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If you’re gearing up for your first job post-graduation, you might be feeling a mix of emotions. There’s happiness about landing your new gig, excitement about what’s to come, and some nervousness, too.

And then there are all the practical considerations. You’ll need to budget for your new work life to cover things like commuting and your wardrobe. At the same time, you probably have student loans to pay off, and you’ll want a solid plan in place to manage your debt.

That’s a lot! But not to worry. With a little prep, and by taking a few smart steps, you’ll be set to start your new job and start working toward your financial goals.

Researching the Company

You likely researched your new employer before you accepted the position. Now that you’ve got an official start date, it’s time to dig a little deeper.

Consider learning about the history of the company. And then brush up on what’s ahead. Is there any information about the direction the firm is headed in or any future plans that have been released? Are new products and services about to be launched?

Researching the broader industry could also be beneficial. Search for general trends that are worth noting. What are their biggest competitors working on?

It’s also a good idea to take a look at your network. Do you know anyone who works at the company you could reach out to? Perhaps there is a friend-of-a-friend who might be willing to chat with you before your first day. Getting some information on the company’s culture could help relieve your anticipatory anxiety. Plus, then you’ll have a familiar face to look out for around the office.

Recommended: 10 Personal Finance Basics

Doing a Dry Run of Your Commute

Worrying and stressing about whether or not you’re going to be on time for your first day is no way to start a job, so do a test run of your new commute. Whether it’s a drive, walk, or bus or train ride, making the commute in advance means you’ll get all of your second guessing, potential detours, and missed turns out of the way.

Plus, this way you can get a sense of the traffic patterns and find out where and when you may need to allow more time. You can also see how much commuting might cost you and figure out ways to pay less for your drive to work.

Planning for the Day Ahead

One good way to destress your morning routine is to prepare everything the night before. Get the coffee ready to go and set on a timer so you don’t have to think about it when you wake up. Plan what to have for breakfast so you’re not scrambling at the last minute.

Choose your clothes for the big day in advance. Try everything on to make sure it fits and that there aren’t any loose buttons. This will save you precious time in the morning.

If you’re not sure what the standard attire is at your new office, err on the side of being more professional than casual. As you get to know the company culture, you can adjust your outfit choices, which could even help you save money on clothes.

Gathering the Appropriate Paperwork

Before you head into the office, you’ll usually get an email from HR with some information about your first day. It’s worth reading through it carefully and gathering any paperwork that might be needed. Organize the documents and pack them in your bag the night before. If you have questions about benefits, holidays, when you’ll be paid, or anything else, jot them all down and bring them with you so you can go over everything with the HR rep.

Getting to Know the Team

You will likely be collaborating with your coworkers on a daily basis, so first impressions matter. Project a friendly, professional, and fully engaged attitude as you meet and interact with your colleagues.

Be receptive and enthusiastic when you get your first assignment. Listen closely and ask your manager questions so you fully understand your responsibilities. Then you can get down to work.

Updating (Or Creating) Your Financial Plan

Some of the other important work-related changes you’ll need to make involve getting your financial life in shape. You can start by:

Refining Your Budget

A new job means a new salary, which makes this a good time to update or create a budget. Consider making adjustments based on your new salary. If you don’t have an existing budget in place, this could be the perfect time to add some structure to your spending and saving.

If you’re moving to a new city for the job or into a new apartment, it’s wise to start planning for all those moving costs now.

Planning for Future You

Next, focus on building your financial security. Carefully review the options your new company offers for retirement savings. Do they have a 401(k)? And if so, do they offer matching contributions?

Saving for retirement might not be on your radar right now, but it’s never too early to start prepping for your future. Sign up to contribute to your employer’s 401(k) plan, and contribute at least enough for the company to match your contributions.

Handling Debt

As a recent graduate, you likely have student loans you’re paying off. If that’s the case, part of your financial strategy could include figuring out if your current repayment plan is the best one for you—or if there’s one out there that might be a better fit.

The repayment plan you choose will depend on a variety of factors, including the types of student loans you have, the amount of debt, and your income and profession. If you have federal student loans, you might be eligible for repayment options including income-driven repayment plans, federal student loan consolidation, or loan forgiveness.

It’s also worth seeing if your new company offers assistance to employees repaying student loans. A growing number of employers have such programs. If yours is one of them, find out how you can get some help repaying what you owe.

