SoFi

You might have heard the phrase “there’s no such thing as free money.” You may also have heard that “money doesn’t grow on trees,” but we’re pretty sure money is still made of paper. While cash back from your credit card isn’t exactly free money, using credit wisely can be beneficial.

How Does a Cash Back Perk Work?

Cash back is the rebate of the credit card world. The money that you get back, depending on the card and the deal you’ve gotten, may come in the form of a check, statement credit, or deposit with your financial institution.

With points, you might end up with $10 off your next Starbucks purchase; but you might actually prefer The Coffee Bean and Tea Leaf, so a Starbucks card may hold no value for you. With a cash-back reward, you typically get to decide how you want to spend the money: your mortgage, your lunch, your boyfriend’s birthday present, or even your credit card debt.

While some credit card companies offer a flat cash-back rate, other cards offer some combination of a flat cash back rate, and a specialized cash back rate for certain categories (often ones you can choose).

Card holders may be eligible to receive varying amounts—typically a percentage of spending in a certain category, e.g., dining, hospitality, airlines, or groceries.

But choosing a cash-back card with the best rewards isn’t so simple. There are many different kinds of cash-back rewards which may be available.

What’s Available

•   Cash back on a monthly, quarterly, or annual basis.

•   The cash back could be for any kind of purchase or for particular purchases in certain categories like dining, gas, groceries, etc. Sometimes it might be a combination of these two with higher rates of return on certain categories.

•   Timed spending bonuses: If you spend a certain amount within a certain prescribed time you may be eligible for even more cash back than the base amount.

•   Certain cards might also offer non-cash benefits like flight upgrades or extended warranties on purchases made with that card.

Why Do Cash Back Rewards Even Exist?

How is this even possible? Getting paid to spend money sounds like the kind of job you invented when you were twelve—it couldn’t possibly be real.

It turns out that the money you’re getting back comes from some very real places. Of course, credit card companies will try to get you sign up with them instead of their competitors. It’s dog-eat-dog out there. Credit card companies have since come up with a variety of tools to attract customers, and cash back is a common reward.

But where does the money come from? If you’ve ever been asked to fulfill a credit card minimum purchase amount you know where it comes from. The $10 minimum at the cafe is not there entirely to keep you adding extra shots to your morning latte (although you’re totally going to anyway).

The Pros

With so many kinds of credit cards out there, why would you consider a cash-back card?

•   Credit cards with cash-back rewards might actually help you earn more money than a low-interest-rate checking account with a debit card. Some checking account interest rates can often be less than 1% APY. Getting 5%—or more—cash back on your purchases is a lofty difference. Credit card spending, though, is still spending—not saving—an important difference to keep in mind when making purchases. Buying within a budget is still an important consideration.

•   Some cash-back cards offer sign-up bonuses or bonuses for spending over a certain amount or in a certain categories. When used responsibly, these types of bonuses could be used for special purchases a buyer might not have been able to afford otherwise. Two tickets to Paris please!

•   Consumers with credit scores of 740 and higher are typically the ones who qualify for cards with the highest cash-back rewards, which could be up to 6% when purchasing items from designated categories. Yet another reason to pat yourself on the back for your high credit score.

The Cons

Okay, so maybe some of the maxims are correct. Nothing in life is free and money doesn’t grow on trees. Like anything good in life, there can be a downside (we’re looking at you, cupcakes).

•   Many cash-back programs actually come with a maximum on rewards. While it seems that the more you spend the more you get, eventually you might just be spending more.

•   Some cash-back credit cards have annual fees. While this may seem small compared to the money you’ll be getting back, it might be worth it to do the math and make sure the pros outweigh the cons before you are convinced that this card is worth your spending power. Some cards with hefty fees reward the cardholders with perks beyond the cash-back bonus.

•   Like any other credit card, if the balance due is not paid on time, there are typically interest charges and fees added to the principal balance. That amount may negate any cash-back rewards you earned during that statement cycle.

•   Perhaps the biggest con: Choosing and managing a credit card can be complicated. Lots of homework, (i.e., research online, with your bank, has to go into this one before you may feel ready to commit to this endeavor. With occasional fees and sometimes hard-to-acquire gains, your research is key to making sure you find one that works for your spending habits. Cash-back credit cards can pay off, but it might take some digging to find the right one.

Unfortunately, at the end of the day, there’s no free lunch. Credit card companies are in the business of making money and they rely on your debt to fund their businesses.

