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Whether you’re thinking about a career in nursing, or you’re already working as a nursing professional, it’s almost inevitable that you’ll have to shoulder a good bit of student loan debt. The cost of nursing school, like other forms of education, keeps rising, and many students are taking on higher levels of student loan debt as a result. Balancing a student loan payment with all the other expenses you have, especially if you recently graduated from college, can really add to your stress.

The good news: The median income for registered nurses in 2017 was $70,000. Want another bit of really good news? There are many programs to help you manage your student loan payments and debt. Nursing is one of the careers that has numerous options for student loan forgiveness. And if you don’t qualify for student loan forgiveness for nurses, you can leverage one of the many federal loan repayment plans to help you pay back what you owe more easily.

The government considers nursing to be a vital service to society, so they offer multiple ways to help nurses with student loan debt. If you’re starting to research the right options for you, some key places to contact include your school, your employer, your state’s department of financial aid, and studentaid.ed.gov , for the federal government’s loan repayment and forgiveness plans.

But before you do that, check out our quick guide to student loan forgiveness for nurses. We’ll start by talking about what loan forgiveness is, the repayment plans nurses may be eligible for, and loan forgiveness and assistance plans specifically targeted at nurses. And if for some reason you don’t qualify for a loan forgiveness program, you may still have options.

What Is Loan Forgiveness?

Simply put, loan forgiveness means the borrower of the loan is no longer required to pay all or part of the remaining principal and interest balance. To qualify under most federal forgiveness plans available, your student loan must not be in default. Private loans do not qualify for federal loan forgiveness programs.

There are nurse-specific loan forgiveness programs, and loan forgiveness programs designated specifically for those working in public service. Nurses can also take advantage of federal student loan repayment plans that offer forgiveness after 20 or 25 years of qualifying payments. (The caveat is that it takes quite a bit of time before the loans are forgiven. And your loan forgiveness balance may be subject to taxes.)

Getting to Know Your Federal Student Loans

Before we get into loan forgiveness, let’s talk about the loans you may have taken out for undergraduate or nursing school.

1. Direct Student Loan Program

Most federal student loans are part of the Federal Direct Student Loan Program. When you borrow funds for your education, you’re borrowing directly from the U.S. Department of Education. Here’s a rundown of eligible student loan options:

Direct Subsidized Loans : Undergraduate students can take advantage of these if they demonstrate financial need.

Direct Unsubsidized Loans : Students don’t have to demonstrate financial need for these loans, plus they are available to both undergraduate and graduate students.

Direct PLUS Loans : These loans allow parents to help pay for a dependent student’s education, and are meant to bridge the gap after other financial aid has been exhausted. Some graduate, professional, and certain undergraduate students may be eligible for PLUS Loans on their own as well.

Direct Consolidation Loans : This loan allows you to consolidate all your federal loans into one, at an interest rate that’s a weighted average of all your loans’ interest rates rounded to the nearest one-eighth of 1%.

2. Federal Perkins Loan Program

This plan is usually reserved for students with severe financial needs. The loans are sourced by the school to help students pay for their education. P.S., the loan program has been discontinued, but those still paying them off may be eligible for forgiveness.

3. The Federal Family Education Loan Program (FFEL)

This loan program has been discontinued and has not been available since 2010. However, if you have one, these loans can still be forgiven.

Federal Loan Forgiveness Programs

The federal government provides several loan forgiveness programs, but borrowers must be in good standing with their lender, meaning they have a history of making full payments on time.

Just don’t fall for the “Obama Student Loan Forgiveness Act,” because it doesn’t exist. There was a bill called the Student Loan Forgiveness Act that would’ve capped how much you paid on your student loan, but it never became law. So check out these bona fide programs that provide loan forgiveness for nurses and see if you qualify.

The Public Service Loan Forgiveness Program (PSLF)

This program forgives loans after you’ve made 10 years (120 months) of on-time, qualifying payments. These are for Direct Student Loan Program loans, but FFEL loans can be included if you combine them with your direct loans in a Direct Consolidation Loan.

