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One way a college student can fund their education is by getting a scholarship, which is gifted money that doesn’t have to be paid back. A scholarship can be awarded to a student for a number of reasons, including having a special talent, academic or athletic merit, community involvement, financial need, or a combination of any of these factors.

College scholarships aren’t just for high school grads who are trying to find financial awards to pay for school. Students who are already enrolled in college and in the process of earning their degree can also apply. Although there are certain time periods where scholarship deadlines are more prevalent, there are still plenty of scholarships current college students can apply for year-round.

Keep reading to learn about the different types of scholarships for college students, how to find them, and application tips to consider to increase your chances of being selected.

Eligibility Requirements

While college scholarship requirements can vary, there are some common eligibility qualifications that most will require. For instance, every scholarship application will want your basic information, such as your name, address, email, phone number, and what college you’re currently attending.

Sometimes a scholarship will only ask for basic information, but others will require more. You may be asked to give your GPA, submit an essay, or provide letters of recommendation. Scholarships that are based on financial need may call for the student or their parents to provide financial information, such as income or assets.

How to Find Scholarships for Current College Students

According to the Education Data Initiative, more than 1.7 million scholarships are awarded in the U.S. each year. With so many opportunities, it can be difficult to know where to start looking.

One easy way to dive in is by using SoFi’s scholarship search tool, where you can scout out thousands of scholarships, grants, fellowships, and other awarded aid. The tool enables you to use keywords to search and filters to see only awards according to type, level of study, residency, and more.

SoFi also has a $2,500 scholarship sweepstakes you can enter every single month just by registering with SoFi.

Another way to find out about getting free money for college is by visiting your college’s financial aid office and consulting with your academic advisor or head of the department for your particular major.

You may also be able to apply for a scholarship if you or a parent work for an employer who offers scholarship awards. For instance, if you’re a college student employed at McDonald’s, Starbucks, T-Mobile, Walmart, or Taco Bell, you may be eligible to apply for their scholarship opportunities.

Large employers, such as Wells Fargo, CVS, American Airlines, and PepsiCo, offer the opportunity for an employee’s dependent to apply for that company’s college scholarship. College students with a parent who is an active, retired, or deceased military member are also eligible to apply for a scholarship program, according to the U.S. Department of Veterans Affairs.

Recommended: The Differences Between Grants, Scholarships, and Loans

Scholarships for Current College Students

As mentioned previously, there are a multitude of scholarships to apply for while in college, including those that are based on merit, financial need, and even those geared toward certain cultural heritage or minority populations.

Depending on the scholarship provider, there may be strict terms and conditions on how the money is spent, such as dictating the money go toward tuition, room and board, books, and other college-related expenses. Others may give you more leeway, and some may even allow you to use the funds to pay off student loans.

Here’s a list of some of entities that offer scholarships for current college students to consider:

Federal or State Government Scholarships and Grants

Scholarships and grants, which are usually based on need and awarded according to the student’s financial situation, are available through the U.S. government and through the individual states.

Through the federal government, college students can apply for a Pell Grant, a Federal Supplemental Educational Opportunity Grant (FSEOG), or a TEACH Grant for those students who want to be teachers. With a TEACH Grant, you can get up to $4,000 a year, but you must commit to teaching a highly needed subject in a low-income area elementary or secondary school, where there’s a shortage of specific subject teachers.

To find out what your individual state offers scholarship-wise, you can check with your state’s education agency. The National Association of Student Financial Aid Administrators offers links to each state’s education department, which you can access by clicking the state on their map.

It’s important to know that in order to be considered for a federal or state scholarship or grant, you’ll need to fill out a Free Application for Federal Student Aid (FAFSA) form. This form needs to be submitted every year since eligibility for financial aid doesn’t carry over to the next school year.

Recommended: Pell Grant Eligibility: What Are the Income Limits?

Financial Institutions

Sallie Mae, a bank and education solutions company, offers many scholarship opportunities, including their easy to apply for $2,000 award. Other financial institutions, including Discover, U.S. Bank, Charles Schwab, and Morgan Stanley, also have scholarships for students currently enrolled in college.

Your College

Your school may offer their own scholarships or grants. These prizes may be funded by private individuals, foundations, organizations, or even via the federal or state government. As mentioned earlier, checking with your school’s financial aid office or talking to the department head of your field of study can help steer you toward eligible awards.

Clubs or Organizations

Many national organizations, such as the Elks National Foundation, Rotary International, and the NAACP, offer scholarships to college students. The good news is you may not have to be a member of a club or organization to qualify.

