Jun
02
2023
What is Deflation and Why Does it Matter?

What Is Deflation and Why Does It Matter?

By | Financial Independence, Growing Wealth, invest, Investing | Comments Off on What Is Deflation and Why Does It Matter?

Deflation is essentially the opposite of inflation. It occurs when the prices consumers pay for goods and services goes down. That means that consumers can purchase more with the same amount of money.

There are many factors that cause deflation, which happens when the supply of goods and services is higher than the demand for them. While deflation can have some benefits to consumers, it’s often a sign of trouble for the overall economy.

What Happens During Deflation?

In addition to knowing what inflation is, it’s important to understand how it impacts the economy. In a deflationary economy, prices gradually drop and consumers can purchase more with their money. In other words, the value of a dollar rises when deflation happens.

It’s important not to confuse deflation with disinflation. Disinflation is simply inflation decelerating. For example, the annual inflation rate may change from 5% to 3%. This variation still means that inflation is present, just at a lower rate. By contrast, deflation lowers prices. So, instead of prices increasing 3%, they may drop in value by 2%.

Although it may seem advantageous for consumer purchasing power to increase, it can accompany a recession. When prices drop, consumers may delay purchases on the assumption that they can buy something later for a lower price. However, when consumers put less money into the economy, it results in less money for the service or product creators.

The combination of these two factors can yield higher unemployment and interest rates. Historically, after the financial crises of 1890, 1893, 1907, and the early-1930s, the United States saw deflationary periods follow.

How Is Deflation Measured?

Economists measure deflation the same way they measure inflation, by first gathering price data on goods and services. The Bureau of Economic Analysis (BEA) and the Bureau of Labor Statistics (BLS) record and monitor this type of data in the United States. They collect pricing information that they then put into buckets reflecting the types of goods and services consumers generally use.

While these buckets do not include every product and service; they offer a sample of items and services consumed. In the United States, economists incorporate these prices into an indicator known as the Consumer Price Index (CPI).

Then, economists can compare the CPI to previous years to determine whether the economy is experiencing inflation or deflation. For example, if the prices decrease in a period compared to the year before, the economy is experiencing deflation. On the other hand, if prices increase compared to the previous year, the economy is experiencing inflation.

What Causes Deflation?

Deflation comes from a swing in supply and demand. Typically, when demand dwindles and supply increases, prices drop. Factors that may contribute to this shift include:

Rising Interest rates

When the economy is expanding, the Federal Reserve may increase interest rates. When rates go up, consumers are less likely to spend their money and may keep more in high interest savings accounts to capitalize on the increase in rates.

Also, the cost of borrowing increases with the rise of interest rates, further discouraging consumers from spending on large items.

Decline in Consumer Confidence

When the country is experiencing economic turbulence, like a recession, consumers spend less money. Because consumers tend to worry about the direction of the economy, they may want to keep more of their money in savings to protect their financial well-being.

Innovations in Technology

Technological innovation and process efficiency ultimately help lower prices while increasing supply. Some companies’ increase in productivity may have a small impact on the economy. While other industries, such as oil, can have a drastic impact on the economy as a whole.

Lower Production Costs

When the cost to produce certain items, such as oil, decreases, manufacturers may increase production. If demand for the product stagnates or decreases, they may then end up with excess supply. To sell the product, companies may drop prices to encourage consumer purchases.

Why Does Deflation Matter?

Although falling prices may seem advantageous when you need to purchase something, it’s always not a good sign for the economy. Many economists prefer slow and unwavering inflation. When prices continue to rise, consumers have an incentive to make purchases sooner, which further boosts the economy.

One of the most significant impacts of deflation is that it can take a toll on business revenues. When prices fall, businesses can’t make as much money.

The drop in business profits makes it challenging for companies to support their employees, leading to layoffs or pay cuts. When incomes go down, consumers spend less money. So deflation can create a domino effect impacting the economy at many different levels, including lower wages, increased unemployment, and falling demand.

