Beyond these uses, endowments also allow colleges and universities to look ahead into the future. It helps schools plan for faculty hiring, help to stave off tuition increases, plan for new facilities, and more.

Recommended: What Is the Average Cost of College Tuition in 2023?

Taking Advantage of Endowments

While students will never have direct access to a college or university’s endowment, they could still reap the benefits of any and all donations. Those benefits could come in the form of having access to newer facilities and equipment, through research opportunities, or via learning from the highest skilled professors.

Of course, students can also take advantage of a university’s endowment by applying for specific scholarships funded by donors, or by applying for any and all available financial aid to help them pay for college.

However, sometimes, financial aid and scholarships can fail to stack up against the growing cost of tuition. And that’s where a private student loan could come in to help fill the gaps.

Private student loans are usually available via a bank or another private lender or financial institution. Different lenders will offer different terms, so students will likely want to shop around for one that fits their specific needs.

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.

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

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

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

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.

SOIS0723040

If you’re like over 93% of Americans, you get paid by direct deposit, meaning funds are electronically transferred directly into your bank account, with no checks or cash changing hands.

But did you know that in some states in the nation, it’s not your choice whether or not you get paid this way? Some businesses are allowed to require that their staff be paid by direct deposit. From the employer’s point of view, this can be a real advantage. It means they don’t have to go to the time and expense of cutting checks. Everything can be automated. Some workers, though, might not love this policy, as they might be unbanked or prefer not to share their account details.

Here, you will learn more about this topic, including:

•  What is direct deposit?

•  Which states allow employers to require direct deposit?

•  What are ways to accept direct deposit?

•  What are the pros and cons of direct deposit?

What Direct Deposits Are

First, consider what a direct deposit is and how it works.

•  A direct deposit occurs when money is moved from one bank account to another without the use of a physical check. For example, an employer might shift money from its bank account to an employee’s bank account on payday.

•  Banks use the Automated Clearing House (ACH) network to coordinate electronic payments and other automated money transfers between financial institutions.

•  When you receive a direct deposit, money goes directly into your bank account, without the need for any intermediary steps, such as accepting the transfer, as you would if you were to deposit a check.

•  The money is cleared automatically through the ACH and is available immediately. With paper checks, banks might put a temporary hold on the funds while they wait for the check to clear. It can sometimes take some time for a check to clear; several days even.

Because it does away with a lot of cumbersome paperwork, direct deposit has become more and more popular. Direct deposit is not only used to transfer paychecks from employer to employees, but also for things like tax refunds and payments from retirement accounts.

Some government agencies have done away with direct deposit entirely. The Social Security Administration, for example, no longer cuts paper checks and requires people to accept their benefits via direct deposit or a reloadable debit card.

Which States Allow Required Direct Deposit?

Depending on state law, the answer to, “Can employers require direct direct deposit?” may be yes. State law is not always cut and dried, however.

The rules may depend on whether an employee works in the public sector or for a private company. And rules may not apply to all employers equally.

Here’s a look at direct deposit laws by state; these are the states that allow some form of mandatory direct deposit.

Why Some States Allow Required Direct Deposit

In some states, it is believed that direct deposit is a reliable payment method. Its benefits are that payment arrives on time in a secure way. There are no checks for employees to worry about depositing or that could be lost.

Employers who want to make direct deposit mandatory must meet federal requirements for allowing the employee to choose which bank receives the deposit or the employer may determine the bank. In the latter situation, the employer would also have to offer the option of payment by check or cash.

Can You Be Fired for Refusing Direct Deposit?

In some cases, an employee may want to refuse direct deposit. This could be because they are unbanked. Trying to force a person to accept direct deposit could be unintentional discrimination. This situation could require a case-by-case review.

If you feel you don’t want direct deposit and are being forced to do so, it may be worthwhile to check with your HR department about possible work-arounds.

4 Ways to Accept Direct Deposit

There are several ways to accept direct deposit. Consider these options.

Bank Account

You can have direct deposit go into a checking or savings account. Typically, you’d fill out your banking information (such as your account and routing number) with your payroll department and perhaps provide a voided check.

Investment Account

You may be able to direct some or all of your direct deposit to an investment account.

Prepaid Debit Cards

You could send direct deposit to a prepaid debit card, such as American Express’ Bluebird Card.

Payment Apps

If you are receiving direct deposit, another option could be to have it go to a payment app, such as PayPal or Cash app.

Recommended: What If Direct Deposit Goes to a Closed Account?

Advantages of Direct Deposit

Whether or not direct deposit is required, there can be some distinct upsides for employers and employees.

