source_product Archives

Aug

2025

How Are IPO Prices Set?

By Michael Flannelly | Growing Wealth, invest, Investing | Comments Off

Table of Contents

What Is IPO Price?
Initial Public Offerings 101
Why Do Companies Go Public?
Steps in IPO Valuation
IPO Price vs Opening Price: Similarities & Differences
Do IPO Stocks Always Rise?
How to Invest in IPOs
FAQ

When a company prepares for an initial public offering (IPO), a vital part of the process is determining the valuation of the new company. This can be a complex procedure that takes into account the value of similar companies on the market, current demand based on pre-IPO interest, projected growth, among other factors.

In general, the IPO underwriters — typically investment banks — consider a number of such details in their analysis in order to create the IPO price and attract potential investors.

Because the company is new and doesn’t have a track record, the valuation process can be opaque, and interested investors must do their due diligence before investing. This is especially true in an IPO environment, which tends to be highly volatile.

Key Points

• The IPO process involves a rigorous preparation phase, where companies set a suggested starting price for shares before going public.

• In order to set the IPO valuation, underwriters analyze various factors like market conditions and growth potential to establish the IPO price, which is aimed at attracting investors.

• Companies typically go public to raise capital, enhance visibility, and provide liquidity for early investors, though they may face new challenges post-IPO.

• The initial public offering price is distinct from the opening price; the latter may fluctuate based on market demand once trading begins.

• Investing in IPOs can be risky due to potential volatility, making it crucial for investors to assess their financial goals and risk tolerance before participating.

What Is IPO Price?

An IPO price is the price at which a company’s stock is sold to accredited, institutional and other eligible investors right before the stock trades on a public exchange. The purpose of the public offering price during the IPO process is to attract investors to buy the shares.

IPO stocks are considered high-risk investments, and while some companies may present an opportunity for growth, there are no guarantees. Like investing in any other type of stock, it’s essential for investors to do their due diligence.

The investment banks that underwrite a company’s public offering set the IPO price, using several variables including an analysis of the company’s growth potential, a comparison to related firms, and a determination of market demand conditions.

💡 Quick Tip: Keen to invest in an initial public offering, or IPO? Be sure to check with your brokerage about what’s required. Typically IPO stock is available only to eligible investors.

Initial Public Offerings 101

When privately owned companies, such as unicorn companies, begin to sell shares of stock to the public, they hold an initial public offering, or IPO. Before an IPO, companies are usually owned by the founders, employees, and early investors, such as venture capital firms and angel investors. The process of selling shares to investors is called going public.

Typically the initial offering is limited, and there are a number of people eligible for those shares first.

For this reason, it can be difficult for individual investors to buy IPO stock when it’s first issued, even when they do research and due diligence for an IPO. In most cases, individuals can trade IPO shares on the secondary market through their brokerage. In some cases, a brokerage may set certain requirements in order for individual investors to buy shares.

An IPO can help a company raise significant capital. It can also be a source of publicity. However, the IPO process is also time-consuming and expensive. Once a company has gone public, it faces new challenges such as regulatory scrutiny and an increased need to please shareholders.

Recommended: Stock Market Basics

Why Do Companies Go Public?

The main reason companies choose to go public is to raise capital from outside investors. Holding an IPO can create significant value for a company and its management. In some cases, IPOs raise millions and even billions of dollars for the company, but some companies also face losses after an IPO.

Benefits to Investors and Employees

Bringing in public investment can benefit the business, but it may also benefit early investors. These initial investors, who have invested time and money in a company, can sell their shares following an IPO, unlocking shareholder value.

An IPO can also benefit employees of the company. That’s because when an individual joins a company, sometimes they are granted pre-IPO employee stock options. Companies will often give early employees the options over several months or years — a process called vesting.

Usually, employees must wait to sell their vested stock until the end of a lock-up period — a period after an IPO during which employees have to wait before selling their shares.

Cultivating Market Attention

Other reasons companies go public are to gain media attention, grow market interest through a broad base of financial supporters, and create a windfall for venture capital firms that helped fund the company in its early stages.

The number of publicly traded, exchange-listed companies in the U.S. has decreased from the peak in the mid-to-late 1990s when it reached about 8,000. In 2024, some 225 IPO companies traded on different stock exchanges, such as the New York Stock Exchange (NYSE) and Nasdaq.