To be eligible for Public Service Loan Forgiveness, you must work for a qualifying government organization, tax-exempt not-for-profit organization, certain other not-for-profits, or as a volunteer for AmeriCorps or Peace Corps.

Federal Perkins Loan Cancellation

While we’ve been mostly using the term loan forgiveness, the phrase “cancellation of loan” is basically the same thing, and that’s how it’s used under the Federal Perkins Loan cancellation program. Nurses may be able to have their Perkins Loans cancelled if they qualify and meet the eligible service requirements .

NURSE Corps Loan Repayment Program

The federal government wants to encourage careers in nursing, especially as the nation ages. The Nurse Corps Loan Repayment program will repay some of a nurse’s eligible student loans when they work full-time at a Critical Shortage Facility (CSF) or as a faculty member at a qualifying nursing school. The financial award depends upon the nurse’s role at the facility.

Successful applicants are eligible to receive 60% of their outstanding student loan balances over a two-year employment commitment. Those who qualify may be able to get an extension to a third year and an additional 25% of their original loan balance forgiven.

You have to be a licensed registered nurse, advanced practice registered nurse, or a faculty member at a qualifying nursing school to be eligible for the award. There are additional requirements, so check out the details at the Bureau of Health Workforce , which administers the program.

National Health Service Corps Loan Repayment Program

This program can provide up to $50,000 of student loan forgiveness for nurses if they commit to working two years in clinical practice at a National Health Service Corps site.

Not only do federal student loans apply, but so do some state and local loans. The program is available for nurse practitioners, mental health nurse practitioners, certified nurse midwives, or psychiatric nurse specialists.

Other Loan Forgiveness Options

It’s not just the federal government that’s offering student loan forgiveness for nurses. Other entities have programs you can take advantage of, too. Individual states may also provide some type of loan forgiveness for nurses.

Just like the federal government, states seek to place health professionals in needy areas, designated as Health Professional Shortage Areas (HPSAs). Each state has its own program requirements and benefits, so you’d just need to call your state’s department of health to see what’s available.

A newer trend can be found in the private sector. More and more employers offer loan forgiveness or loan repayment assistance as a way to retain and recruit qualified professionals.

If you’ve got an in-demand specialty or designation, you could even consider negotiating for assistance or loan forgiveness as part of your compensation package. Of course, this is far from guaranteed when starting a new job. But if you’re looking at potential new employers, you may want to check online resources like Glassdoor or even contact their HR department before applying to see if they offer any kind of student loan repayment program.

If You Don’t Qualify for Loan Forgiveness

It’s not the end of the world if you can’t find a student loan forgiveness program. You’ve still got options. If you have federal loans, there are plenty of repayment plans that may suit your financial needs.

Here are some federal loan repayment plan options to consider. If one of these plans speaks to you, check studentaid.ed.gov to see if your loan qualifies.

Graduated Repayment Plan: This plan allows you to start with a lower monthly payment that grows larger over time, increasing usually every two years. The idea is that as your career progresses, so does your income. You have 10 years to repay your loans (within 10 to 30 years if you have a Direct Consolidation Loan).

Extended Repayment Plan: You must have at least $30,000 in outstanding Direct Student Loan debt to be eligible for this repayment plan. These plans extend the time to pay off your direct student loans out to a maximum of 25 years. You can choose a fixed or graduated payment.

Revised Pay As You Earn Repayment Plan (REPAYE): This plan might be an even easier-to-live-with option because, if you qualify, it caps your monthly payment at 10% of your discretionary income. You have 20 years to pay for undergraduate loans and 25 years for graduate or professional education loans.

Pay As You Earn Repayment Plan (PAYE): To qualify for PAYE, you must have taken out the loan on or after October 1, 2007 and begun receiving loan funds by October 1, 2010. Payments would be 10% of your discretionary income (never more than what you would pay on the Standard Repayment Plan); any qualifying remaining balance after 20 years is forgiven, and you have 20 years to repay the loan.