Using credit wisely—and reaping all the rewards—typically means paying the balance due in full each billing cycle. Getting to that point can take some time, though.

New and existing Checking and Savings members who have not previously enrolled in direct deposit with SoFi are eligible to earn a cash bonus when they set up direct deposits of at least $1,000 over a consecutive 25-day period. Cash bonus will be based on the total amount of direct deposit. The Program will be available through 12/31/23. Full terms at sofi.com/banking. SoFi Checking and Savings is offered through SoFi Bank, N.A. Member FDIC.

SoFi members with direct deposit can earn up to 4.00% annual percentage yield (APY) interest on Savings account balances (including Vaults) and up to 1.20% APY on Checking account balances. There is no minimum direct deposit amount required to qualify for these rates. Members without direct deposit will earn 1.20% APY on all account balances in Checking and Savings (including Vaults). Interest rates are variable and subject to change at any time. These rates are current as of 3/17/2023. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet

¹See Rewards Details at SoFi.com/card/rewards.


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 .

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.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SoFi 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.

SOPL19062

Remember your kids as little ones, riding on their tricycles and grabbing fistfuls of Cheerios? Now they are soon off to college, and you might be feeling bittersweet. Your children can finally do their own laundry (hallelujah) and you get some much needed quiet time around the house.

Sending kids to college is not just a transition for your children, it’s also a big step in parenthood for you. You may be sending your first child to college, but what if you have another child headed off to educational pursuits not too far behind?

If you have two kids going to college at the same time, the double whammy can hurt right in the wallet. As you navigate college dorms, tuition, and how to make sure your kids know where all of their classes are, you might have a few questions on how to support them over the next four years. We’ve compiled a few tips that could help guide you through sending your kids to college.

Financing Your Kids’ Education the Debt-Free Way

If you are putting multiple kids through college, then you know how much tuition and other costs can beat down your budget. You might want to start by talking with your spouse or someone you trust about finding the cash to finance your children’s education.

There are several ways to get creative with saving for your child’s college tuition that might help you avoid going into massive debt.

Scholarships can also play a role in financing your children’s education. They can be especially helpful since you won’t need to pay them back after your child graduates, and they can be used to directly fund tuition. Scholarship hunting can be a daunting task though.

Your mini-mes are most likely overwhelmed with selecting their university, studying for college entrance exams, and finishing out their high school senior year.

You could band together on scholarship applications by helping them find scholarships they are eligible for and compile a list. Ultimately, it’s up to your child to make the effort to complete the requirements. Encouragement is key here!

A Borrower’s Way to Pay

If paying for tuition out-of-pocket is out of reach, it’s recommended to first apply for federal financial aid by filling out the Free Application for Federal Student Aid (FAFSA®) . You may be faced with several options here, including Federal Direct Loans, which can be either subsidized or unsubsidized, PLUS Loans work-study, or grants.

Federal Direct Subsidized and Unsubsidized loans are offered to students who are enrolled at least half-time in school. Each of your kids will need to fill out their own FAFSA—parents cannot take out these types of loans on behalf of their children. That’s where the Parent PLUS, or Direct PLUS, loan comes into play.

The Direct PLUS Loan allows parents of undergraduate students to take out a loan to pay for education expenses not covered by other financial aid. It’s helpful to have a strong credit history, as anything adversely affecting your credit could also affect your eligibility to receive a Direct PLUS Loan.

Are You Cashing In on Ramen and Mac ‘n’ Cheese?

Your kids might not be accustomed to fending for themselves when it comes to food. If you’re concerned about your child’s eating habits while in college, you could make clear what you will or will not be paying for in groceries.

If you want to help out your kiddos, you could send them food items to get them through the week. You might want to check with the college residence hall coordinator first about any rules on using a mini fridge. Or you could stick with items that can be stored in a plastic bin or inside a closet to make things easy.

Let Your Kids Spread Their Financial Wings

Tuition continues to rise, and so does the cost of living. Tuition and fees for full-time, in-state students attending four-year public colleges and universities saw a 2.6% increase between the 2018-19 academic year and 2019-20.

How will your children support themselves in school? There are several ways, and it might be advantageous to have a conversation with your kids early on about how they can take care of themselves financially.

Some universities offer work-study programs, which give student workers the opportunity to work a job that fits within their class schedule. Students would need to fill out the FAFSA to determine eligibility for federal work-study.

If your child qualifies, it will be noted in their financial aid award. If your child is awarded work-study, they will still be responsible for securing a job that fits within the program.