Steps in IPO Valuation

When a company decides to hold an IPO, they work with an investment bank to determine the company’s IPO valuation. The process of investment bankers handling an IPO is called underwriting.

How Underwriting Works in IPOs

Each underwriting process can be slightly different, but investment bankers’ factors in determining IPO prices and valuations are essentially the same. Some questions include:

• Why has the company decided to go public?

• What is the current status of the market?

• Who are the company’s competitors?

• What are the company’s assets?

• How much has been invested in the company and by whom?

• What is the history of the company and its team?

• What are the company’s prospects for growth?

Process of Determining IPO Prices

The rules of supply and demand apply to how the company and its underwriters will set an IPO price. Essentially, the underwriters must determine the demand for the shares based on the supply of shares that will be offered and sold to investors. These underwriters try to figure out what investors are willing to pay for each share of a company when it decides to go public.

To create a balance in this tradeoff that makes both existing and new investors happy, the company must decide how many new shares to issue, and the estimated IPO price they plan to sell each share.

The company’s executives and their investment bank determine the number of new shares by deciding how much money they hope to raise and how much ownership they are willing to give up.

Institutional Investors in IPO Process

Once executives and bankers decide on the number of new shares to issue, they reach out to institutional investors to ask them how many shares they are interested in buying. Institutional investors include hedge funds, mutual funds, high net-worth individuals, and pension funds in good standing with the investment bank.

Days before the IPO, the institutional investors place requests for how many shares they actually want to purchase. The company and its investment bankers then set the price for the IPO, and they know how much money they will raise.

The underwriting investment bank goes through the complex process of selling and allocating all the newly public shares to the institutional investors. They want to create a balance of different types of investors.

Determining Opening Price Point

Before the first day of trading, the stock exchanges on which the company decides to list look at all the incoming orders for the newly issued stock, which may be either buy or sell orders, and report the predominant price.

They then go through a process of price discovery to determine what the opening price will be. The goal is to have the maximum number of trades be executed from all the placed orders. At Nasdaq, this is done electronically, while human traders are involved at the NYSE.

Following this price discovery period, the opening price point is set, and the trading day continues. The stock is open for public trading.

Retail Investors in IPO Process

Unfortunately for the retail investor, it can be difficult to buy a stock at its IPO price. However, some brokerage platforms have started to offer IPO investing services that allow individuals to buy closer to the IPO price.

Post-IPO Trading

In an ideal situation for the company and the underwriters, the stock’s closing price is relatively close to the opening price on opening day. This means the shares were priced accurately for what investors are willing to pay and the company had an appropriate valuation.

However, the IPO price isn’t necessarily a good indicator of the value of a stock, and IPOs can be highly volatile. Broader market interest in the stock is impossible to plan for, and IPO conditions differ from the company’s long-term presence in the market.

IPO Price vs Opening Price: Similarities & Differences

Many analysts use the terms IPO price and opening price interchangeably when discussing a newly public company. However, there is a distinction between the two price points.

• The IPO price is the price at which a company’s shares are first offered to institutional and accredited investors. The underwriters of the IPO sell the newly issued public share to these investors and clients at the initial public offering price.

• The opening price is the price at which the stock trades when it first begins trading on the stock market. The two prices are usually very close, but the opening price may be higher or lower than the IPO price.

Do IPO Stocks Always Rise?

IPO stocks don’t always rise in price once they are available for public trading. Many highly talked-about IPOs have disappointed in their opening weeks. This may be because investors feel these companies are overvalued and don’t want to risk putting money into them when they haven’t yet shown a profit.

It can take time for a stock to increase following an IPO, so the initial sale isn’t necessarily an indicator of long-term success or failure. The initial stock offering doesn’t always result in an immediate rise, but the influx of new capital can allow the company to grow.

Many stocks experienced tumultuous action for months before seeing a steadier climb. As an investor, looking for companies with a solid team and business plan, rather than just hype and a high valuation, can result in long-term portfolio growth.

How to Invest in IPOs

You can expose yourself to IPO stocks through an exchange-traded fund (ETF). Certain ETFs offer a weighted balance of newly public stocks and are adjusted over time. By diversifying your portfolio, you benefit from any gains while avoiding steep losses.