Diversity and Identity-Geared Groups or Agencies

There are a multitude of scholarships for college students with specific social identities. Based on your cultural heritage, ethnicity, race, or religious affiliation, you can find financial awards specifically for these populations. There are also scholarships for women and for individuals who are a part of the LGBTQ+ community.

Recommended: A Guide to Unclaimed Scholarships

Types of Scholarships Available for Current College Students

There are two principal categories of scholarships: need-based and merit-based scholarships. The two aren’t exclusive, though. You may find a scholarship that’s both need- and merit-based.

Here’s the key differences between the two:

Need-Based Scholarships

These scholarships are based on a student’s financial need rather than any specific achievements. Need-based scholarships allow someone who may not have had the funds otherwise to attend college.

Since these financial awards are based on a student’s financial situation, the application process is pretty straightforward, typically only requiring a student or their parents’ income information.

Merit-Based Scholarships

A merit-based scholarship is one given to a student based on their achievements, which can be academic, artistic, athletic, or related to leadership or a special interest. Unlike a need-based scholarship, a merit-based scholarship rewards a college student’s accomplishments over financial need.

Applications for merit-based scholarships tend to be more involved, asking for essays, letters of recommendation, possibly an interview, and wanting to see if you have a certain GPA.

Tips to Help When You’re Applying for Scholarships

Read on for some strategies to increase your chances of landing a scholarship while already in college:

Create a List of What Makes You Unique

Take stock of your particular background, skills, hobbies, and personal experiences and see what college scholarships might be tailored for you. For example, if you speak another language, play an instrument, are a first-generation college student, or have overcome a difficult life challenge, there’s a scholarship out there for you.

Cast a Wide Net During Your Search

Since there aren’t any limits on how many scholarships you can apply for and receive, look for those offering both large and small amounts of money. It all adds up.

Read the Fine Print

Review the scholarship eligibility qualifications carefully; otherwise you may be applying for one that you’re not able to receive. Double-check the deadline date, too, and mark it on your calendar so you can keep track.

Start the Application Process Early

Factor in how much time you’ll need to complete certain requirements, such as gathering letters of recommendation and writing an essay.

Seek Out Scholarship Workshops

In-person or online scholarship workshop seminars can help walk you through the process and give you tips on how to stand out in your application. Check to see if a workshop is available at your school.

The Takeaway

College scholarships aren’t only for high school seniors applying to college. If you’re already a college student, there are myriad scholarships out there and there’s no definitive limit on how many you can pursue or the amount of money you can receive. Once you’ve applied all of your scholarships to your cost of attendance, you can pay your remaining college expenses with cash savings, grants, and student loans.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

How often should I apply for scholarships in college?

You should apply for scholarships as often as possible and for as many as you can. Doing so can only increase your chances of winning. And don’t discount scholarships offering smaller amounts of money: When it comes to paying for college, every little bit helps.

Can I receive scholarships and federal aid at the same time?

Yes, you can. However, it’s important to realize the monetary amount of your scholarship and federal aid can’t total more than your cost of attendance at your college or university. If you are rewarded with a scholarship and your aid exceeds the cost of attendance, you’ll need to notify your school’s financial aid office. They will have to recalculate the financial aid package, which can lower the amount of your financial aid.

Do scholarships for current students consider GPA?

It’s up to the scholarship provider to set the criteria for eligibility, and some may not even ask for your GPA. In general, though, a 3.0 GPA or higher will give you a leg up when it comes to qualifying for many scholarships.

Photo credit: iStock/Goodboy Picture Company

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.

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

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

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SOISL-Q324-036

Scholarships are a form of financial aid that doesn’t have to be repaid in most cases. There are many scholarships and other forms of financial assistance available to help Native American students pay for college.

This guide provides a sample list of Native American college scholarships, an overview of common eligibility requirements, and tips for applying.

Eligibility Requirements

Before applying to scholarships, check that you meet the eligibility requirements. Scholarships have unique award criteria, so it’s important to review and verify whether you meet all of them.

That being said, some common factors that can impact qualifying for a scholarship include where you live, field of study, grade point average (GPA), financial need, leadership experience, and degree type.

Recommended: 10 Most Common Types of Scholarships for College

How to Find Native American Scholarships

Scholarships for higher education may be offered by academic institutions, employers, charitable foundations, and state, local, or tribal governments.