Your kids could also explore part-time opportunities off-campus, such as waiting tables or picking up a gig as a nanny.

Another alternative, if you have the ability, is to support your children financially. You could determine an appropriate amount to keep your child on the right path or consider offering cash incentives for good grades. If you have the funds to help throughout the year, this could help offset student loan debt.

You Come First

Sending your kids to college can be a priority, but you come first. You might want to prioritize your money goals first, such as retirement. You don’t want to be caught dumping all of your potential retirement savings into tuition if you are short on your retirement goals.

You could make a plan and ask yourself how much you want to contribute each month to retirement, regardless of other pressing expenses. Tuition can be covered in a variety of ways, but borrowing from your retirement stash or neglecting it could have an impact on your retirement goals.

They’re Off to College, but They Still Need You

Just because you successfully guided your offspring to college doesn’t mean that they don’t need you. You can probably expect to answer text messages (because we all know actual phone calls are a thing of the past with Gen Z’s) on how to make a pot of coffee or what that genie lamp light means on the dashboard of their car (hint: check your engine oil!). Remember, they may still lean on you for support as they transition into adulthood.

Then There’s the Whole Paying It Back Thing

Four years are going to fly by. When your kids are well on their way to their post-grad careers, you could check out how refinancing their student loans might help. Refinancing student loans with SoFi can create one monthly payment.

Your child could even reduce their interest rate when they refinance, depending on the terms of their existing financing. If they have federal loans, know that refinancing means they’ll no longer qualify for federal protections or repayment programs.

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.

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.

SOSL19028

College is full of decisions: what school should I go to? What will my major be? Should I live on campus? Should I go full or part-time? It is easy to get overwhelmed trying to find all the answers, but when it comes to choosing between full and part-time, your choice could change things like the amount of work you’re doing every week to how much financial aid, including federal student loans, you may be eligible for.

Whether you’re a full or part-time student depends on how many credit hours you’re taking during the semester.

In general, most schools require that you take about 120 credit hours in order to graduate with a bachelor’s degree. Associate’s degrees and certificate programs require fewer credits.

This means that, typically, in order to graduate with a Bachelor’s degree in four years, you’ll need to take about 15 credits per semester. But what if you’re a night student, or are balancing classes with a full-time job? In that case, you may be a part-time student, taking less than a full load each semester.

Here’s what you need to know about the part-time versus full-time distinction and how the number of credits you take each semester could impact your education.

What Is a Full-Time Student?

Each college determines the exact number of credits that constitutes a full-time course load. But at its most basic, a full-time student is someone who is taking a “full-load” of college classes, as measured by the number of credit hours.

Each class you take is worth a certain amount of credits, depending on how much work is expected in the course. Your school determines how many credits each course is worth. For example, you might take a biology course worth four credits, a chemistry lab worth four credits, an English Lit class worth four credits, and a dance class worth two credits. Together, the total number of credits in your schedule determine whether you’re a full-time or part-time student.

What Is a Part-Time Student?

A part-time student is anyone who is taking some college credit hours but who is not taking the minimum number of college credit hours designated by the school as “full-time.”

This means that you might be a part-time college student if you’re taking a single two credit art class for fun after work, or if you’re taking a 10 credit course load when your school designates full time as 12 credits or more.

Differences in Finances for Full Time and Part-Time Students

One area where being a full or part-time student can make a big difference is when it comes to finances. Full and part-time student status could potentially impact factors like tuition costs and financial aid.

Tuition Costs

One big difference when it comes to full-time or part-time student status is tuition costs. Many degree programs charge tuition based on the number of credits you’re taking. Tuition policies and rates will vary by school, so it might be worth checking the specific policies at your school to determine how your enrollment might impact your tuition. If tuition is charged per credit hour, taking additional credits could make your semester more expensive.

Some students who are paying for their degree out of pocket opt to attend school part-time in order to pay less in tuition each semester and spread out the cost of their education over a longer period of time.

On the flip side, the cost-per-credit model can mean that students looking to max out the number of credits they take each semester in order to graduate as soon as possible, might face high costs when it comes to tuition.

And that’s not to mention books, as the more classes you take, the more books you’ll likely have to buy. For students facing high costs due to taking a high number of credits, and who have maxed out the federal aid available to them, a private student loan might help cover the increased costs of attendance that come with being a full-time student.