If paying off student loan debt quickly is a priority for you, consider putting any windfalls, like a signing bonus, toward your student loans.

Another option to think about is student loan refinancing. For qualifying borrowers, refinancing could offer better terms, which could potentially lead to savings. But refinancing may not be for everyone. When federal loans are refinanced they become private loans and are no longer eligible for federal repayment plans or protections, such as the Public Service Loan Forgiveness program.

If you decide that refinancing is beneficial for you, you’ll want to shop around for the best deal. SoFi offers student refinancing loans with low fixed and variable interest rates, flexible terms, and no fees. Plus, SoFi members get free perks like career coaching and financial advice.

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

With the rising price of tuition, fees, and room and board at four-year public colleges and private nonprofit institutions, more students in all income brackets have been taking out loans.

If you’re wondering where to get a student loan for college, you have two options. The first is getting a federal student loan through the government. Federal student loans account for more than 93% of all student loan debt. The second option is a private student loan, which is given by a bank, credit union, or online lender. Private student loans are not based on need, but rather your college’s cost of attendance, your credit profile, and your income (or your cosigner’s income).

Prioritizing a Plan

When creating a plan to fund college education, it can make good sense to first explore any avenues for free money in the form of grants and scholarships.

By taking a look at the remaining balance after any free money has been found, exploring federal loans can be a smart next step. They come with income-based repayment options and the ability to request loan forgiveness under some circumstances. There are also work-study programs that can help students earn money while attending college.

If all needs are not covered, then there are private student loans to consider, along with Direct PLUS Loans that parents can apply for to get funds for their children.

After that, some people may seek out personal loans to cover living expenses while in school and/or emergency loans from the college.

Here are more specifics about these options.

Where to Get a Federal Student Loan

When the funding for college comes from the federal government, then—as the name indicates—that’s considered a federal student loan. To obtain any kind of federal student loan, a student must first fill out the Free Application for Federal Student Aid, commonly called the FAFSA®. Here are tips on how to fill out the FAFSA®.

After filling out this form, a student will have insights into what federal funding is available for them, along with work-study options. More specifically, each school that a student applies to can send a financial aid offer letter, which includes information about how to apply for student loans that they qualify for.

Two broad types of federal loans are:

•   Direct subsidized loans: These are for undergraduates with financial need.

•   Direct unsubsidized loans: These are available for undergraduate students, as well as graduate and professional ones, that do not demonstrate financial need.

A key difference between the two types involves the interest on the loan. With a subsidized loan, the U.S. Department of Education pays the interest when a qualifying student is attending school at least half time, as well as during a six-month grace period when the student graduates, withdraws, or reduces to less than part-time. This can also apply if the loan goes into deferment, meaning when loan payments are postponed. With an unsubsidized loan, the student is responsible for paying the interest.

Where to Get a Private Student Loan

A variety of financial institutions offer private student loans and have their own criteria for qualification. Some allow students to apply online and can give quick responses, while others go a more traditional route with in-person applications.

Private lenders will typically review a student’s income, plus that of any cosigner, along with credit histories and more to make lending decisions. A lender might grant a private student loan to someone whose credit isn’t stellar, but charge a higher interest rate.

When applying for a private student loan, it’s important to understand the loan terms before signing the note. This includes the interest rate and whether the rate is fixed (staying the same over the life of the loan, with the principal and interest payments also staying the same) or variable. If a loan is variable, how much can the rate change? How often? What is the term of the loan?

Recommended: Fixed vs. Variable Rate Loans

Benefits of private student loans can include the following:

•   They can bridge the gap between what is owed after federal student loans are applied to the balance and what is needed to attend college.

•   Students can apply for them any time of the year, without the strict deadlines associated with federal loans.

•   Borrowers may have more choices in interest rates and terms.

•   The loans may not include origination fees or prepayment fees, although that isn’t universally true.

Potential cons can include these:

•   It isn’t unusual for a private lender to require a cosigner because college students often don’t have enough income to qualify or have established a good enough credit profile to get the loan on their own.

•   Students who are considered a higher credit risk may pay more in interest.

•   Private student loans don’t come with many of the benefits associated with federal loans, such as forgiveness programs and income-based repayment plans.