Finding scholarships for Native American students starts with completing the Free Application for Federal Student Aid (FAFSA) to determine financial need. It’s common for scholarship programs to use the FAFSA to determine eligibility for need-based awards.

After filling out the FAFSA, there are online resources to help search for scholarships. The Department of Labor maintains a scholarship database, known as CareerOneStop. Additionally, the National Indian Education Association keeps a list of scholarships for Native Americans to pursue higher education.

SoFi’s scholarship finder is another resource to find free money to help pay for an undergraduate, graduate, or professional degree. Users can filter by residency, field of study, ethnicity, and other criteria to narrow their search.

Scholarships for Native American Students

Though Native American students account for just 1% of undergraduate enrollment in the U.S., there are numerous Native American scholarships offered by tribal governments, non-profits, private companies, and other entities.

For a chance to win SoFi’s monthly $2,500 Scholarship Sweepstakes, you’ll just need to submit your name, email address, and school.

Browse the college scholarships for Native American students below to see what additional opportunities you qualify for.

•   American Indian Education Fund Scholarships: Awards for Native American, Alaska Native, and Native Hawaiian students pursuing undergraduate and graduate degrees.

•   American Indian Services Scholarship: Awards for undergraduate students who are enrolled members of a federally recognized American Indian or Alaska Native tribe.

•   Catching the Dream Scholarship: Awards for Native American and Alaska Native students to study business administration, economic development, and related subjects.

•   Cherokee Nation Higher Education Scholarships: Multiple scholarships for registered Cherokee citizens pursuing an associate, bachelor’s, or graduate degree.

•   Consuelo W. Gosnell Memorial Scholarship: Awards for master’s degree candidates in social work who have demonstrated a commitment to working with American Indian, Alaska Native, and Hispanic/Latino populations.

•   Continental Society Daughters of Indian Wars Scholarship: Awards for undergraduate Native American students who are enrolled tribal members and plan to work in education or social services with a tribe or nation.

•   DAR American Indian Scholarship: Awards for Native American students enrolled in an undergraduate or graduate program, with preference given to undergrad students.

•   EDSA Diversity Scholarships: Awards for Native American and minority students to continue studying landscape architecture, either at graduate school or in the final two years of an undergraduate program.

•   Full Circle and Tribal College Scholarships: Awards for Native American and Alaska Native students seeking technical, undergraduate, and graduate degrees at tribal colleges or accredited non-profit schools.

•   The Gates Scholarship: Highly-competitive, merit- and need-based awards for minority high school seniors from low-income backgrounds.

•   Hopi Tribe Grants and Scholarships Program: Multiple awards for enrolled members of the Hopi Tribe to pursue post-secondary and professional degrees.

•   Minority Undergraduate Retention Grant: Financial assistance to Native American and other minority students enrolled at a college in Wisconsin.

•   NACME Scholarships: Awards for Native American, African American, and Hispanic-American students enrolled in an undergraduate engineering or computer science program.

•   Native American Scholarship Program: Merit-based awards for Native American college students with proof of tribal registration.

•   Native Forward Scholars Fund: Scholarships and support services for Native American students pursuing undergraduate, graduate, and professional degrees.

•   NativeVision Scholarship: Scholarships for Native American students to help fund their first year of college.

•   Truman D. Picard Scholarship: Awards for Native American and Native Alaskan students pursuing careers in natural resources.

•   Udall Undergraduate Scholarship: Awards for college sophomores and juniors who demonstrate a commitment to issues related to Tribal policy, the environment, or healthcare.

•   USET Scholarship Fund: One-time award for Native American college students who are members of United South and Eastern tribes.

•   Wells Fargo American Indian Scholarship: Awards for enrolled members of a U.S. federally recognized American Indian or Alaska Native tribe pursuing a degree in gaming, tourism, financial, or hospitality industries.

Recommended: How to Apply for Student Loans

Types of Scholarships Available for Native Americans

Most students use multiple funding sources to pay for college. There are multiple types of scholarships for Native Americans to look into, including awards based on academics, athletics, extracurricular activities, discipline or area of study, and more.

Native American students may be eligible to apply for other scholarships for minorities, too. Keep in mind that awards with a wider application pool are often more competitive.

First-generation college students, veterans, and active service members also have specific scholarships available to them.

Recommended: Grants, Scholarships and Loans: Differences

Need-Based Scholarships

The cost of college can be a barrier for many students. Need-based financial aid, including scholarships, is intended to make attending college more affordable for eligible students.