But, as mentioned above, IPOs can be very volatile. Although there is potential for significant returns, investors can also see severe losses in the weeks and months after a company goes public.

Rather than investing immediately, you can wait a quarter or six months to see how a company’s stock fluctuates following the IPO and then decide whether to invest. Stocks can often fall to form a base price before beginning to rise again.

The Takeaway

Although the IPO price is set as part of the lengthy IPO process, once the stock goes public all bets are off. Now the market determines the stock price, and the valuation of the company itself.

That’s one reason it can be challenging for most investors to know when and how to add new IPO stocks to their portfolios. Ultimately, investing in newly public stocks can be risky; the decision should be based on financial goals, time horizon, and risk tolerance.

Invest in what matters most to you with SoFi Active Invest. In a self-directed account provided by SoFi Securities, you can trade stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, options, and more — all while paying $0 commission on every trade. Other fees may apply. Whether you want to trade after-hours or manage your portfolio using real-time stock insights and analyst ratings, you can invest your way in SoFi's easy-to-use mobile app.

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FAQ

Is it good to buy at the IPO price?

Like all investments, there is risk in buying a stock when it goes public. IPOs can be suitable investments if the stock price increases after the IPO, but there is also a risk that the stock price could decrease. When buying a stock at an IPO price, investors don’t have the benefit of history to help analyze the stock.

How is an IPO price determined?

The investment bank that works with the company going public determines the IPO price based on market demand, projected growth for the new company, and the valuation of comparable companies.

Can you lose money on an IPO?

Yes. As with any stock, investors can lose money on an IPO if the company’s stock price falls below the price at which the investor bought the shares.

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SOIN-Q325-029

Aug

2025

Private Equity: Examples, Ways to Invest

By Melanie Mannarino | Financial Independence, Growing Wealth, invest, Investing | Comments Off

Table of Contents

What Is Private Equity?
Key Characteristics of Private Equity
How Do Private Equity Firms Work?
Types of Private Equity Funds
Can Anyone Invest in Private Equity?
How to Invest in Private Equity
Advantages and Disadvantages of Private Equity
Private Equity Comparisons
FAQ

Private equity involves partnerships, whereby qualified investors combine their capital in a private equity fund, which in turn funnels the money into an ownership stake in other companies in order to manage, overhaul, and/or acquire them.

The goal of private equity firms is to then sell these companies for more than they invested. The key word in private equity is “private” — as these companies don’t trade on public exchanges.

Private equity investing requires a significant amount of capital, typically invested for a period of years; thus it’s generally only available to high net-worth or accredited investors. Individual investors may be able to access private equity through exchange-traded funds (ETFs) and other vehicles.

Private equity, which is a type of alternative investment, has a high-stakes reputation for good reason, as these investments can be highly risky.

Key Points

• Private equity investments use a strategy whereby qualified investors pool their capital into a fund that’s used to manage or take over other companies.

• The goal of private equity investing is to sell the target companies for a profit.

• Owing to the amount of capital involved, and the longer time commitment, private equity is typically only available to high-net-worth or accredited investors.

• Private equity firms do not trade on public exchanges, and are not subject to SEC regulations.

• Private equity is considered a type of alternative investment.

What Is Private Equity?

Private equity can be confused with hedge funds and venture capital, but it’s important to understand what private equity is and how it differs from other high-risk alternative strategies.

Private equity firms raise capital from institutional and accredited investors in order to set up private equity funds that can then be used to buy, manage, and/or acquire other companies.

Private equity firms are typically not publicly traded on a stock exchange or regulated by the Securities and Exchange Commission (SEC), and typically neither are the companies they invest in.

With publicly traded companies, investors purchase shares of the company on a public market such as the New York Stock Exchange (NYSE), or buy stock online. With private equity, qualified investors can combine their assets to invest in private companies that aren’t typically available to the average investor.

Key Characteristics of Private Equity

Certain characteristics help define private equity:

• Private equity firms pool capital from various investors into a designated fund that can then invest in private companies (those typically not listed on public exchanges).

• A private equity investment typically involves large sums of money, invested for a period of years.

• Private equity is typically available to high net-worth, institutional, and accredited investors.