Deflation During The Great Depression

The Great Depression is a significant example of the potential economic impact of a deflationary period. While the 1929 stock market crash and recession set this economic disaster off, deflation heavily contributed to it. The rapid decrease in demand along with cautious money hoarding led to falling prices for goods and services. Many companies couldn’t recover and shut down. This caused record-high unemployment in the United States, peaking at 25%, and in several other countries as well.

During this time, the economy continued to experience the negative feedback loop associated with deflation: cash shortages, falling prices, economic stagnation, and business shutdowns. While the United States has seen small episodes of deflationary periods since the Great Depression, it hasn’t seen anything as substantial as this event.

How to Manage Deflation

So, what can the government do to help regulate inflation? For starters, the Federal Reserve can lower interest rates to stimulate financial institutions to lend money. The Fed may also purchase Treasury securities back to increase liquidity that may help financial institutions loan funds. Those initiatives can increase the circulation of the money in the economy and boost spending.

Another way to manage deflation is with changes in fiscal policy, such as lowering taxes or providing stimulus funds. Putting more money in consumers’ pockets encourages an increase in spending. This, in turn, creates a chain effect that may increase demand, increase prices, and move the economy out of a deflationary period.

The Takeaway

Deflation refers to a period that can be thought of as the opposite of inflation. It occurs when the prices consumers pay for goods and services goes down, which means that consumers can purchase more with the same amount of money.

When the economy is experiencing some turbulence, some investors may choose to keep their money in savings. On the other hand, other investors may see falling prices as an opportunity to purchase securities at a discount, either to hold or to sell when the economy recovers. Like any other investment strategy, investors must base their investment decisions on their personal preferences since there are no guaranteed results.

Ready to invest in your goals? It’s easy to get started when you open an Active Invest account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

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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.

Probability of Member receiving $1,000 is a probability of 0.028%.

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Jun
02
2023

Can Medical Bills Affect Your Credit Report?

By | Debt Payoff, personal_loan | Comments Off on Can Medical Bills Affect Your Credit Report?

A hospitalization or medical treatment can carry a price tag that packs a serious punch. If you’re unable to deal with those costs and leave the resulting bill unpaid, insult can get added to injury in the form of damage to your credit score.

That’s because once a medical bill becomes delinquent, many hospitals and individual medical providers will send it to collections. Even though unpaid medical bills might affect your credit report, there are steps to take to potentially lessen the impact.

Do Medical Bills Hurt Your Credit?

Unpaid doctor or hospital bills typically don’t automatically hurt your credit score. Because most health care providers do not report to the credit bureaus, medical debt would have to get sent to collections in order to eventually appear on your credit report and have a potential effect on your credit score. The point at which medical providers will sell the debt to a collection agency is after it’s 60, 90, or 120 past due, depending on the provider.

After that, the three credit bureaus — Experian, Equifax, and TransUnion — have set a one-year waiting period from the time the bill is sent to collections until the medical debt is included on a consumer’s credit report. This is intended to make sure there’s enough time to solve any disputes with insurers and allow for delays in payment.

Further, the three major credit bureaus will soon no longer include unpaid medical bills in collections on a person’s credit report if the amount owed is less than $500. And in even better news, medical debt that was in collections but is now paid off will no longer be included on your credit report (usually, collections accounts take seven years to drop off a report).

On top of all that, some scoring models don’t weigh medical debt as heavily as they do other types of debt when calculating credit scores. In fact, some models may exclude unpaid medical debt entirely. So while medical bills can affect your credit, the effect might not be as drastic as other types of unpaid debt.

Can Medical Bills Be Removed From My Credit Report?

Unlike other types of debt, medical collections debt will no longer appear on your credit report once it is paid. Unpaid medical debt, however, can appear on your credit report for up to seven years if it remains unpaid. Fortunately, as time goes by, the account in collections counts less toward your credit scores.