Need-based scholarships are typically determined based on the information students provide on the FAFSA. They may include grants for college expenses, work-study programs, and federal student loans.

Merit-Based Scholarships

Students may qualify for scholarships based on their academics. Merit-based scholarships typically consider a student’s standardized test scores, GPA, or academic performance in a specific subject area.

Class rank is another factor that may be used to determine merit scholarship eligibility.

Tips for Applying

With so many scholarships to choose from, the application process may feel overwhelming. Here are some quick tips to guide your scholarship applications.

First, take note of the application deadlines and required materials for each scholarship, including essays, transcripts, and letters of recommendation. A scholarship checklist can keep you organized and on schedule with applications.

Plus, it’s helpful to have the details for every scholarship you’re applying to when asking a teacher or supervisor to write a letter of recommendation. Double check that whomever you ask fulfills the application requirements, as some scholarships may require a letter from a guidance counselor or a teacher of a core academic subject.

Finally, remember that students can apply for scholarships throughout their studies. In some cases, scholarships may be specifically intended for upperclassmen versus first-year students.

To avoid leaving money on the table, plan to research and apply for scholarships every year.

Recommended: 8 Tips for Asking a Professor for a Letter of Recommendation

The Takeaway

There are numerous scholarships and grants available to make college more affordable for Native American students. It’s not uncommon for students to need additional financing, such as federal and private student loans, to fill any funding gaps for college. It’s important to use federal loans first, as they come with borrower protections and income-driven repayment plans.

If you’ve exhausted all federal student aid options, no-fee private student loans from SoFi can help you pay for school. The online application process is easy, and you can see rates and terms in just minutes. Repayment plans are flexible, so you can find an option that works for your financial plan and budget.

FAQ

Do I need to be an enrolled tribal member for these scholarships?

Yes, many scholarships for Native Americans require applicants to be enrolled tribal members. Some awards are available only to members of federally recognized tribes or nations.

Are there scholarships for non-Native spouses of tribal members?

Generally, Native American scholarships are reserved for applicants with tribal membership or who are at least ¼ American Indian or Alaskan Native.

Can I apply for multiple Native American scholarships?

Yes, you can apply for multiple Native American scholarships. Students may combine multiple scholarships, grants, and other financial aid to pay for college.

Photo credit: iStock/SDI Productions

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.

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.

SOISL-Q324-038

Some lenders offer a monetary incentive for new and existing customers called a student loan refinance bonus. There are different kinds of student loan refinance offers you may come across, and it’s smart to compare them when you’re refinancing.

Read on to learn about student loan refinance deals and how they work to help determine if one might be right for you.

Student Loan Refinance Bonuses Explained

A student loan refinance bonus is an incentive from a lender to help bring in new business. A lender might offer a cash bonus or give an interest rate discount to borrowers who are refinancing student loans.

A refinance bonus is similar to a sign-up bonus you might get when you apply for a new credit card or open a savings account. After you are approved for a refinanced student loan with a fixed or variable rate, the lender will issue the bonus to you.

How They Work

To get a student loan refinance bonus offer, you typically need to apply for refinancing using a specific promotion link. The link might be on the lender’s website, you might get it in your mail or email, or a third-party partner of the lender may send it to you. Some student loan refinance deals are available for a limited time, while other are offered on an ongoing basis.

Once you’re approved for refinancing, you’ll receive the bonus from the lender. The bonus may be issued to you via electronic transfer to your bank account or mailed as a check.

Types of Student Loan Refinance Bonuses

Student loan refinance bonuses can come in different forms. Below are a few common types you might see if you’re considering refinancing your student loans.

Cash Bonuses

Think of this one-time lump sum as a welcome bonus you get for taking out a student refinancing loan. A cash bonus is a way for lenders to earn your business if you’re a new customer, or to reward you for being a loyal customer if you already have an account with them.

Referral Bonuses

If you’re a borrower who has refinanced student loans and you recommend your lender to other people, you may be eligible for a referral bonus. Your lender gives you a referral link or code that you can pass along to family and friends who are interested in refinancing their student loans.

When one of your contacts refinances their student loans using your personal link or code, you get the bonus. Lenders might also provide a bonus or discount to the newly referred customer.

Interest Rate Discounts

Some student loan refinance deals come in the form of discounts instead of cash back. For example, many lenders offer an interest rate discount to borrowers who sign up for autopay.

In exchange for signing up for automatic payments, the lender gives you a small discount off your existing student loan refinance rate — typically a 0.25% reduction. This discounted rate generally applies throughout your loan term as long as you remain enrolled in autopay.