• Most retail investors would have to use other vehicles, such as exchange traded funds, or ETFs, to gain exposure to PE strategies.

• Private equity funds also use leverage to invest in target companies.

• The goal of private equity is to make a profit by overhauling a company and its product or operations, by breaking it apart and selling off parts of it, or by selling the company in an acquisition later.

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How Do Private Equity Firms Work?

Private equity firms have funds that allow qualified investors to pool their assets in order to invest in existing private companies and manage them. PE firms typically don’t target startups, but rather mature companies that may benefit from restructuring or other interventions. Note that this process is separate from the type of self-directed investing most individual investors are familiar with.

Private equity investors are referred to as limited partners. They are often high net-worth individuals or institutions such as endowments or foundations. Equity firms usually require a sizable financial commitment from limited partners for a long period of time to qualify for this investment opportunity.

The equity firm uses the assets from investors to help the companies they invest in achieve specific objectives — like raising capital for growth or leveraging operations.

Private Equity Objectives

To help further these objectives, equity firms offer a range of services to the companies they invest in, from strategy guidance to operations management.

The amount of involvement and support the firm gives depends on the firm’s percentage of equity. The more equity they have, the larger the role they play.

In helping these private companies reach their business objectives, private equity firms are working toward their own goal: to exit the relationship with a large return on their investment. Equity firms may aim to receive their profits a few years after the original investment. However, the time horizon for each fund depends on the specifics of the investment objectives.

The more value a firm can add to a company during the time horizon, the greater the profit. Equity firms can add value by repaying debt, increasing revenue streams, lowering production or operation costs, or increasing the company’s previously acquired price tag.

Many private equity firms leave the investment when the company is acquired or undergoes an initial public offering (IPO).

Role of General Partners and Limited Partners

In private equity firms, general partners and limited partners play very different roles.

• General partners are typically those who are involved in the oversight of a private equity fund, taking a more strategic role. For example, a general partner may look for target companies to invest in, evaluate these opportunities, and then oversee the companies ultimately added to the private equity firm’s portfolio.

• Limited partners are the investors who put up the capital for these partnerships: e.g., pension funds, endowments, HNW investors. They are typically less involved in daily operations, and as such they assume less risk for the success or failure of the companies in the portfolio.

💡 Quick Tip: All investments come with some degree of risk — and some are riskier than others. Before investing online, decide on your investment goals and how much risk you want to take.

Types of Private Equity Funds

Typically, private equity funds fall into three categories: Venture Capital (VC), Leveraged Buyout (LBO) or Buyout, and Growth Equity.

Venture Capital Funds

Venture capital (VC) funds focus their investment strategy on young businesses that are typically smaller and relatively new with high growth potential, but have limited access to capital. This dynamic creates a reciprocal relationship between VC fund investors and emerging businesses.

The start-up depends on VC funds to raise capital, and VC investors can possibly generate large returns.

Leveraged Buyout

In comparison to VC funds, a leveraged buyout (LBO) is typically less risky for investors. LBO or buyouts often target mature businesses, which may generate higher rates of return. On top of that, an LBO fund typically holds ownership over a majority of the corporation’s voting stock, otherwise known as controlling interest.

Growth Equity

In some cases, a private equity fund may invest in an established company that has a working business model, but requires capital in order to expand. This is considered a growth equity play.

Can Anyone Invest in Private Equity?

According to the SEC, under securities laws, private equity funds are not registered or regulated as investment companies. Thus, a PE fund cannot offer its securities on a public exchange. In addition, in order to remain exempt from securities regulations, the structure of private equity funds must fall within one of three defined categories:

• a traditional 3(c)(1) fund with no more than 100 owners

• a 3(c)(7) fund that’s limited to qualified investors

• and a qualifying VC fund

So when it comes to how to invest in private equity, only qualified or accredited investors are allowed to become limited partners in a private equity fund. Because private equity funds are not registered with the SEC, investors must understand the risk of such investments and be willing to lose their entire investment if the fund doesn’t meet performance expectations.

Since the initial investment is typically pretty high, and may be well into the millions of dollars, an individual must meet strict criteria to qualify as an individual accredited investor.

• A person must make over $200,000 per year (for two consecutive years) as an individual investor or $300,000 per year as a married couple.