•   Students may borrow more than they can ultimately afford, and these loans are typically not dischargeable in bankruptcy proceedings.

Check out this Guide to Private Student Loans for more information on funding your education through a financial lender.

Parent PLUS Loans and More

Parent PLUS Loans

When asking “Where is the best place to get a student loan?” also consider the Parent PLUS Loan, in which parents can apply for federal funding to help their children attend college.

Eligibility for a Parent PLUS Loan isn’t based on financial need, but credit is checked. If applicants have a credit history that’s considered “adverse,” they “must meet additional requirements to qualify.”

So, what does “adverse” mean? According to the Federal Student Aid office, this can include:

•   Having accounts that, in total, have an outstanding balance of more than $2,085 and are at least 90 days delinquent.

•   A default or a bankruptcy discharge during the previous five years.

•   Involvement in a foreclosure, repossession, or tax lien situation in the previous five years.

•   Write-off of federal student loan debt or wage garnishment during the past five years.

Qualifying parents of a dependent undergraduate student can receive funding through this loan program to cover education-related costs that are not covered by other financial aid.

Personal Loans

It’s also possible to apply for personal loans from financial institutions to cover living expenses during college or to address an emergency. There are downsides to this, though, including:

•   Interest rates will likely be higher than student loans, along with shorter payoff periods (which means principal and interest payments can be higher).

•   There isn’t typically a grace period, which means repayment starts right away.

•   These loans don’t come with deferments or forbearance, as can be available through federal student loans.

Emergency Loans

In an emergency, a student might want to reach out to the college financial aid center to see if the school offers emergency loans for those in need. These loans would not typically be large, perhaps $1,000 to $1,500, but might be enough to address a dire situation.

Each college has its own guidelines, so check them out carefully. Some charge interest; others may not. Some may charge a service fee; others may not. As with personal loans, repayment may start immediately, so factor that into budget planning.

Private Student Loans at SoFi

To help students who decide that private student loans should play a role in their funding mix for college, SoFi offers private student loans.

Students should take advantage of federal student aid opportunities first. Then, when private loans make sense, SoFi offers them with no fees and flexible repayment options to fit a range of budgets.

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.

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

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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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When a payment is past due, it becomes a delinquent payment. For instance, if your student loan payment is due by the 15th of each month, and the 16th arrives and you haven’t paid the amount you owe, you’re generally considered to be delinquent on that loan.

Once you’re late making a payment, a late fee may be assessed, and late payments may impact your credit report.

Read on to learn more about delinquent debt and the potential consequences, as well as ways to help prevent student loans from becoming delinquent.

Credit Score Calculations and Purposes

When you apply for a loan, like a personal loan, a car loan, or a credit card, the lending institution reviews your application to make sure you’re able to repay the loan. They look at things like your income to make sure you have the financial resources to make payments, as well your outstanding debts.

If you’re applying for a secured loan (which is a loan secured by collateral like a home, car, boat and so forth), they’ll make sure the asset being used as security for the loan has enough value.

And the lender will also check your credit score. Unlike when your income is checked, your credit score doesn’t summarize whether or not you can repay a loan. Instead, it provides a snapshot to a lending institution about how well you’ve upheld your financial commitments in the past. (it’s worth noting that most federal student loans do not require a credit check.)

If the lender sees that, to date, you’ve met your financial obligations, that can make you look like a responsible borrower. But if your credit history isn’t as clean as it could be, say you have delinquent credit, this shoots up a red flag; things like late payments can impact your credit for months or even years.

As a result, the lender may deny the loan, approve less than what you need, or offer you a higher interest rate than what’s being awarded to people with excellent credit scores.

Although there are multiple calculations that can be used to determine creditworthiness, FICO® scores are the most commonly used. This base score can range from 300 to 850; the higher the base score, the better your credit is considered to be.

Here is the general formula used to determine your base FICO score:

•  As much as 35%: payment history

•  About 30%: what you currently owe

•  Up to 15%: length of your credit history

•  Up to 10%: types of credit you have

•  Up to 10%: new credit applications you’ve made

There are three major credit reporting agencies. Besides Experian, there is TransUnion and Equifax. According to the federal Fair Credit Reporting Act (FCRA), you are allowed to obtain a free copy of your credit report each year.

As you read your credit report, if you find errors, it’s important to report and correct them with the credit bureaus.