Income-Based Repayment Plan (IBR): This plan is available for certain loans under both the Federal Direct Student Loan Program and the Federal Family Education Loan Program (FFEL). Payments would be between 10% and 15% of your discretionary income. You’d have between 20 and 25 years to repay the loan, with any remaining balance forgiven at the end of those periods, depending on when you first acquired it.

Income-Contingent Repayment Plan (ICR): If you have high debt relative to your income, this plan allows you to make payments equal to 10% to15% of your discretionary income. Both direct student loans and FFEL loans qualify. You’d have 25 years to pay the loan and any remaining balance is then forgiven.

Income-Sensitive Repayment Plan: Those with subsidized and unsubsidized Federal Stafford Loans, FEEL Plus Loans, and FEEL Consolidation loans may be able to qualify for income-sensitive repayment. While your new monthly payment is still based off your income, it is calculated on a timeline that allows you to be done with repayment in 10 years.

Refinancing Your Student Loans

Here’s one more option for nurses who have both federal and private loans. You can combine your federal and private loans into a new loan by refinancing—ideally at a lower interest rate. When you refinance, you lose access to federal loan benefits such as income-based repayment plans and the Public Service Loan Forgiveness program. However, you gain the chance to potentially qualify for a more desirable interest rate and loan term.

For example, if you qualify to refinance your student loans with SoFi, you could choose a fixed-rate loan, where the interest remains steady over time, or a variable-rate loan, in which payments may start lower, but could rise and fall over time.

Plus, with refinancing, you may be able to change the term of the loan, lengthening it to reduce the monthly payment, increasing the total interest you’d pay over time, or shortening it, so your monthly payments are higher, but you could pay less in interest over time.

If you’ve exhausted your options in finding loan forgiveness for nurses, consider refinancing your student loans with SoFi. You can do it all online, so it’s fast and easy—and with no hidden 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.

SOSL18176

About 65% of college graduates in 2017 owed an average of $28,650, according to The Institute for College Access and Success . Owing nearly $30,000 can seem overwhelming, and you might wonder how long it will take to pay off that loan, and whether paying it off will prevent you from reaching other financial milestones, such as buying a house or a car, or starting a family.

Our Student Loan Payoff Calculator can help you figure out how long it might take to pay off your loan under your current payment plan. If you are unsure of your loans and payment dates, you can also look them up. Use the National Student Loan Data System to view all your federal loans and the AnnualCreditReport.com to find a list of any of your private loans.

If you’d like to pay off your student loans faster, here are eight ways to potentially hit that debt-free milestone sooner than you planned to.

Making Extra Payments

There are no prepayment penalties with student loans, so if you want to pay off your loan faster, you can simply make an extra payment each month. However, borrowers may need to specify that any extra payments should be applied to their principal loan balance, not the next monthly payment.

Making a Yearly Lump-Sum Payment

Tax refunds or yearly bonuses can be used to make an extra one-time payment each year. Paying even an extra $1,000 from a tax return once a year could help someone get out of debt sooner.

Devoting Side-gig Earnings to Your Loans

Taking on a side gig that allows you to earn extra money can start with an Etsy shop, walking dogs, or offering guitar lessons. Considering the average dog walker rate is $13.94 an hour , just five hours a week walking dogs could mean an extra $3,600 a year.

Putting An Income Raise to Use

If you get a raise, rather than spending that extra money to buy something new, upgrade to a nicer apartment, or take a vacation, that extra cash could mean an extra payment on your student loans each month. The 2018 to 2019 U.S. Compensation Planning Survey , projects a 2.9% raise for employees in 2019.

Looking at Jobs that Can Help You Qualify for Loan Forgiveness

There are several types of jobs that can help you qualify for student loan forgiveness (on certain federal student loans), including working for the Peace Corps and AmeriCorps.

The Public Service Loan Forgiveness (PSLF) Program forgives the remaining balance on Direct Loans after 120 qualifying monthly payments under a qualifying repayment plan while working full-time for a qualifying employer.