• Alternatively, an investor can qualify as accredited if they have a net worth of at least $1 million individually or as a married couple to qualify (excluding the value of their primary residence), or if they hold a Series 7, 65, or 82 license.

• In addition, some private equity opportunities may require that investors be considered qualified investors, which can mean having assets of at least $5 million.

Other examples of accredited investors include insurance companies, pension funds, and banks.

Direct vs. Indirect Investment Options

As interest in private equity has grown, and private equity firms have sought to develop new avenues to give retail investors that access, there are a growing number of direct and indirect private equity investment options.

• Direct private equity investments include new offerings from large financial institutions as of Q2 2025, that include a mix of public and private assets. These may include active as well as index options. Some platforms also offer investors the chance to invest their capital into so-called feeder funds, which provide exposure to certain private equity strategies.

• Indirect private equity investments can include ETFs, and Limited Investment Trusts (LITs), which are closed-end funds that enable investors to pool their capital in a multi-asset fund.

How to Invest in Private Equity

As noted above, there are an increasing number of options for average investors seeking to gain exposure to private equity, including:

Publicly traded stock: Some private equity firms have publicly traded stock that investors can buy shares of. This includes PE firms like the Carlyle Group, the Blackstone Group, and Apollo Global Management.

Funds of funds: Mutual funds are restricted by the SEC from buying private equity, but they can invest indirectly in publicly traded private equity firms. This is known as funds of funds.

Interval funds: These closed-end funds, which are not traded on the secondary market and are largely illiquid, may give some investors access to private equity. Interval funds may invest directly or indirectly through a third-party managed fund in private companies. Investors may be able to sell a portion of their shares back to the fund at certain intervals at net asset value (NAV). Interval funds typically have high minimum investments.

Advantages and Disadvantages of Private Equity

While private equity funds provide the opportunity for potentially larger profits, there are some key considerations, costs, and high risks investors should know about.

Advantages

Here are some possible benefits of private equity investments.

Potentially Higher Returns

With private equity, returns may be greater than those from the public stock market. That’s because PE firms tend to invest in companies with significant growth potential. However, the risk is higher as well.

More Control Over the Investment

Private equity investors are typically involved in the management of the companies they are invested in.

Diversification

Private equity investments allow investors to invest in industries they may not be able to invest in through the public stock market. This may help them diversify their holdings.

Disadvantages

The drawbacks of investing in private equity include:

Higher Risk

Private companies are not required to disclose as much information about their finances and operations, so PE investments can be riskier than publicly traded stocks.

Lack of Liquidity

Private equity funds tend to lack liquidity due to the extensive time horizon required for the investment. Since investors’ funds are tied up for years, equity firms may not allow limited partners to take out any of their money before the term of the investment expires. This might mean that individual investors are unable to seek other investment opportunities while their capital is held up with the funds.

Conflicting Interests

Because equity firms can invest, advise, and manage multiple private equity funds and portfolios, there may be conflicts. To uphold the fiduciary standard, private equity firms must disclose any conflicts of interest between the funds they manage and the firm itself.

High Fees

Private equity firms typically charge high management fees and carry fees. Upon investing in a private equity fund, limited partners receive offer documentation that outlines the investment agreement. All documents should state the term of the investment and all fees or expenses involved in the agreement.

Private Equity Comparisons

Private equity is one type of alternative investment, but there are others. Here’s how a few of them compare.

Private Equity vs IPO Investing

From an investor’s standpoint, private equity investing means you’re putting money into a company, and hopefully making money in the form of distributions as the company becomes profitable.

Investing in an IPO, on the other hand, means you’re buying stocks in a new company that has just gone public. In order to make money, the company’s stock price needs to rise, and then you need to sell your stocks in that company for more than you initially paid.

Private Equity vs Venture Capital

Venture capital funding is a form of private equity. Specifically, venture capital funds typically invest in very young companies, whereas other private equity funds typically focus on more stable companies.

Private Equity vs Investment Banking

The difference between these two forms of investing is of the chicken-and-egg variety: Private equity starts by building high-net-worth funds, then looks for companies to invest in. Investment banking starts with specific businesses, then finds ways to raise money for them.