More about Delinquent Payments

What is delinquent debt? If someone is late on a payment, there can be fees assessed. If payments continue to be late, additional fees may be added. Delinquent payments may also cause your loan to switch to a penalty APR, which can significantly increase the interest you owe and make it harder to pay down the balance.

Late payments of 30 days or more may end up on your credit report, which can be damaging, and may negatively impact your credit score. If the amount you owe is sent to collections, that fact could appear on your credit report for seven years. If you’ve missed a loan payment and are delinquent, you can contact the lender to discuss how you can get back on track.

Late Student Loan Payment

Just as you don’t want to make a delinquent payment on a loan for your house or car, you don’t want to be late on your student loan payments. Specific consequences vary by lender; you can check with your loan servicer for exact details.The consequences may be different for private student loans vs. federal student loans.

In addition to typically involving a late fee, a late student loan payment may appear on your credit report. If your federal student loan payment is 90 days late, it will then be reported to all three credit bureaus. However, private student loan late payments are often reported to a credit bureau when they are 30 to 45 days past due.

If your late federal student loan payment snowballs into multiple ones, and you missed making payments for 270 days (about nine months), your federal student loans go from delinquent to being in default. This means that your loans are now due in full, along with accrued interest, fees charged by collection agencies, and any other fees, fines, and penalties.

To collect this amount, the government can garnish up to 15% of your pay, and/or take your tax refund to put towards the debt. They can do the same to your loan co-signer, if you have one. And, your loan servicer can even sue you.

If you know you’re going to miss a payment, you can contact your student loan servicer. If you’re undergoing financial hardship, perhaps because of a job loss or medical emergency, you can apply for federal student loan deferment, which can postpone payments or reduce them.

If the situation is less serious, and you’ve missed a payment because of your hectic schedule, you might find it helpful to set up automatic loan payments to avoid delinquent debt.

Here’s a third scenario: Let’s say that you’re meeting your student loan payments, but the amount you’re paying every month is higher than you’d like. In that case, you could apply for student loan refinancing. If you qualify, you could have the option to select a more manageable monthly payment or get a lower interest rate.

A student loan refinance calculator can help you determine how much you might save.

Should you refinance your student loans? You may want to think twice if you have federal student loans. That’s because if you refinance your federal loans with a private lender, you will forfeit all of your federal benefits, including programs like income-driven repayment plans.

Recommended: Student Loan Refinancing Guide

Refinancing Student Loans with SoFi

When you refinance your student loans, you can consolidate multiple loans into one loan with one convenient payment. And you may be able to qualify for a lower interest rate, which could help you save money. SoFi offers loans with low fixed and variable rates, flexible loan terms, and no fees. And as a SoFi member, you also get free perks like career coaching and financial advice.

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

Life after law school can be an exciting time as you look forward to your new career. There are plenty of opportunities available to those with a JD. Some avenues to consider include practicing law at a firm, specializing as an attorney in a field like patents, contracts, immigration (and many more), working as general counsel in-house at a corporation, or even pursuing a career in government.

The path you choose depends on the type of law you studied, your interests, and your past experiences. According to the Bureau of Labor Statistics (BLS), the median salary for lawyers in 2021 was $127,990 annually.

Once you find your first post-law school gig, you may also have to start thinking about repaying any law school student loans.

Finding Jobs After Law School

After getting a law degree, what to do really depends on why you decided to go to law school in the first place. Did you have dreams of working at a major law firm, becoming a public defender, or going solo with your own practice?

Maybe you’ve decided you no longer want to practice law and would rather apply your new skills to a relevant career or continue to further your education. If you are considering what to do after law school, you can start by examining what workplace environment you find the most exciting and attainable.

Landing at a Law Firm

A law firm is an obvious choice for where to work after getting your JD. But the size, location, and culture of the law firm can greatly impact your experience and job satisfaction. Attorneys working at smaller firms may offer stronger partnership prospects than larger law firms. However, depending on location, the pay could be comparatively lower, and your training may come in the form of on-the-job experience.

While the path to promotion may be longer at a larger firm, they may have more resources and a higher salary. Depending on your preferences and career interests, a major law firm with a big name might be a better fit to help you find your specialty.