Employment with the following types of organizations may qualify graduates for PSLF, according to the U.S. Federal Student Aid office :

•   Any federal, state, local, or tribal government organization.
•   Not-for-profit organizations that are tax-exempt under Section 501(c)(3) of the Internal Revenue Code
•   Other types of not-for-profit organizations that are not tax-exempt provided their primary purpose is to provide certain types of qualifying public services.
•   You can learn more about qualifying employment here .

Seeking Employers that Offer a Matching Student Loan Contribution Plan

A number of companies are starting programs to help their employees pay off their student loans, including Fidelity, Aetna, PwC, Carvana, and SoFi, according to GlassDoor . Some of these employers help pay off loans while others offer a matching payment plan.

For instance, PricewaterhouseCoopers offers up to $1,200 per year toward their employees’ student loans, with a maximum of $7,200. And Aetna offers up to $2,000 in matching student loan payments for a maximum of $10,000 for full-time employees.

Refinancing Your Student Loans

Don’t underestimate the potential power of refinancing your student loans. You could end up with a lower monthly payment, or you may be able to reduce your student loan interest rate. Refinancing allows you to combine any federal or private student loans into one new loan with a new (and hopefully lower) interest rate.

And SoFi offers rate discounts to eligible members who enroll in autopay for their loan payments. SoFi offers a range of refinancing options to help optimize your monthly payments, and potentially improve your loan terms and rates.

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.
No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.
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.

SOSL18122

As adults, we tend to bounce from one big financial quest to the next. We need money to buy a car, to go to college, to own a home, which usually means we have to keep asking for loans.

You’d expect it would get easier as you go, but sometimes it doesn’t, especially if you’ve made mistakes along the way. Unfortunately, your missteps could keep you from qualifying for a mortgage—the Mount Everest of money-borrowing pursuits. If you’ve buried yourself in credit card and other debt, it’s crucial to get clear before you can move forward.

Consolidating Credit Card Debt Before a Mortgage Approval

Your credit card debt and mortgage approval can sometimes go hand in hand. Mortgage lenders want to know that you can afford to pay back the loan they’re offering, so they’re going to be curious about what you already owe others. While every lender is different, they’ll typically look at what you earn every month versus what you’ll be paying for your home and other debt obligations. Our home buyer’s guide is an excellent resource for first-time home buyers or existing homeowners looking to brush up on the home buying process.

Even if you have a good credit score and a debt-to-income ratio of 43% or less, high credit card debt payments could still make it difficult for you to pay a mortgage.

Credit cards typically come with a high interest rate and as long as you don’t pay your balance off in full every payment cycle, interest can continuously compound.

Taking out a debt consolidation loan is a way to help break the debt cycle. While you’ll then have to take out a personal loan, the interest rate may be lower than your credit cards, and personal loans usually offer fixed interest rates.

Think of it as your borrowing base camp—a personal loan can help you catch your breath and get your finances in order before you move on in your quest for a mortgage.

Recommended: Home Affordability Calculator

Using a Personal Loan To Consolidate Debt

Let’s get into more detail about how it all works:

You’ll combine the credit card debt into one manageable bill with a single payment due date. That means you’ll no longer have to worry about multiple payment due dates (or what will happen to the interest rates attached to those accounts if you don’t make your payments on time).

You may also qualify for a lower interest rate. The average interest rate on credit cards hovers around 16%, which is pretty hefty. Or maybe you accepted a higher rate on a new card a while ago when you needed it to build your credit and never got the rate adjusted. If you have a good credit record, a consistent job history, and a solid income, you may be able to bring your interest rate down with a personal loan.

Those high interest rates might be the very reason you got into trouble in the first place. Perhaps you aren’t an over-spender or maybe you just got into the habit of paying the minimum on your credit cards each month, figuring you’d catch up “someday.”

And it wasn’t until you started thinking about purchasing a home that you realized you’re on thin ice. With a lower interest rate and just one bill, you could help set yourself up for success with a better chance of staying on top of your debt.