If your bill was sent to collections by mistake, you may be able to have it removed by proving the error. Collect as much evidence as you can to make your case, such as credit card or checking account statements. You also might ask for payment records from your medical provider’s billing office.

You can file a dispute with the credit bureau that’s reporting the error. The credit bureau will then investigate and respond to you within 30 days. You may also receive email updates from the credit bureau regarding the status of your dispute.

Does Paying Off Medical Collections Improve Credit?

If you pay off medical collections debt, it will get removed from your credit report, which will have a positive impact on your credit score, and potentially a significant one. This is a recent change — previously, paid medical collections debt remained on credit reports for up to seven years.

One option to explore if you’re seeking to pay off your medical collections debt and thus get it removed from your credit report is to get your health insurance company to pay the debt. If you have reason to believe your insurance company should have paid a medical bill, ask your insurer to reconsider your insurance claims.

What to Do if You Can’t Pay Your Medical Bills

If the balance on your medical bill is your financial responsibility, but you’re unable to pay it, there may be ways to relieve your medical debt. Here are some options to consider:

•   Ask the medical provider to set up a payment plan. Discuss this option with your medical provider to find a plan that is manageable with your monthly budget.

•   Review your explanation of benefits the insurance company provides. Look out for billing errors or consider negotiating some of the medical charges, both of which could lower the total amount due.

•   Consider getting a temporary part-time job. This may help bring in extra income that you can put toward the medical debt.

•   Get assistance from a patient advocate. This might be an option worth considering if you can’t get the provider to budge on the payment.

•   Apply for a personal loan. Medical debt is one of the common uses for personal loans. If you can secure a personal loan that has a lower interest rate than credit cards, this may offer another option for payment. Note that your approval and the interest rate you’re offered on the loan will depend on your credit record and other factors — here are some tips to get your personal loan approved.

Being Proactive About Medical Bills

Just because you made your copay at the doctor’s office doesn’t necessarily mean the bill is settled. Additionally, the fact that the provider has billed your insurance company doesn’t automatically mean the amount will be accurate or even paid.

If you haven’t received a statement from your medical provider’s billing office within a few weeks of your appointment or hospital stay, it might be a good idea to call for a billing update. Catching errors early in the billing process can help keep medical bills off your credit report and in turn, prevent medical bills from affecting your credit score.

If you know ahead of time that you won’t be able to pay the entire amount owed, contacting the provider’s billing office and trying to negotiate a payment plan may be a good first step. If you can come to an agreement, it’s a good idea to get it in writing. If you can’t reach an agreement, start exploring other options, making sure to weigh the pros and cons and crunch the numbers, such as with a personal loan calculator.

Should a collection agency employee contact you about a bill that you think has been paid or should have been paid by insurance, stay calm. Ask if you can call back with information that shows there’s no open balance.

The Takeaway

If you have unpaid medical bills on your credit report, focusing on getting them paid has the potential to make a real difference in your financial future. Staying on top of medical bills can mean extra vigilance, but the effort is worth it to keep medical debt from affecting your credit.

If paying your medical bills with a personal loan makes sense for your financial situation, a medical loan from SoFi might be right for you. An unsecured SoFi personal loan can be used for medical bills, in addition to other expenses, and has no fees required, competitive interest rates, and a variety of repayment terms to work with different budgets.

Check your rate on a medical loan from SoFi.

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.

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 .

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Jun
01
2023
What Is the Difference Between Ebit and Ebitda?

What is the Difference Between EBIT and EBITDA?

By | Growing Wealth, invest, Investing, Terminology | Comments Off on What is the Difference Between EBIT and EBITDA?

EBIT and EBITDA are two common ways to calculate a company’s profits, and investors may come across both terms when reviewing a company’s financial statements. Though they appear similar, they can present two very different views of a company’s income and expenses.

If you’re an investor or you own a business, it’s important to understand the difference between EBIT and EBITDA and know why the distinction matters.

What Is EBIT?

EBIT is a way to measure a company’s operating income. So, what does EBIT stand for in finance? It’s an acronym that stands for “earnings before interest and taxes”.