How to Qualify for a Student Loan Refinance Bonus

To get a student loan refinance bonus, you’ll need to follow the lender’s specific requirements. This varies between lenders and bonus programs, but you can typically expect to take these steps.

1.    Register or apply using the bonus link, code, or website page.

2.    Fill out a student loan refinance application.

3.    Meet the lender’s eligibility requirements and get your loan application approved.

4.    Provide bank account details to receive your bonus.

5.    Complete tax forms, like a Form W-9, if necessary.

6.    Once your loan amount is disbursed, receive your bonus offer.

Depending on the size of the cash bonus you receive, you might be responsible for income taxes on the money. The IRS treats amounts of $600 or greater as taxable income. In that case, your lender might issue you a Form 1099-MISC for your tax reporting purposes.

Benefits of a Student Loan Refinance Bonus

You may decide to refinance if you can get a fixed interest rate, lower rate, or a more favorable term. As part of the refinancing process, a student loan refinance bonus can be a useful perk. Here’s what it might do for you.

•   Help you earn cash back. If you’re already considering a student loan refinance, a bonus offer may sweeten the deal. Cash bonuses come as a lump sum that you can use in any way you’d like.

•   Allow you to pay down your loan balance faster. If your goal is to be debt-free as quickly as possible, the bonus you earn can be redirected toward paying off student loans early. Ideally, if you qualify, you might be able to pair this strategy with a lower student loan refinance rate for greater savings over time.

•   Provide benefits for you and a friend. By taking advantage of a referral-based refinance student loans bonus, you can get a cash-back incentive — and so potentially can the friend you referred. It’s a win-win for both parties.

The Takeaway

Paying back student loans can be costly. A student loan refinance bonus can help put money back in your pocket and potentially unlock a lower interest rate on your loan, if you qualify.

But before deciding on a student loan refinance bonus, look at the big picture. As you’re considering refinancing offers, calculate how much the interest rate on each loan will cost you over time. A refinance loan with a lower interest rate over the long term might be more financially beneficial than a high upfront cash bonus. Shop around with different lenders to find the best option for you.

Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.

FAQ

Are student loan refinance bonuses taxable?

If a refinance student loan bonus is $600 or more, the IRS considers the bonus taxable. You’ll receive a Form 1099-MISC from the lender that you can refer to when filing your annual tax return. You are responsible for paying any tax liability associated with the bonus.

Can I qualify for multiple refinance bonuses?

You might qualify for multiple refinance offers, depending on your lender. For example, you may receive a referral bonus for referring a friend who takes out a refinance loan, and you might also qualify for an interest rate discount if you enroll your loans in autopay.

How do refinance bonuses affect my credit score?

Receiving a student loan refinance bonus doesn’t directly affect your credit score. However, applying for student loan refinancing requires a hard credit check, which can temporarily impact your credit score.

Photo credit: iStock/KadnikovValerii

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.

SOSLR-Q324-013

Holiday loans are personal loans marketed toward those looking for extra money to pay for holiday expenses. In other words, they’re personal loans with some tinsel thrown on them. They are marketed to help people afford such seasonal spending as gifts, airfare to visit relatives, or the cost of renting a ski chalet for a big celebration.

Like other personal loans, holiday loans are usually offered at a fixed interest rate, and payments are made in regular monthly installments. However, even though they often come with lower interest rates than credit cards, taking out a holiday loan might not be the best financial move. Learn more here.

Understanding Holiday Loans

Holiday loans are basically defined as personal loans, with some seasonal flair. They may also be marketed as Christmas loans, depending on the financial institution that’s offering them.

The bank may list a variety of ways to use the money you get in a holiday loan, such as gift buying or holiday travel, but once the funds hit your account — just like with any other personal loan — you can use them for just about anything. There’s no need to verify that you put the funds toward, say, a new bike for your sweetie or a luxe hotel stay for the entire family.

Like other personal loans, holiday loans are usually unsecured. This means you don’t use a tangible asset like your home or a car as collateral, which means they may have higher interest rates on average than some other kinds of loans. They may also have more stringent qualification requirements, since an unsecured loan is a riskier prospect for the lender.

Features of Holiday Loans

The specific features of each holiday loan, including the amount available to borrow, will vary depending on the lender.

•   Typical loan amount: Some banks may cap their holiday loans at relatively low amounts, like $2,000, while others might offer tens of thousands of dollars to borrowers, as long as they can meet the eligibility requirements.