Available Tax Credits

Student status can also make a difference when it comes to your or your parents’ taxes. Tax credits like the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC) may offer tax benefits to students.

The AOTC can be worth a maximum annual benefit of $2,500 per eligible student, but it is only available during the first four years at an eligible college or vocational school.

The LLC offers a maximum benefit of up to $2,000 per tax return for both graduate and undergraduate students, and has a slightly broader net, as it also allows for deductions taken by professional students who want to take courses to “maintain or improve job skills.”

In order to claim either the AOTC or the LLC, you need to meet certain qualifications . These include: 1) pay for qualified education expenses and 2) you’re enrolled at an eligible educational institution.
The good news is that because these tax credits only require enrollment at an “eligible educational institution,” they are available to both full-time and part-time students.

Federal Aid

When it comes to federal student loans, it is a different story. In order to qualify for most types of federal student aid, you must be enrolled at least half- time at a qualifying institution. Like full-time enrollment, half-time enrollment is determined by your school. Generally, it is around six credits per semester, but depends entirely on which school a student attends.

If a student falls below half-time enrollment, they could lose their eligibility for federal student aid. Some schools may also adjust financial aid awards depending on student enrollment. The financial aid office at your school should be able to provide information on your school’s policies.

This means that for students who are using federal student aid, it’s likely important to make sure your schedule has enough credits, or risk losing your student aid.

If you’re paying out of pocket and not relying on federal student aid, it might not be as important to maintain a schedule that keeps your credit hours at half-time, as fewer credits could equal lower tuition bills.

Paying for College

Whether you’re a full-time student, a half-time student, or a part-time student, it can still be a struggle to pay for college. There are things you can do to lower the cost of college, but many students end up taking out some type of loan to complete their degree.

Private student loans are one option that could help, whether you’re eligible for federal student aid or not.

Private student loans can be a backup plan to cover educational costs that go beyond what you’re able to meet with federal aid—provided, in most cases, you’re enrolled at least half-time.

It is important to consider private loans carefully, because private student loans don’t have the same repayment benefits and protections of federal student loans, including flexible repayment plans and the possibility of loan forgiveness.

If you’re looking for a way to fill in the gaps, however, a private student loan could be the answer you’re looking for.

Depending on the lender, private student loans might only be an option for students attending at least half-time. For example, at SoFi, borrowers must be attending school at least half-time in a qualifying degree granting program in order to qualify for a loan.

If you do decide to borrow a private student loan to cover educational costs, consider SoFi. There are absolutely no fees and borrowers can select from up to four flexible repayment plans. And with SoFi, you can apply online in just a few minutes—even if you’re using a co-signer.

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.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

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.

SOPS19045

In the U.S., debt is a reality for many Americans. According to the Federal Reserve’s most recent report, our total national household debt is at $13.95 trillion .

That’s a lot of student loans, car loans, mortgages, and credit card debt. And for those who’ve fallen behind, it can mean a lot of headaches and heartache.

If you’ve had enough of all that stress and you’re trying to build a budget that tackles your debt, it helps to have a strategy you can stick to while you also keep current with your other monthly bills.

If you find yourself struggling to make ends meet and are unable to form a plan to get back on track on your own, many people find some assistance by exploring other options, such as a nonprofit credit counseling agency to put together a debt management plan—but there can be some downsides to that decision.

The basic concept seems simple enough: Typically, a debt settlement agency negotiates a repayment schedule with creditors for debt that can include credit cards, medical bills, and personal loans; the consumer makes one payment each month to an account set up with the agency, which includes a small fee; then the agency pays each creditor over an agreed-upon period of time, typically two to five years.

You might want to be sure that you are able to set aside that money for the full term of the plan. If you fail to make your required deposits to the debt relief savings account on time—if an unexpected home repair or medical bill breaks your budget, for example—you can be dropped from the plan and all its perks.

It’s also likely you’ll have to give up your credit cards for the length of the program—and you won’t be able to take out any new lines of credit during that time. And it’s important to note that taking actions like closing accounts may impact your credit history, so it could be a great idea to talk through the pros and cons of this method of debt repayment with a trusted, credentialed advisor.

If that lack of flexibility doesn’t work for you, there are a few other strategies you could consider instead. They, too, take discipline, but you’ll be completely in control of the plan’s structure.

The most well-known of the debt management plans are likely the snowball and avalanche methods, but there’s also the fireball method, which combines both strategies.

Which method is right for you is something only you can decide, and we aren’t advocating one or all of these methods. Here’s just a little bit on each and some of their pros and cons.