Considering a Clerkship

A clerkship is an important career milestone for many attorneys. Usually taking place under the guidance of a certain judge, a clerkship allows law school graduates to see the inner workings of the legal system. Many are considered prestigious resume boosters and offer valuable first-hand experience working under a judge and a leg up on networking from the start.

There are federal and state court clerkships, but federal opportunities like with Supreme Court or circuit court judges can be more difficult to secure because of their prestige. However, state clerkships can also be beneficial, especially if you plan on practicing in the local area.

Getting an Advanced Degree

If you have a desire to specialize in a specific field of law, staying in school to get a post-JD degree is another avenue to consider after getting a law degree.

You might want to pursue this type of degree after having some relevant work experience, which can help you first figure out what particular field of law you want to study. These specialty degrees include Air and Space Law, Sports Law, Global Food Law, Cannabis Law, and more.

Alternative Careers Outside Law

Pivoting after law school to a different careeris another option to consider when looking at jobs. If you, like many, have graduated with six-figures worth of student loan debt, you’ll obviously want to find a steady job so you can make regular student loan payments.

Other jobs that may fit with the skill set you curated in law school may include political advisor, journalist, lobbyist, and teacher.

Tackling Law School Debt

Depending on your earning potential and chosen career path, it might make sense for you to aggressively pay off your law school debt in 10 years or less, or try to maximize your law school loan forgiveness opportunities.

In order to make your degree count towards your personal and professional goals, figuring out how to approach your debt is a key part of what to do after law school.

Making Payments While Still in School

While the government does not require you to make payments on most federal student loans while still in school, you could consider paying the amount of interest that builds up each month to help keep your student loan debt from growing.

Whether you need to pick up a side hustle or prioritize how much you save, making at least interest payments on your student loans while still in school can help reduce the amount of interest that will capitalize on your student loans. This can ultimately reduce the amount of interest that accrues and help set you up for success after law school.

Sticking to Budget Basics

After your law degree, it can be wise to take stock of your budget and work to balance your goals for savings, emergency funds, credit card payments, and student loans. The average student loan debt from law school currently sits at $180,000, so you’ll want to prioritize making a plan to get these paid off as quickly and efficiently as possible.

Ultimately, you’ll likely want to pick a student loan repayment plan that works for your personal budget, no matter what jobs after law school you are considering. You may decide to pay down debt while also building up a basic emergency fund as part of your financial foundation.

Recommended: How Much Money Should Be in Your Emergency Fund?

Refinancing Law School Loans

Refinancing your law school loans means that a private lender will issue one new loan that effectively pays off your existing federal and/or private student loans. This new loan comes with new terms, ideally with a lower interest rate or shorter repayment period. Instead of paying multiple student loans, such as from undergraduate and graduate school, there is only one new loan to pay off.

While there are many advantages to refinancing student loans, refinancing federal student loans means that you will not be able to take advantage of benefits like income-driven repayment plans and Public Service Loan Forgiveness. So it may not make sense if you are taking advantage of one of these benefits or plan to in the future.

The Takeaway

Life after law school can mean something different for everyone. Whether you pursue a private practice, family law at a small firm, or corporate law at a large one, there are many career opportunities to pursue.

Law school may also mean taking on a significant amount of student loan debt. Refinancing could be an option that helps you spend less in interest over the life of the loan if you’re able to qualify for a more competitive interest rate or secure a shorter term. If you’re interested in student loan refinancing, consider SoFi. Refinancing with SoFi can be completed online and there are no application fees, origination fees, or prepayment penalties.

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

Are you a parent who is committed to helping your kids get through college and minimizing higher education costs as much as possible? Have you been asking yourself, is private school tuition tax deductible?

The good news is that it may be possible to lower education costs by using tuition tax breaks. Even if the money comes out of your pocket at first, you might be able to recoup some of those dollars come tax time. There are currently two tuition tax credits for parents to consider: the American Opportunity Tax Credit and the Lifetime Learning Credit.

With each of these programs to make private school tuition tax deductible, the parent would need to claim their student as a dependent on their taxes, as well as meet some pretty specific rules for each program. To get started, it’s smart to understand the rules and requirements of each and know that not every filer is going to qualify for these programs.

This article is for informational purposes only, offering a high-level overview of the available tuition-related tax credits and deductions. For parents wanting to take a deep dive into the particulars of tax programs, talking to a licensed tax professional about tax credits and deductions is critical.