•   Interest rate: Most holiday loans come with a fixed interest rate. Because holiday loans are unsecured, interest rates tend to be higher than they are for secured loans like mortgages and car payments. For the 2023 holiday season, holiday loan rates ranged from approximately 7.99% to 13.99% annual percentage rate, or APR. However, these numbers will fluctuate with the economy and other factors, such as your credit score.

•   Loan term: A typical loan term (or repayment period) is a year or longer. Some holiday loans may come with terms as long as five years, which is a long time to be paying off a Christmas gift, tickets to the Nutcracker ballet, or a holiday party, no matter how awesome it was.

•   Fees: Be sure to read the fine print, because some holiday loans may also include additional fees like origination fees or early repayment penalties. If you take out a large high-interest loan, you may want to repay it more quickly than the term calls for to save money on overall interest.

•   Application process: Many Christmas holiday loans and other variations can be applied for online. You’ll likely need to upload certain documentation to prove your identity and your earnings. However, if you prefer an in-person process vs. a holiday loan online application, you may find a bank or credit union in your area offers this option.

Pros and Cons of Holiday Loans

Like any financial decision, there are both benefits and drawbacks to consider when it comes to holiday loans.

Pros:

•   Quick money upfront for holiday expenses (perhaps helping you achieve the “best holiday ever”)

•   No need to put down collateral

•   Longer payoff terms can keep monthly payments relatively low

•   Easy online application process

Cons:

•   High interest rates can mean you’ll likely pay a lot more for that gift or party than you would have in cash

•   Interest rates may be higher than other sources of funding

•   Origination fees and early repayment penalties could increase costs even more

•   Payoff terms of several years can keep you in debt long after that holiday season is remembered

Who Should Consider a Holiday Loan?

In many cases, financial advisors recommend against going into debt to pay for a seasonal celebration. Interest charges mean you’ll pay more for everything you purchase than you would if you bought items with cash. Even the best holiday trip or Hanukkah present may not be worth paying hundreds or even thousands of extra dollars in interest.

However, sometimes there are compelling reasons to take out that holiday loan. Maybe your family is about to move cross-country and you want to have a special celebration with relatives. Or you and your partner want to use the holiday as the occasion to get a much-needed new car.

Whatever the case, you are likely to have the best outcome with a holiday loan if you are confident you can repay the loan in full, preferably ahead of its full term. That can help you dodge some of the interest charges. Just be sure to check the fine print so you won’t be subject to any early repayment penalties.

Recommended: Affordable Ways to Celebrate the Holidays

Alternatives to Holiday Loans

If you want to enjoy an unforgettable season, there are alternatives to holiday loans worth considering.

Saving Up in Advance

Yes, you’ve probably thought of this one — but as mentioned, going into debt almost always means paying interest, and interest means each purchase costs far more than it otherwise would. Planning ahead and perhaps making automatic transfers into a savings account over the months prior to the holiday season can be a smart move.

Using Credit Cards Strategically

If you have access to a credit card with a high enough limit, it might be an alternative to a holiday loan. Again, though, if you want to avoid paying interest, make sure you’re in a position to pay it off in full before the grace period ends.

You may also be able to apply for a new credit card that offers a 0% interest promotional period. Usually, these periods last about a year, which could give you more time to pay off the holiday debt without accruing interest. But again, make sure you can pay it off in full before time runs out. Otherwise, you may face interest rates even higher than you would with holiday loans.

Other Financing Options

As the holidays roll around, you might also consider some other ways to pay for seasonal expenses.

•   You could take out a standard personal loan (vs. one marketed as for the holidays). This will typically have a lower interest rate than credit cards. See how these compare to holiday loans before you commit.

•   You might see if a close friend or family member would be willing to loan you some money; just make sure to honor the terms of repayment so as not to rock your relationship.

•   Buy now, pay later offers allow you to purchase items on a form of layaway plan.

•   Another possible source of funding could be a P2P loan, which involves individuals lending and borrowing to one another without a bank’s involvement.

Recommended: How Much Will a Personal Loan Cost You?

The Takeaway

Holiday loans are personal loans marketed to people looking for extra money to spend on holiday expenses. While some are on the smaller side (up to $2,000), some lenders will approve tens of thousands of dollars to borrowers for holiday purchases and celebrations. Compare options carefully, though. You likely don’t want to spend any longer than necessary paying off holiday expenses. Shop around for the right terms to suit your financial situation.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

FAQ

Is it difficult to get a holiday loan?