Here’s a look at what each of those components means:

•   Earnings: This is the net income of a company over a specified period of time, such as a quarter or fiscal year.

•   Interest: This refers to interest payments made to any liabilities owed by the company, including loans or lines of credit.

•   Taxes: This refers to any taxes a company must pay under federal and state laws.

The formula for calculating EBIT is simple.

EBIT = Net income + Interest + Taxes

The EBIT calculation assumes you know a company’s net income. To determine net income, you would use this formula:

Net income = Revenue – Cost of Goods Sold – Expenses

In this formula, revenue means the total amount of income generated by goods or services the company sells. Cost of goods sold refers to the cost of making or acquiring any goods the company sells, including labor or raw materials. Expenses include operating costs such as rent, utilities or payroll.

EBIT should not be confused with EBT, or earnings before tax. Earnings before tax is used to measure profits with taxes factored in, but not any interest payments the company owes. You may use this metric to evaluate companies that are subject to different taxation rules at the state level.

You can find EBIT listed on a company’s income or profit and loss statement alongside other important financial ratios, such as earnings per share (EPS).

Is Depreciation Included in EBIT?

The short answer is no, depreciation is not included in the context of the EBIT formula. But you will see depreciation factored in when calculating EBITDA.

What EBIT Tells Investors

Knowing the EBIT for a company can tell you how financially healthy that company is based on its business operations. Specifically, EBIT can tell you things like:

•   How much operating income a company needs to stay in business

•   What level of earnings a company generates

•   How efficiently the company uses earnings when debt obligations aren’t factored in

EBIT can be useful in determining how well a company manages business operations before external factors like debt and taxes come into play. It can also help to create a framework for evaluating whether certain actions, such as a stock buyback, are a true sign that a company is struggling financially.

You can also use EBIT to determine interest coverage ratio. This ratio can tell you how easily a company is able to pay interest on outstanding debt obligations. To find the interest coverage ratio, you’d divide a company’s earnings before interest and taxes by any interest paid toward debt for the specific time period you’re measuring. As an investor, this ratio can give you insight into how well a company is able to keep up with its current debts and any debts it may take on down the line.

What Is EBITDA?

EBITDA is another acronym you may see on financial statements that stands for “earnings before interest, taxes, depreciation, and amortization”. In terms of the first three terms, the breakdown is exactly the same as for EBIT. Plus there are two new additions:

•   Depreciation: This term is used to refer to the decline in an asset’s value over time due to things like regular use, wear and tear or becoming obsolete.

•   Amortization: This term also applies to a decline in value but instead of a tangible asset, it can be used for intangible assets. Amortization can also be referred to in the context of borrowing. For example, a business loan amortization schedule would show how the balance declines over time as payments are made.

So what is the EBITDA formula? It looks like this:

EBITDA = Net Income + Interest + Taxes + Depreciation + Amortization

Alternately, you can substitute this formula instead:

EBITDA = Operating Profit + Depreciation + Amortization

In this formula, operating profit is the same thing as EBIT. So to calculate EBITDA, you’d first need to calculate earnings before interest and taxes.

You should be able to find all the information you need to calculate EBITDA on a company’s income statement, though you may also need a cash flow statement for an accurate calculation.

EBIT vs EBITDA: Which is Better?

Compared to EBIT, EBITDA offers a clearer snapshot of a company’s net cash flow and how money is moving in or out of the business.

Calculating the earnings before interest, taxes, depreciation, and amortization can offer a fuller picture of a company’s financial health in terms of how operational decision-making affects profitability. It can also be useful when calculating valuations for different companies and/or comparing a business to its competitors.

While EBIT and EBITDA can be a starting point for choosing where to put your money, it’s also helpful to consider other fundamental ratios such as earnings per share or price-to-earnings ratio. Active traders who are interested in benefiting from market momentum, may consider technical analysis indicators instead.