The Takeaway

Private equity firms manage funds that invest in private companies that are typically not available to investors. Sometimes these companies are small and new with high growth potential; in other cases, the companies are well-established, and may offer a higher rate of return.

Not everyone qualifies to invest in private equity. If you do qualify, it’s important to remember that while private equity funds may offer the opportunity for profitability, they also come with some hefty risks. As with any investment, it’s a good idea to make sure you fully understand the risks of investing in a private equity fund before moving forward.

Ready to expand your portfolio's growth potential? Alternative investments, traditionally available to high-net-worth individuals, are accessible to everyday investors on SoFi's easy-to-use platform. Investments in commodities, real estate, venture capital, and more are now within reach. Alternative investments can be high risk, so it's important to consider your portfolio goals and risk tolerance to determine if they're right for you.

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FAQ

What’s the history of private equity?

Pooling money to buy stakes in a private company can be traced back to the early days of the industrial revolution, when this type of financing was a common source of equity for the burgeoning railroad industry. Modern private equity took hold in the 20th century, however, with its roots in venture capital firms that emerged after WWII. Private equity as it’s known today gained popularity when leveraged buyouts took off in the 1980s.

How does private equity make money?

Private equity firms make money by buying companies they consider to have value and potential for improvement. PE firms then make improvements, which in turn, can increase profits. These firms also benefit when they can sell the company for more than they bought it for.

How much money do you need to invest in private equity?

Private equity funds have very high minimum investments that typically start at $1 million, with a diversified portfolio reaching much higher than that. In addition, an individual usually needs to be an accredited investor with a net worth of at least $1 million, or an annual income higher than $200,000 for at least the last two years ($300,000 for those who are married).

What are common private equity exit strategies?

Common exit strategies for private equity firms include initial public offerings (IPOs), where a refurbished once-private company goes public; secondary buyouts, whereby a company is sold to another private equity firm; and liquidation, when a company is dissolved and sold off.

Is private equity suitable for individual investors?

It depends. While direct investments in private equity are generally out of reach for most individual investors, today there are investment options that provide private equity exposure for individuals. These include ETFs, and closed-end funds (like interval funds), and typically permit lower minimums than traditional PE funds.

INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE

SoFi Invest is a trade name used by SoFi Wealth LLC and SoFi Securities LLC offering investment products and services. Robo investing and advisory services are provided by SoFi Wealth LLC, an SEC-registered investment adviser. Brokerage and self-directed investing products offered through SoFi Securities LLC, Member FINRA/SIPC.

For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.

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.

Investing in an Initial Public Offering (IPO) involves substantial risk, including the risk of loss. Further, there are a variety of risk factors to consider when investing in an IPO, including but not limited to, unproven management, significant debt, and lack of operating history. For a comprehensive discussion of these risks please refer to SoFi Securities’ IPO Risk Disclosure Statement. This should not be considered a recommendation to participate in IPOs and investors should carefully read the offering prospectus to determine whether an offering is consistent with their investment objectives, risk tolerance, and financial situation. New offerings generally have high demand and there are a limited number of shares available for distribution to participants. Many customers may not be allocated shares and share allocations may be significantly smaller than the shares requested in the customer’s initial offer (Indication of Interest). For more information on the allocation process please visit IPO Allocation Procedures.

Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by emailing customer service at [email protected]. Please read the prospectus carefully prior to investing.

Mutual Funds (MFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or clicking the prospectus link on the fund's respective page at sofi.com. You may also contact customer service at: 1.855.456.7634. Please read the prospectus carefully prior to investing.Mutual Funds must be bought and sold at NAV (Net Asset Value); unless otherwise noted in the prospectus, trades are only done once per day after the markets close. Investment returns are subject to risk, include the risk of loss. Shares may be worth more or less their original value when redeemed. The diversification of a mutual fund will not protect against loss. A mutual fund may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.

Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market.

Fund Fees
If you invest in Exchange Traded Funds (ETFs) through SoFi Invest (either by buying them yourself or via investing in SoFi Invest’s automated investments, formerly SoFi Wealth), these funds will have their own management fees. These fees are not paid directly by you, but rather by the fund itself. these fees do reduce the fund’s returns. Check out each fund’s prospectus for details. SoFi Invest does not receive sales commissions, 12b-1 fees, or other fees from ETFs for investing such funds on behalf of advisory clients, though if SoFi Invest creates its own funds, it could earn management fees there.
SoFi Invest may waive all, or part of any of these fees, permanently or for a period of time, at its sole discretion for any reason. Fees are subject to change at any time. The current fee schedule will always be available in your Account Documents section of SoFi Invest.