Having the balance of one or more of your credit cards near the credit limit may negatively affect your credit score. Credit utilization is one of five major factors that help determine your credit score (along with payment history, the age of the credit, credit mix, and the number of recent credit inquiries).

Credit utilization is a comparison between the amount of credit you have available to you (your account limits) and what you’re actually using (your balances). If your credit utilization is high, a lender might see you as more of a risk, and the ratio can impact up to 30% of your credit score . Paying off your credit cards —and keeping them paid off—may help you boost your credit score.

Being on firmer footing with debt also could boost your savings sense. You’re probably going to want to get home-loan-ready one careful step at a time, and knowing you’re doing something about your debt might inspire you to make other savvy moves, like spending less and saving more.

If you reduce your monthly debt payments with a consolidation loan, you could put that extra money toward the down payment you’ll need for your new home. And putting down more up front will ultimately mean you own more of your house—and have a smaller mortgage.

Using a personal loan to lower the amount you’re required to pay on your debt each month may help improve that statistic lenders lean so hard on: the debt-to-income ratio.

Lenders may conclude that those with higher debt-to-income could have more difficulty paying their mortgage. You may seem like a safer bet in the eyes of a lender with a lower debt-to-income ratio.

Understandably, they just don’t want the risk, so why give them an excuse to turn you down? Your consolidation loan won’t magically make your debt disappear, but by paying regularly on your personal loan, you can get a better grip on your debt load and eventually improve your credit profile.

You might find you don’t even need those credit cards anymore—at least not as many or not so often. Maybe when you were starting out on your own, you used credit to get by when times were tight. Now that you’re earning more money and your finances are more in order, that’s hopefully not true anymore.

You might find yourself chopping up some of those extra cards. After all, if your personal loan comes with a lower monthly payment, you’ll likely have more cash in your pocket to pay for the small stuff.

Other Options For Knocking Down Debt

If you think you have the resources and discipline to knock down your credit card balances on your own within six months or so, you probably don’t need to bother with a loan.

Or you might want to look into using a balance transfer card—that is, if you think you can focus on paying it off within the required timeline to take advantage of the low interest rate…and you can resist the temptation to keep charging.

But, if it feels as though your debt is becoming a slippery slope, and consolidation would help you set up a new and better payment structure for getting rid of it, you may want to consider a personal loan.

Consolidating debt before buying a home can be a wise first step. And if all goes as planned, when you’re ready to purchase that home, you could decide to apply for a mortgage loan through SoFi.

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.
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 .
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 Mortgages are not available in all states. Products and terms may vary from those advertised on this site. See SoFi.com/eligibility-criteria#eligibility-mortgage for details.

SOPL18133

Millions of students across the U.S. take out student loans every year as a way to finance their college education. Student loan debt in America is at an all-time high, reaching nearly $1.5 trillion in 2018. About 70% of college students graduated in 2017 with student loan debt that was expected to average $38,000 .

After years of record low interest rates, 2018 marks the second year in a row that interest rates on federal student loans have increased. Interest rates on federal student loans for undergraduates have increased from 4.45% to 5.05% for the 2018 to 2019 academic year . This student loan rate increase of 0.595% applies for any new loans taken out on or after July 1, 2018.

Student loan interest rates also increased for graduate students—rising from 6% to 6.6%. Rates on PLUS loans, which are available to parents and graduate students, increased from 7% to 7.6%.

How Does Student Loan Interest Increase on Federal Loans?

Since 2013, the interest rate on federal student loans has been set annually by Congress based on the 10-year treasury note . Each year, the new rates take effect on July 1 and apply to loans taken out for the following academic year. Under this formula, rates can increase, decrease, or remain the same.

Federal student loans have fixed interest rates, so the new rate hikes only affect new loans taken out in the 2018 to 2019 school year. Because many students rely on federal loans to pay for college every year, the increases could still result in borrowers paying more money each month, even though the interest rates on federal loans are fixed.