What’s the Difference Between a Tax Deduction and Tax Credit?

For those dealing with student loan debt and wondering, can you write off private school tuition?, it’s important to understand the difference between a tax deduction and a tax credit. A deduction can reduce the amount of your taxable income. For example, if you made $80,000 in gross income in a given year and had $15,000 in deductions, you’d have $65,000 in taxable income.

A tax credit, on the other hand, can help provide a dollar-for-dollar reduction in income taxes you owe. For example, a $2,000 tax credit would reduce your tax bill by $2,000.

When compared dollar for dollar, tax credits can sometimes be more valuable than a similar tax deduction. A nonrefundable tax credit qualifies a taxpayer for a reduction up to the amount that they owe. With a refundable credit, a taxpayer could receive a refund even if they do not owe any tax.

The American Opportunity Tax Credit

So, is private school tuition tax deductible? It could be. Parents with a child or children they claim as dependents who are in the first four years of their undergraduate education may qualify for the American Opportunity Tax Credit (AOTC).

The AOTC is a credit for tuition and other qualified educational expenses paid for during an eligible student’s initial four years of their college education. The AOTC doesn’t apply to students in their fifth year and beyond.

The AOTC is worth up to $2,500 per eligible student. Because it is a tax credit, it should directly reduce the filer’s tax bill—not their taxable income. As of this writing, if the credit happens to bring the filer’s tax bill to zero, they may qualify to have 40% of any remaining amount of the credit (up to $1,000) refunded to them.

To qualify for the AOTC, there are additional requirements for both the parent and the student. According to the IRS, for the student to be eligible for the AOTC, they must be pursuing a degree or other recognized educational credential, be enrolled at least half time for at least one academic period beginning in the tax year, not have claimed the AOTC for more than four tax years, and do not have a felony drug conviction at the end of the tax year. Again, the AOTC only applies to undergrad students in their first four years.

To currently qualify as a parent, your modified adjusted gross income must be $80,000 or less ($160,000 or less if married filing jointly) in order to claim the full credit. If your modified adjusted gross income is between $80,000 and $90,000 ($160,000 and $180,000 if married filing jointly), you would be eligible for a reduced credit.

Recommended: Private Student Loans Guide

Lifetime Learning Credit

The Lifetime Learning Credit (LLC) is another possibility for parents paying for school for a child they claim as a dependent.

Like the AOTC, the LLC is a tax credit. The LLC is more expansive in the coursework it covers, which is helpful because college is not for everyone. The LLC credit can be applied to qualified tuition and education expenses for eligible students enrolled in a qualifying educational institution. This includes undergraduate, graduate, and professional schools—including courses to acquire job skills.

In addition, there is no limit on the number of years where a person can claim the LLC, compared to the AOTC’s four years per student.

Similar to the AOTC, there is an income limitation to who qualifies for the LLC credit. To claim the full credit in 2022, a parent’s modified adjusted gross income must be below $80,000 (or $160,000 if married filing jointly). If your modified adjusted gross income is between $80,000 and $90,000 ($10,000 and $180,000 if married filing jointly), you could be eligible for a reduced credit.

Parents cannot file for both the LLC and the AOTC for the same student in the same tax year, so it is a choice between one or the other. Also, a student can’t file for either of these if their parents have already filed for a credit for the same expenses.

Recommended: Are Student Loans Tax Deductible?

Other Education-Related Deductions

Parents who have taken out loans for their child’s education and put money toward student loans may also qualify to deduct the interest payments on those loans.

One of the basics of student loans is that borrowers pay interest on the loans. The deduction includes both required and voluntary interest payments.

Filers may be able to deduct up to $2,500 in student loan interest expenses. You do not need to itemize your taxes in order to qualify for the deduction.

Aside from deductions, another way to possibly lower your student loan payments is by refinancing student loans. When you refinance, you replace your current student loans with a new loan.

One of the advantages of refinancing is that you may be able to get a lower interest rate or better terms that could lower your monthly payments. However, be aware that if you refinance student loans, they become ineligible for federal protections and programs like income-driven repayment. Also be aware that you may pay more interest over the life of the loan if you refinance with an extended term.

If you decide that refinancing is an option that might help you save on student loan payments, SoFi offers loans with flexible terms, low fixed or variable interest rates, and no fees.

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