Because holiday loans are unsecured loans, which can be a relatively high-risk venture for the lending bank, they may have more stringent application requirements than secured loans like mortgages and auto loans. However, some lenders may advertise holiday loans for bad credit. These can come with even higher interest rates and fees than other similar loans, though.

Are holiday loans common?

Holiday loans aren’t the most common type of personal loan; personal loans are more commonly taken out by people consolidating debt or renovating their houses. But holiday loans are certainly not unheard of, and many lenders advertise them specifically.

Do banks typically offer holiday loans?

While not every bank offers holiday loans, many banks, credit unions, and other financial institutions offer regular, unsecured personal loans. Funds from those loans can be used to pay for holiday expenses. (In fact, many holiday loans are essentially the same product as personal loans.) No matter what kind of loan you’re taking out, always be sure you understand the full fee structure, including the total amount of interest you stand to pay over the lifetime of the loan, up front.

Photo credit: iStock/Tempura

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

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

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

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

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A personal loan cosigner is someone who adds themself to a loan application along with the primary borrower. By taking this step, a cosigner — who typically has good credit — can help an applicant who has a poor credit score or thin credit history get approved for funding.

However, cosigning does come with risks: The cosigner is as liable for the debt as the primary borrower. If the primary signer can’t make payments, the cosigner is expected to swoop in and make them instead. If loan payments are late or the loan goes into default, both signers will likely see their credit score take a hit.

Understanding Cosigning

As mentioned above, a cosigner is someone who adds their name to a loan application, taking on equal financial responsibility for the loan. Their credit history, income, and other financial qualifications will be part of the materials provided for the loan application. A cosigner’s solid credit score and history can substantially increase the approval odds for primary borrowers with little credit history (or a poor one).

By becoming a cosigner, you might enable a close friend or family member to get approved for a personal loan at a more favorable rate and/or for a higher amount.

Cosigning examples: It’s common for parents to cosign student loan applications for college students, whose credit files are likely still thin. Or if you’ve had some negative credit events (such as late payments) on your file for a few years but are ready to buy a new car, enlisting a cosigner could help you successfully close the deal — and potentially qualify for a lower interest rate.

In the case of a personal loan, it is likely to be an unsecured term loan at a fixed interest rate that the primary borrower is seeking. If approved, these funds could be used for anything from car repairs to travel expenses to a home improvement project.

An important note: Understand the difference between a loan guarantor vs. cosigner. If you are a guarantor, your responsibility only kicks in if the loan goes into default, but as a cosigner, you are as legally responsible for the debt as the primary applicant at every step along the way. This means that if that applicant makes late payments, the cosigner’s credit history and score can be negatively impacted.

If the debt is unpaid and goes to collections, both cosigner and guarantor could face a court case and potentially have their wages garnished.

Benefits of Cosigning a Personal Loan

The upsides of cosigning a personal loan include:

•   Adding a cosigner can increase the odds of approval for the primary borrower, possibly unlocking financial products and milestones they otherwise wouldn’t reach. For instance, they might use a personal loan to consolidate credit card debt, thereby freeing up funds to pay off a student loan.

•   In addition to gaining approval, enlisting a cosigner could help the primary borrower snag a higher loan amount and/or a lower interest rate.

•   For cosigners themselves, adding their name to a loan could potentially build their credit history in the long run. It might, say, increase their credit mix, which could be a positive factor, as long as the loan is paid on time each month.

In these ways, cosigning could benefit your financial standing.

Recommended: How Cosigning Affects Your Credit

Risks of Cosigning a Personal Loan

The risks of a personal loan with a cosigner should not be taken lightly:

•   Should the primary borrower fail to make payments and end up defaulting on a personal loan, the debt is as much the cosigner’s responsibility as the borrower’s.

•   If the primary applicant makes late payments on the loan — or fails to make payments at all — those factors will impact the cosigner’s credit file just as they will the primary applicant’s. That’s true up to and including legal suits.

•   Cosigners are usually people you’re close to in life (like family members or dear friends). For this reason, enlisting or becoming a cosigner has the potential to strain interpersonal relationships if something doesn’t go as planned. How would you feel if you were a cosigner on your sibling’s personal loan and they failed to make payments, leaving you saddled with debt? It’s worthwhile to think through this kind of worst-case scenario before agreeing to cosign.