Drawbacks of EBIT vs EBITDA

While EBIT and EBITDA can be useful, there are some potential issues to be aware of. Chiefly, neither formula is considered part of Generally Accepted Account Principles (GAAP). This is a uniform set of standards that’s designed to encourage transparency and accuracy in accounting for corporations, governments and other entities.

In other words, EBIT and EBITDA don’t have any official seal of approval from an accounting authority. That means companies can manipulate the numbers in their favor, if they choose to.

Here’s why: The better a company looks on paper, the easier it may be to attract investors or qualify for financing. Companies that are struggling behind the scenes may use inflated numbers or leave out critical information when calculating EBIT or EBITDA to appear more financially stable than they are.

That could potentially lead to losses for investors who choose to put money into a company because they accepted EBIT or EBITDA calculations at face value. So it’s important to dig deeper when deciding where to invest, as these numbers may not provide a full picture of a company’s financial situation.

The Takeaway

EBIT, or earnings before interest and tax, and EBITDA, or earnings before interest, tax, depreciation and amortization, are two ways to assess the financial health of a company. To recap, EBIT measures operating income, and EBITDA stands for “earnings before interest, taxes, depreciation, and amortization.”

But note that these figures can be manipulated by companies looking to present a rosy outlook to investors, so as always, it’s a good idea to research a company from a variety of different angles before investing in it.

Ready to invest in your goals? It’s easy to get started when you open an Active Invest account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

For a limited time, opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.

Photo credit: iStock/Vertigo3d

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.

Probability of Member receiving $1,000 is a probability of 0.028%.

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Jun
01
2023
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Using an Offer Letter as Proof of Income for Graduate Student Loans

By | Going to College, Student Loans, student_loan | Comments Off on Using an Offer Letter as Proof of Income for Graduate Student Loans

Typically, when you apply for a loan, the lender wants proof of income, aka proof that you can pay them back. For graduate students, this can pose a catch-22 since they are going to school in order to become gainfully employed. The customary workaround: having a cosigner on the private graduate student loan.

But some graduate students, perhaps MBA, law school, or computer science students about to start their final years, may have offer letters of employment for when they graduate. Wouldn’t it be great if they could submit those offer letters as proof of income — a practice used in mortgage lending?

How Common Is the Practice of Using an Offer Letter as Proof of Income?

Certainly, accepting offer letters as part of graduate students’ applications is not standard. Luckily, for graduate private student loans, SoFi now accepts an offer letter as a form of income for eligible borrowers.

When a loan applicant can submit an offer letter as proof of income, a cosigner may no longer be needed. Read on for more ways an offer letter may strengthen the loan application and empower the funding process for the student.

Using an Offer Letter as Proof of Income

Given how much a student likely already has on their plate, chances are they want the student loan application process to be as straightforward as possible. Needing to supply an additional document might sound like an extra hassle, but there can be plenty of benefits to using a job offer letter as proof of income on a student loan application.

Qualifying Without a Cosigner

A student loan cosigner is a second person who signs a loan along with the borrower and who is therefore also responsible for the debt should the borrower fail to repay. In the case of student loans, cosigners are often parents or guardians, though other relatives and even friends can be cosigners, as well.

In many cases, it can be hard for graduate students to qualify for additional student loans without a cosigner, particularly if they’re young and newly graduated from college — which probably means their credit histories are short and their income is limited.

Recommended: 10 Strategies for Building Credit Over Time

Because a job offer letter demonstrates the applicant’s individual earning potential, using one in a student loan application may empower students to be able to qualify without a cosigner (if the loan company doesn’t expressly require one).

Increasing Approval Chances

Even if a graduate school student loan applicant does still elect to have a cosigner, using an offer letter as proof of income may help increase the chances of approval. When it comes to borrowing large amounts of educational funding, every little bit of qualification can help.

Potentially Qualifying for a More Favorable Rate

With or without a cosigner, additional income validation in the form of a job offer letter may be able to qualify you for a more favorable interest rate, which may potentially mean savings over time. It is important to remember that this is just one of the many factors that lenders take into account when determining what rate you qualify for.