Assuming a 10-year repayment plan, the latest interest rate hike in July 2018 will increase monthly loan payments by about 2.8% . And although the interest rate on federal education loans remains the same over the life the loan, when a student takes out an education loan for the next school year, that loan might have a higher interest rate. Higher interest rates on student loans lead to more debt, which can make it harder for graduates to pay off their student loans.

In an effort to keep the interest rates on student loans from skyrocketing, Congress has set limits on how high interest rates can go . Undergraduate loans are capped at 8.25%, graduate loans can never go higher than 9.5%, and the limit on parental loans is capped at 10.5%.

How Does Student Loan Interest Increase on Private Loans?

If you have private student loans, the federal rate hikes won’t directly affect your loans. Most private lenders look at your credit history and income, among a few other factors to determine if they will lend to you and what rate you will qualify for. Many private lenders offer fixed and variable rates for student loans.

Often variable rate loans are tied to the one-month LIBOR, a common global index that reflects short-term interest rates and can change monthly. The one-month LIBOR rate generally rises and falls in small increments each month. As the LIBOR fluctuates, the variable rate on your loan will fluctuate as well. For example, in 2017, variable and fixed interest rates on private student loans rose nearly a point.

Private lenders generally add a margin to the rate which is determined by your credit score or the credit score of your co-signer if you have one. Depending on your lender, variable rates can change monthly, quarterly, or annually.

Even if the variable interest rate on your loan rises, you could still be paying less money in interest over the life of the loan if you pay it off in a short period of time. (Because paying it off quickly means there is less time for interest to accrue!)

On the other hand, if rising interest rates are causing your student loan anxiety to increase as well, you could consider refinancing your variable rate student loans to a fixed interest rate.

Protecting Yourself From Student Loan Rate Increases

When you refinance your student loans, you essentially take out a new loan with a new (hopefully lower) interest rate. That new loan is used to pay off your existing loans.

Refinancing your student loans can allow you to adjust your repayment timeline by shortening or extending the term length. These options can change the total amount of interest you pay over the life of the loan and your monthly loan payment, too.

If you have a mix of federal and private loans and you want to get a new interest rate, you won’t be able to consolidate your loans with the government. At SoFi, you can consolidate your federal and private loans through refinancing.

Keep in mind that if you do refinance with a private lender, your loan will no longer have federal protections like income-driven repayment plans or Public Service Loan Forgiveness.

But if you don’t anticipate needing these programs, refinancing with a private lender might result in a lower interest rate.

With SoFi, there are no application fees or prepayment penalties. And you’ll have the opportunity to choose between a fixed rate loan or a variable rate loan. Both options offer strong opportunities for borrowers to reduce the money they spend on interest depending on a variety of factors such as the total amount of the loan and the overall length of the loan.

To get an idea of how refinancing and the different interest rate options could impact your loan, take advantage of SoFi’s easy-to-use student loan refinance calculator.

SoFi is a leader is the student loan space—offering both private student loans to help pay your way through school, or refinancing options to help you pay off your loans faster.

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.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income Based Repayment or Income Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.
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.

SOSL18168

We’re reading a lot about cryptocurrency being here to stay, but for many of us, it’s still not a regular part of our everyday financial lives. Why is that? Could be lack of education among investors, and the general lack of current, regular commercial use of cryptocurrency. However, if acquiring the right financial knowledge is a roadblock, let’s move that out of the way right now and do some schooling on cryptocurrency trading for beginners.

The Basics of Cryptocurrency

Cryptocurrency is digital currency (used exclusively online) that acts as a direct financial exchange between users without the involvement of a bank or other third parties. Think of it as an alternative currency to traditional forms of payment, like cash, checks, and credit cards.

The information used within the system is kept safe through the use of encryption techniques . These methods scramble the info to make the activity secret and difficult for outsiders to access.

When you and others use a cryptocurrency system, everyone and everything remain anonymous. Each exchange that takes place is woven into a group called “blocks” (hence the term blockchain), which again is coded (encrypted) in order to keep it private and secure.