•   The basic act of cosigning a loan can also negatively impact a cosigner’s credit, even if the debt is managed well by the primary applicant. An example: The loan could increase the overall amounts owed, possibly lowering your credit score. In addition, adding your name to the application could ding your credit score a bit for a brief period since a hard credit inquiry will be involved.

Even if you are eager to help a friend or family member snag a personal loan by serving as a cosigner, it’s important to evaluate these risks before diving in.

Legal Implications of Cosigning

While it usually doesn’t happen until a debt has gone unpaid for a long time, it is possible for a collections agency to take borrowers — including personal loan cosigners — to court.

If the judge rules in their favor, the collector could potentially garnish your wages, place a lien on your property, or freeze funds in your bank account. These are reasons why it’s so important for cosigners to ensure they’re actually capable of repaying a loan in the primary applicant’s stead if necessary.

Factors to Consider Before Cosigning

If you’re considering doing someone the (big) favor of applying for a personal loan as a cosigner, here are some factors to think through carefully before you sign your name on the dotted line.

•   Your own credit history. Consider whether your credit history is strong enough to help the primary borrower successfully apply for a personal loan in the first place. If your credit is also only so-so, the application may be denied — or subject to a higher interest rate, which could make repayment more difficult.

•   Your financial goals. While cosigning a personal loan could be an altruistic act, don’t be totally selfless. This decision could have a negative impact on your credit history or even your cash flow if you end up being the one to take over the payments. Be sure to consider your own financial goals when weighing your options.

•   Your relationship to the person asking. Cosign a loan only for someone you trust will do everything in their power to repay the loan on time. Also keep in mind that if something goes awry, your relationship to that person may end up strained. Even if the only hit you take is emotional and not financial, that can still have a profoundly negative impact on your life.

Recommended: Personal Loan Guide for Beginners

How to Protect Yourself as a Cosigner

If you do decide to be a personal loan cosigner, here are some ways to help protect your financial situation.

•   Draft a written contract with the primary applicant. While verbal promises can go a long way, having a written document stating both parties’ expectations — and outlining what actions will take place if they’re not met — can be invaluable if something goes wrong.

•   Ask if you can be a guarantor instead. Being a guarantor on a loan allows the primary applicant to enlist your help as a financial backer. However, it stops short of conferring the full responsibility of the loan on you. Instead, if you’re a guarantor, you’ll only become responsible for the loan if it goes into default (which is a serious consideration in its own right, but somewhat less entwined than a cosigner role).

•   Monitor your credit score. Given the impact cosigning a loan could have on your credit, it’s a good idea to enroll in a free credit score monitoring program to help keep you abreast of any sudden changes. (Credit score monitoring is often a good financial move even if you’re not cosigning a loan.)

•   Ask for copies of each month’s statements. Remember, this loan is just as much yours as theirs. Ask for — and keep — copies of all loan paperwork, from the original agreement to each monthly statement, so you’re up to date on exactly where the loan stands.

The Takeaway

If you have a solid credit history when you cosign a personal loan, you can help increase the primary applicant’s chances of being approved. However, you also take full legal responsibility for the debt. Be sure you only do so in situations in which you trust the primary borrower implicitly and could afford to take on the debt if that person were to default.

If you are in the market for a personal loan, with or without a cosigner, see what SoFi offers.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

FAQ

What happens if the primary borrower defaults on the loan?

If the primary borrower defaults on a loan, the creditor (and possibly a collections agency) will turn to the cosigner. That means the loan in default could negatively impact the cosigner’s cash flow, credit history, and credit score. The situation could even end up leading to a court case for the primary borrower and cosigner. That’s why it’s important to think carefully before cosigning a loan.

Can I remove myself as a cosigner from the loan?

It may be possible to remove yourself as a cosigner — but it might not be a simple process. Removing the cosigner often makes the loan a riskier prospect for the lender, so they might do what they can to keep you on the file. If you can’t get a simple cosigner release, the primary borrower may need to take out a new loan, on their own, to pay off the one you cosigned. This would then release you from the debt.

Does cosigning a loan affect my ability to get other loans?

Yes, it could. Think of cosigning just like applying for a loan for yourself. Along with the hard credit check (which could slightly and briefly lower your credit score), the entire loan will also show up on your credit report, potentially increasing your overall amounts owed and your DTI, or debt-to-income ratio. These factors could negatively impact your credit score and make getting another loan harder.

Photo credit: iStock/Moyo Studio

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

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

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

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

This article is not intended to be legal advice. Please consult an attorney for advice.

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