The Debt Snowball Method

Once you’ve compiled your monthly budget and have a good idea of how much money you’ll have left each month after paying all your bills, the snowball method directs any excess funds to the debt with the smallest outstanding balance. Here are the basic steps:

•   Disregard interest rates and start by listing your debts based on how much you owe, from the smallest balance to the largest.

•   Make the minimum payment on all other debts and pay as much as you can each month to eliminate the smallest one.

•   After you pay off the smallest debt, you’d turn your attention to the next-lowest balance.

•   Keep going until you are debt-free. (And, of course, avoid the temptation to use the credit cards you’ve paid off.)

Pros: This approach is all about motivation. Instead of slogging away, trying to knock down your biggest debt, you’re picking off the little guys as quickly as possible. Depending on your personality, snowballing could provide the psychological boost you need to keep going.

Cons: It’s more about behavior modification than math. By focusing on the smallest account balance instead of the highest interest rate, you could be missing out on an opportunity to make a more significant dent in your debt. The sooner you get your debts paid, the sooner you can adjust your focus to saving and investing to reach other financial goals.

The Avalanche Method

The avalanche method puts any excess money in your budget toward the debt with the highest interest rate. Here’s how it works:

•   Disregard minimum payment amounts and balances, and instead list debts in order by interest rate.

•   Make the minimum payment on all debts and pay as much as you can each month to get rid of the bill with the highest interest rate. (So, for example, if you have three credit cards with interest rates of 21%, 18%, and 22%, and a student loan with 6% interest, you’d pay as much extra as you could toward the card with the 22% rate first and keep at it until the balance is zero.)

•   When the first balance is paid off, you’d move on to the debt with the next-highest interest rate. (The 21% card, in this example, then the 18% card, then the lower-interest student loan.)

Pros: Since this method focuses on the most expensive debt first, it helps bring down the amount of interest paid while working toward debt repayment. If you need a reminder of how impactful interest can be, check your credit card bill: The minimum payment warning explains just how long it will take you to get rid of that debt if you pay only what you have to every month.

Cons: This method could take more commitment and discipline. If you’re the type who needs to experience little “wins” along the way, you might lose interest before you wrap up this plan.

The Debt Fireball Method

This strategy takes a hybrid approach to the traditional snowball and avalanche methods of paying down debt.

We call it the fireball method because it can help you blaze through costly bad debt faster so you can accomplish the things that matter to you. The steps include:

•   Categorize all debt as either “good” or “bad.” (Debts with a less than 7% interest rate are “good.” Debts with a higher than 7% interest rate that do not have the potential to increase your net worth are considered “bad” debt under this method.)

•   List “bad” debts from smallest to largest based on their outstanding balances.

•   Make the minimum monthly payment on all outstanding debts, then funnel any excess funds to the smallest of your “bad” debts.

•   When that balance is paid in full, you’d go on to the next smallest on the bad-debt list. Torch those balances until all your bad debt is repaid.

•   When that’s done, you’d keep paying off your “good” debt on the normal schedule while investing in your future. Then you could start applying the money you used to pay toward your “bad” debt to a financial goal, such as saving for a house, starting a business, saving for retirement, etc.

Pros: The math here may make more sense because you’re taking on more expensive debt before less-expensive debt. And it can also work from a psychological perspective because the payoff tends to accelerate as you approach the finish line.

Cons: If you’re more interested in dumping all your debt first before investing in the future, this approach might not satisfy your need to make even low-interest debt a payoff priority. Also, it typically isn’t as mathematically efficient as the avalanche method—though it could be more cost-effective than the snowball method.

Consolidating Your Debt With a Personal Loan

Looking for another method to help pay off your debt? A personal loan from SoFi may be the right choice for you. SoFi offers low-rate, no-fee option, unsecured personal loans to help you save money on your debt.

With a fixed monthly payment, you may qualify for a SoFi personal loan to consolidate credit cards or other high-interest debt at a more competitive interest rate.

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.

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.

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.

SOPL19071

While the stress of term papers and finals comes to an end once you graduate from college, the stress of building your post-collegiate life—and dealing with student loans—is just beginning.

Even if you’ve already got a job, you may have to move to a new city, and it will likely be a bit before a steady paycheck starts rolling in. Luckily, many student loans allow a grace period to give you a chance to put your life in order before you have to pay back your loans.

What Is a Grace Period?