What’s the Process of Using a Job Offer Letter?

To use a job offer letter as part of your student loan application package, the applicant will need to include the letter in their application materials.

Depending on the loan company’s process, the letter may be uploaded directly online or a copy included in a mailed-in application. Offer letters typically include a start date and pre-tax pay rate so the lender can accurately assess how the offer augments the application.

Funding a Graduate Education with SoFi? Your Offer Letter Could Help

Students may already know that SoFi offers a range of private student loans for undergraduates, graduates, and parents. The loans carry competitive interest rates and are free of origination, late, or insufficient funds fees, and they’re getting even better.

SoFi now allows graduate, law, and MBA students to use a job offer letter as proof of income in addition to, or instead of, adding a cosigner to their application.

While students should exhaust all their federal student aid options before considering a private student loan, sometimes additional assistance is necessary to handle the expense of graduate or professional graduate programs.

SoFi members can also qualify for perks like rate discounts on additional loans, career services, financial advisors, and more. With competitive rates and multiple repayment options, SoFi Private Student Graduate Loans might be just the thing for you and your budget.

See if you prequalify for a private graduate loan with SoFi in just two minutes.

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 .

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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Jun
01
2023

4 Tips for Surviving Finals Week

By | Going to College, Student Loans, student_loan | Comments Off on 4 Tips for Surviving Finals Week

There’s almost nothing as ominous as the phrase “finals week.” Cue the thoughts of cramming, sleep deprivation, and high anxiety. The stress the two words can induce is almost universal among college students.

However, students can both survive and succeed during finals week as long as they prepare. Here are four tips to help students get ready for finals week.

1. Get Organized

Getting organized is a great way to feel in control before finals begin. College finals week doesn’t have to blindside students, forcing them into all-nighters and sleepovers in the library. There are a couple of things students can do to get set up for finals week.

Memorize Your Finals Schedule

The dates for finals week are usually available from the beginning of a semester. This may vary by school, but students can sometimes find their finals information in their syllabus.

Memorizing the schedule and writing it down will ensure that students don’t forget to study for any exams and can budget enough time for each test.

Make a Study Plan

Once students have their finals schedule memorized, they can start mapping out their study strategy. Students can base their study tips on which finals will require the most studying and the dates they occur.

It is recommended that students avoid long cram sessions. Studying ahead of time in shorter increments helps to retain information. This is why mapping out a study plan ahead of time can be helpful.

When making a plan, there are different strategies students can use. They can create a schedule based on the difficulty level of the tests, choosing to set aside more time to study for the finals that will be the most challenging for them.

They can also plan their schedule based on the order of their finals, saving more time later on to study for the last exams.

Having a plan can help students avoid cramming, spending too much time studying for one final over another, or forgetting to study for one altogether.

Recommended: Do Grades Affect Student Loans?

2. Keep Your Body Healthy

As tempting as it is to stay in the library 24/7 living on ramen and coffee, staying physically healthy during finals week is important for bringing home those good grades.

Eating a balanced diet — yes, that means fruits and veggies too, before and during finals week — can help students stay focused and avoid getting sick during finals.

Drinking water is also a good idea when plotting to ace those finals. Dehydration can have many negative effects, like tiredness, headaches, reduced alertness, and diminished concentration, which could affect test performance. Even drinking water during an exam can lead to better performance.

Another important piece of staying healthy is getting enough sleep. It’s common to see students pulling all-nighters in the library during finals week, but a lack of sleep can result in a worse memory and therefore, an inability to remember what has been studied. Missing out on a full night’s sleep can be detrimental to students’ ability to pass their exams.

Exercising is also often deprioritized during finals week. Students are so focused on studying that it’s easy to skip that 30-minute workout. Exercise, though, needs to find a place in a hectic schedule because it will benefit a student during this stressful time. Exercise can both lower stress and maintain high-level brain functioning, leading to a better chance of crushing those exams.