Disclaimer: The projections or other information regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results.

An investor should consider the investment objectives, risks, charges, and expenses of the Fund carefully before investing. This and other important information are contained in the Fund’s prospectus. For a current prospectus, please click the Prospectus link on the Fund’s respective page. The prospectus should be read carefully prior to investing.
Alternative investments, including funds that invest in alternative investments, are risky and may not be suitable for all investors. Alternative investments often employ leveraging and other speculative practices that increase an investor's risk of loss to include complete loss of investment, often charge high fees, and can be highly illiquid and volatile. Alternative investments may lack diversification, involve complex tax structures and have delays in reporting important tax information. Registered and unregistered alternative investments are not subject to the same regulatory requirements as mutual funds.
Please note that Interval Funds are illiquid instruments, hence the ability to trade on your timeline may be restricted. Investors should review the fee schedule for Interval Funds via the prospectus.

SOIN-Q325-056

Aug

2025

A woman in a high school graduation cap looks up thoughtfully, symbolizing college success and opportunity.

Pros & Cons of Being a Double Major

By Stacey Leasca | Going to College, Student Loans, student_loan | Comments Off

Double majoring certainly has its perks. It gives you the freedom to study more than one subject, allows you to become more well-rounded during your time in college, and could afford you the opportunity to study both a career path and a passion project at the same time.

However, deciding to become a double major is a big decision, as going after two majors could mean double the work.

Table of Contents

What Is a Double Major?
How Many People Pursue a Double Major?
Pros of Declaring a Double Major
Cons of Declaring a Double Major
When It Makes the Most Sense to Double Major
One Alternative to Double Majoring
Being Financially Prepared to Go After Any Degree You Want
The Takeaway
FAQ

Key Points

• Double majoring allows studying two subjects, enhancing a broader learning experience.

• It can widen potential job opportunities by showcasing diverse skills and preparing students for two fields.

• Many double majors can still graduate within four years.

• Double majoring may involve more studying and less time for extracurriculars.

• Potential increased tuition costs should be weighed against the benefits of double majoring.

What Is a Double Major?

Though the term “double major” can vary from school to school, it typically refers to a student pursuing two different disciplines under one degree.

While in school, the student works to obtain enough credits for majors in those two disciplines. Usually, this means studying two fields based in the same school, which will earn the student the same type of degree, such as a Bachelor of Science (B.S.) or Bachelor of Arts (B.A.).

Classes, including general education classes, might overlap within the two majors, making it easier to complete both courses of study throughout a student’s education.

It’s important to note there is a distinction between a double major and a dual degree.

A dual degree can mean a student is pursuing two separate degrees. This could mean going after two degrees in two different fields (for example, getting a B.A. in English and a B.S. in Finance), or it could mean studying for a Bachelor’s and a Master’s degree at the same time.

Some schools may require you to apply for — and gain acceptance to — both degree programs, and you’ll likely need to finish all requirements (including general education classes) under both degrees.

Again, it’s important to check with your college or university to see how they define a “double major” or a “dual degree” to ensure you are going after the right program.

How Many People Pursue a Double Major?

Many students choose to go down the double major path while studying at college or university.

Though the exact number can vary from school to school, it typically ranges somewhere between 10% to 25% of the enrolled student body.

Before diving in and deciding to declare a double major, here are a few pros and cons to consider.

Pros of Declaring a Double Major

Getting to Study Two Areas at Once

Going after a double major can allow you to gain a broader learning experience than others as you expand your classes and curriculum. This means you can leave school with a deep understanding of two totally different topics.

It could also allow you to study something you believe is a direct career path for you, while also exploring an area you are passionate about. And hopefully, in your future career, you can meld the two skill sets together.

Widening Potential Job Opportunities

By studying in two different areas, you may broaden your future career path. After all, having two majors under your belt means you are skilled at more than just one thing.