Convenience

Direct deposit takes a lot of the legwork out of receiving a paycheck. The funds are deposited automatically and regularly, requiring no trips to the bank or mobile deposits. You don’t need to be home to receive the check. So if you’re on vacation or working far from your regular stomping grounds, your check will go through without lifting a finger.

You may also be able to send some of your paycheck to a savings account, which is a way to automate your savings.

Organization

Keeping track of paper checks can be a pain for employers and employees, who may end up having to file away hard copies of records, such as pay stubs, for future reference. Electronic transfers provide a paperless transaction history that both parties have access to. The transaction history doesn’t need to be stored in a physical place, so it can be referenced from anywhere at any time.

Resource Saving

Sending money via the ACH is often cheaper for employers than printing and mailing paper checks. Generally, it is free for employees to receive payment through the ACH. It’s also greener, allowing businesses to cut back on the amount of paper, ink, and energy that they consume.

Security

It is possible for paper checks to be lost or stolen, and even for someone to fraudulently cash them. Issuers may charge a fee to replace lost checks, and the process of stopping payment on stolen checks may be slow and expensive.

Generally speaking, direct deposit provides a safer alternative for transferring cash since there is no physical item to be lost or stolen.

There are some potential security issues when setting up direct deposit, as banking information must be exchanged between employees and employers. Making sure that the information is passed through secure channels to a person you can trust can help ensure that direct deposit is set up securely.

Speed

How long does a direct deposit take? The swiftness of direct deposit transactions is one of the key benefits. Money often hits your account nearly immediately after a transaction is made. And transactions usually occur at midnight the night before payday, meaning direct deposits may arrive in an employee’s account long before a paper check would arrive in the mail.

Disadvantages of Direct Deposit

Despite the benefits of direct deposit, there are some reasons that the process can be disadvantageous.

Costs and Fees

In some cases the cost of opening and maintaining a bank account can be burdensome for employees, reducing the amount of their take-home pay. Iowa protects against this possibility by disallowing mandatory direct deposit if it becomes a financial burden.

Lack of Attention

Because direct deposit is automatic, you may forget to check deposits in your bank account regularly. That means that if any problems occur, they may go on for a long time before you catch them.

You can avoid this issue by setting up alerts with your bank every time you receive a deposit to quickly see if everything is correct, and if not, nip any problems in the bud.

Cyber Threats

Though direct deposit provides a relatively secure way to transfer money, that doesn’t mean it’s immune to cyber criminals looking to steal sensitive financial information and bank fraud. Protections against cyber threats include using complicated passwords and password protection and avoiding phishing scams that might give fraudsters access to emails and data.

Setting Up Direct Deposit

To set up direct deposit, you must first have a checking or savings account or another acceptable way to receive the funds, such as a payment app. Then, follow these steps:

•  To receive electronic payments, you will likely provide your account information to your employer. There may be a specific form that you are asked to fill out, you may be asked to provide a voided check for checking accounts, or you may simply be asked to provide your account information in an email.

•  Once again, always be sure you are sending your information to someone you trust and through a secure channel. You may want to avoid sending sensitive information, like account numbers, through email, instead handing information directly to a person or providing it over the phone.

•  Your employer may ask you for other information, such as the name of the account holders on your checking or savings account (if you are using one), your mailing address, and your Social Security number.

•  Employees can list multiple accounts for direct deposit, which can help them accomplish their financial goals. For example, a worker could direct a portion of the paycheck to a checking account and another to a savings account. That way savings are automated while ensuring that enough is in checking to cover bills.

Opening a SoFi Checking Account

Speaking of divvying up earnings to meet specific needs, SoFi Checking and Savings is a good candidate for that — plus much more.

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.

FAQ

Can you deny an employee direct deposit?

Whether or not direct deposit must be offered is a matter of state law. If direct deposit is required, then an employer must offer it.

Can you be fired for not having direct deposit?

When an employer wants to use direct deposit but an employee doesn’t want to accept that form of payment, there may well be a work-around, such as getting paid by a payment app. Finding a solution in this way can keep a situation from getting to the point of an employee thinking about quitting or an employer wondering about taking action.

Which states allow mandatory direct deposit?

In certain circumstances, employer direct deposit laws make it mandatory in Alabama, Alaska, Indiana, Iowa, Kentucky, Louisiana, Maine, Massachusetts, Michigan, Minnesota, North Carolina, North Dakota, Oklahoma, South Dakota, Tennessee, Texas, Utah, Washington, West Virginia, and Wisconsin.

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SoFi members with direct deposit activity can earn 4.00% 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 4.00% 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 4.00% 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 12/3/24. 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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