3. Keep Your Mind Healthy

Maintaining good mental health during the school year may already be a challenge, but especially during finals week it’s important to pay attention to and take care of mental health.

Even students who don’t regularly have anxiety may experience it during finals week. There are many calming techniques available to ease anxiety, and each student should see what feels best. Here are a few techniques they can try.

•   Breathing. There are tons of breathing techniques out there that can help with anxiety or stress. Students should look up a few simple ones and see what works best for them.

•   Grounding. This is a technique where students focus on their senses, naming five things they can see, four things they can feel, three things they can hear, two things they can smell, and one thing they can taste. Doing this can reduce anxiety or panic and help students stay focused.

•   Meditation. Taking up a daily meditation practice before studying and before exams start could help a person stay calm during stressful events. There are lots of meditation apps available as well as guided meditations online.

Another piece of maintaining mental health during finals week is taking breaks. Breaks are beneficial both for studying ability and mental health. Taking a break to do something enjoyable can decrease stress and keep a student’s mind in a good place.

Anyone experiencing high levels of anxiety can reach out to school counselors and see about making an appointment. Students may also benefit from talking about their stress with friends, family members, or professors. Leaning on a social support network during this stressful time may alleviate some of the nervousness that comes with finals week.

Lastly, students should ask for help if they need it. Most colleges have mental health services on campus.

4. Team Up

Students should remember that they’re not going through finals alone. They have a whole class of students struggling right alongside them. This can be a huge asset come finals week.

Instead of studying alone, students can form study groups.Study groups can help students be better prepared for finals. There may be some in the class who understand the material better and can teach it to others.

This helps both the student struggling and the student teaching. The struggling student gets new explanations for tricky material that may be easier to understand. The teaching student solidifies the material in their memory even more by explaining it to others.

Being in a study group can also help with accountability, so students are less likely to slack off and stop studying.

Those who need further support during finals week can visit their professors during office hours or consider getting a tutor. Professors want to see their students succeed, and though they can’t give answers to exam questions, they can help explain parts of the material that someone is struggling with.

No Pay, No Gain

Wait, so college students are paying to suffer through finals week? Technically, yes, because college costs money, of course, and even if the nightmare of finals week is still far off, it’s never too soon for students to start sorting out how they’re going to finance their entire college education.

There’s more than one resource available to students when it comes to funding college expenses. Here are a few, broken down in an easy-to-understand way.

Federal Aid

Students already in college might be familiar with the Free Application for Federal Student Aid, commonly known as the FAFSA.® Eligibility for undergraduates is usually based on parents’ income. Federal aid can come in the form of grants or loans. Grants usually don’t need to be repaid, but loans do.

Federal loans usually come with benefits that private loans don’t, such as income-driven repayments and lower fixed rates. It’s recommended that if students need to take out loans, they use federal loans before turning to private loans.

Is the FAFSA® one and done? Not at all. You must complete the application every year that you attend school if you hope to gain federal aid, and on time.

Free Money

The world of scholarships is vast. Though it can take some digging to find scholarships that students are eligible for, it’s money that usually doesn’t need to be repaid.

Scholarships can be need based or merit based, with the eligibility requirements different for each one. Scholarships come from colleges, corporations, local community organizations, religious organizations, and more.

Students might want to check if their college has any information available on scholarships. Usually, schools have a scholarship office or information about scholarships at their financial aid office.

Another Option

Private student loans are another way to help fund the college experience, when federal aid doesn’t cover all the bases, a student doesn’t qualify for federal aid, or someone has reached a limit on federal direct loans.

The eligibility for private student loans is usually based on a student’s income and credit history, or that of a cosigner. Each lender will have its own terms, including the interest rate and repayment methods, which merit research.

SoFi offers private student loans with attractive fixed or variable rates, no fees, and a quick online application.

See if you prequalify with SoFi in just two minutes.

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.

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