The student loan grace period is typically six months after you graduate from school. However, the clock can start ticking if you leave school before you graduate or you drop below half-time enrollment.

Rules about grace periods can vary depending on the type of loan. You can expect a six-month grace period from Direct Subsidized and Unsubsidized Loans. Federal Perkins Loans, when they were offered, sometimes have a nine-month grace period (check with the school where you received your loan), while PLUS Loans offer no grace period at all, but if you have a PLUS Loan and need more time before you start to pay it off, you can usually apply for student loan deferment.

In general, private loans do not offer grace periods, but there are some that do. So be sure to check with your loan provider to understand their specific terms regarding grace periods.

The grace period is typically only available to you once during the life of your loan. However, there are two possible exceptions for federal student loans: First, if you are an active member of the military and you are called to service for more than 30 days during your grace period, the grace period will start over upon your return.

Second, if you go back to school before the loan’s grace period ends. One word of caution: If you consolidate a federal student loan during its grace period, you will forfeit the remainder of that grace period.

Grace periods also come with another hitch—though you don’t have to make payments during the grace period, some loans, such as a Direct Unsubsidized Loan, will still accrue interest. These interest charges are added to your principal balance, and will have to be paid when the grace period is over.

Making the Most of Your Grace Period

The main advantage of grace periods is that it gives you time to settle in to your new post-graduate life before you have to start paying off your student debt. It gives you time to do things like find a job, move to a new city, and figure out the other bills you may be paying for the first time. Ideally, this period gives you some time to build your income to the point where you can then start paying back your loans.

If you find yourself a little bit ahead of the game, you don’t have to wait for the grace period to end before you start paying back student loans. You may decide that the cost of accruing interest over the period isn’t worth the benefits of waiting. The choice you make will depend on your personal situation and income.

While the grace period may seem like a vacation from your loans, it actually might be a good time to put your financial house in order so you’re better positioned to handle them. Here are a few steps you might consider taking that can help you stay on track:

Getting Reacquainted With Your Loan Terms

First things first—gather information about all of your loans. It may be four years since you last looked at any of your loan information, so get yourself reacquainted.

You can look up your federal loans on the National Student Loan Data System , and you can request information about private loans from your private lender(s). Pay attention to what types of loans you have, whether they offer a grace period, how long the period is, and all interest charges.

Once you understand what types of loans you carry and their terms, you can determine the best options for paying them back. This will help prioritize which loans you want to tackle first.

Federal loans may offer hardship options like forbearance (temporarily halt payments) and income-driven repayment plans (longer-term payment reduction). Though private loans are less likely to offer programs like this, some do, so it’s worth checking.

Building a Budget

This may be a good opportunity to take a long hard look at your finances. While you may be just getting on your feet financially, this is a perfect time to get into the habit of budgeting. Take a look at all of your monthly income and subtract any necessary living expenses like bills, rent, and food.

What you’ve got left is the money you can devote to paying down debt and for discretionary expenses. This amount can give you an idea of how large a student loan payment you can make each month.

Figuring Out Your Monthly Payment

Federal loans often offer flexible repayment options and loan terms. For example, extending the term of your loan can help you lower your monthly payment.

Be aware that extending your term also extends the amount of time you pay interest on your loan, which can cost you more money in the long run. Weigh this consideration carefully as you decide how much to devote to monthly payments.

Considering Student Loan Refinancing

Getting reacquainted with your loans gives you a refresher on their terms and interest rates as well as the repayment options available to you. Yet, if these options don’t work for you, the good news is you’re not necessarily stuck with them.

You could consider refinancing your federal and private loans for terms that work better for your situation.

When you refinance a student loan, you are essentially taking out a new loan that pays off your old loans. Now, you only have one loan to manage, and hopefully a lower interest rate or a term that works better for you.

Typically, to qualify for student loan refinancing, it helps to have a strong credit history. For example, if you had a credit card that you paid off regularly, your credit score may be sufficient to meet lender eligibility requirements. They’ll likely consider other personal financial factors, like your income, too.

Also, before refinancing a federal loan, make sure that there are no federal benefits that you want to take advantage of, such as loan forgiveness, income-driven repayment, and other programs that are only available if you hold on to your federal loans.

These benefits don’t transfer when you refinance with a private lender. That said, other benefits may be available, depending on the lender. For example, if you refinance before your grace period ends, some lenders will honor the remainder of the period.

Make sure your grace period is time well spent, and take the opportunity to understand all your options for paying back student loans.

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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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