The basic unit of value of cryptocurrency is expressed as a “token,” which is used exclusively by members of the group involved in the blockchain. Every time a transaction happens, a “miner” updates the blockchain (more about this later).

Cryptocurrency is not created by any bank system or government agency, which means it’s in a universe of its own. Also, it isn’t regulated to the same degree as other financial products, like banking and investments. At least not yet.

Many people find this freedom to be a very cool vehicle to ride. Its popularity is growing in an organic way too; this makes it hard to predict where it’s going and where it will end up.

Cryptocurrency can be bought and sold on special exchanges ; the most commonly known cryptocurrency is bitcoin. SoFi also allows users to buy and sell cryptocurrency.

Recommended: A Beginner’s Guide to Cryptocurrency

The Future of Cryptocurrency

Of course, not everybody is on board with cryptocurrency being a given for the future. Although there are have been more than 2,000 cryptocurrencies on the market, more than 800 of them are now no longer operational.

Another fact to note: the U.S. Securities and Exchange Commission (SEC) has denied more than a dozen applications for permission to list bitcoin exchange-traded funds (EFFs). The reason, though, could be to your benefit as an investor: the need to minimize risks of fraud and manipulation, and to increase investor protection.

“We’ve seen some thefts around digital assets that make you scratch your head,” SEC Chairman Jay Clayton said at CoinDesk’s Consensus Invest conference. “We care that the assets underlying that ETF have good custody and that they’re not going to disappear.”

That said, are you a believer? Are you thinking about taking a leap, or at least getting in on the ground floor, before the anticipated mad mainstream rush?

Let’s break down the details of cryptocurrency trading for beginners:

It’s in the Wallet?

Offline, cryptocurrencies are stored in “wallets.” A wallet is a software program that stores both private and public keys that allow you to send and receive digital currencies and keep an eye on your coin.

Hot wallets give you easier access, but they can also more easily be hacked. Cold wallets are harder to open. If you plan on holding on to your investment for a long time, you may want to opt for the cold wallet. If you need to dip into your coin more than occasionally, consider the hot wallet.

There are a number of wallet providers , and you’ll want to do some due diligence before choosing one.

Learn to Chill

Cryptocurrency is still a relatively new technology, which means it can act like a newborn: crying jags, not understanding how things work, crawling and stumbling, and behaving irrationally.

You’ll need to get used to huge price swings, instability when least expected, rollercoaster performance reports, and general anxiety on your part. Be sure you can take it.

Tune Out The Naysayers

Cryptocurrency trading for beginners means getting involved in a new idea. When that happens, get ready for the know-it-alls and Negative Nellies to tell you what’s what. You’re going to hear that cryptocurrency is overhyped, just a fad, or a wicked scam.

Of course, you’re going to do your due diligence and make up your own mind with educated decisions, so let don’t let them rattle you. Also, what may be true and unfortunate for one cryptocurrency may not be the same for another.

Get Professional Insights

Here’s the thing: Maybe cryptocurrency isn’t for you right now. The fact is, cryptocurrencies aren’t endorsed or guaranteed by any government—and they are volatile and involve a high degree of risk.

Not only that, but consumer protection and securities laws don’t regulate cryptocurrencies in the same way that they regulate traditional investment products. If you instead want to learn more about traditional investment products, now’s the time to check out SoFi Invest®.

With SoFi Invest, you’ll get access to financial planning and personalized advice, all based on how you want to invest and what your future goals are. All you need to do is make an appointment to chat with one of our SoFi Invest Advisors.—there is no obligation and no cost.

We’ll work with you to make sense of an investment strategy and help you map out a plan (and stick with it).

With an automated investing account with SoFi, we’ll invest in thousands of assets, actively managing them, which can help you get a clearer vision of your future path. To avoid veering off the road, we’ll automatically rebalance your investments as needed, so that they stay on track.

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.
Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including
FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments.
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member
FINRA / SIPC .
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