But, beyond this, employers may also look favorably on candidates with double majors because it shows they have a broad interest in many topics, can handle the pressures of an increased workload, and are ready and willing to take on new, larger tasks with ease.

Staying on Track for Graduating in Four Years

Because most double majors are completed under the same school within a college or university, you can typically still graduate within the standard four-year timeframe.

That’s because you will likely only have to take one set of general education requirements rather than with a dual degree program where you may need to take two.

Completing all of the coursework on time may take some strategic planning, however. If you have questions, consider speaking with your academic advisor, who may be able to provide helpful insight.

Cons of Declaring a Double Major

Next, consider the potential downsides of pursuing a double major.

More Studying

Because you may need to add on more credit hours to earn a double major, you might have to spend more time in classrooms and more time studying than your peers who are in pursuit of a single major.

This can also mean you’ll need to be highly organized and driven to go after a double major, and it might not be right for those who are not self-starters.

Less Time for Outside Interests

Because you will likely be in the classroom or library more often studying, having a double major might mean less time for outside interests and extracurricular activities.

And sure, one goes to college to study. However, it can also serve as an important developmental moment in one’s life.

Taking part in sports, clubs, or activities can help students learn and grow in different ways. It can help them connect with others and serve as a wonderful networking opportunity for future job interests.

It’s critical to weigh your options and make sure you know what you will have to give up to go after a double major.

Potential Increased Tuition

Because you may exceed baseline credit hours, you could end up paying more in tuition, which could mean accessing more federal and/or private student loans or more of them. Here’s why: Each credit hour can be costly, and going after a double major could be a significant investment.

Consider mapping out your coursework to determine exactly how many credits you’ll be required to complete, and how much extra this may cost.

Weigh the potential additional cost against the value having two majors could provide before declaring.

When It Makes the Most Sense to Double Major

In the end, this is a highly personal decision that students must make for themselves or with the guidance of a parent or counselor.

However, it may make sense for anyone who has more than one interest, who wants to broaden the scope of their schooling, or who feels as though a second major will help their future career prospects.

For example, students studying international business may find it helpful to their careers to add a second major in a language.

If someone believes that the return on investment — both in their time and, potentially, money — will be high, then a double major may be right for them.

One Alternative to Double Majoring

There is another way for a student to broaden their horizons and go after their passions throughout their education, and that’s with a minor.

While a major is a student’s main area of study, a minor can be a secondary area of study that requires fewer credit hours to complete than a second major.

Adding a minor can help you broaden your educational scope, allow you to further study areas you are passionate about, and help you walk away with more skills upon graduation.

While a minor doesn’t carry as much weight as a major, you can still list a minor on your resume, which could potentially help you impress recruiters during your post-graduation job search.

Being Financially Prepared to Go After Any Degree You Want

Whether you decide to go after one major, two majors, two degrees, a major and a minor, or any other combination, it’s important to be financially prepared for what’s ahead.

Knowing that you have enough funding for college can give you the freedom to explore different academic paths and pursuits without worrying about how you’ll cover the cost.

An important first step is to complete the Free Application for Federal Student Aid (FAFSA). This will let you know if you are eligible for any federal financial aid, which may include grants, scholarships, work-study, and federal student loans.

To fill in any gaps in funding, some students may also consider a private student loan via a bank, credit union, or online lender. To apply for a private student loan, students generally fill out a loan application either alone or with a student loan cosigner.

Unlike federal student loans, the amount a person qualifies for, along with what interest rate, is usually dependent on the applicant’s (or their cosigner’s) credit score and income, along with other factors.

While qualifying borrowers could secure a competitive interest rate when applying for a private student loan, it’s important to note that federal student loans offer borrower protections that private student loans may not.

These include deferment and forbearance, income-driven repayment plans, and some loan forgiveness programs. Benefits like these mean that students should generally turn to federal loan options before considering private student loans.

The Takeaway

Pursuing a double major can have advantages, such as allowing a student to pursue two fields of interest and then possibly having options career-wise after graduation. However, going after two majors can mean a heavy workload during your college years, and it may cost more than a single major as the credit hours add up. That said, if you are passionate about working to achieve a double major, there are funding options to consider, such as federal and private 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.

Cover up to 100% of school-certified costs including tuition, books, supplies, room and board, and transportation with a private student loan from SoFi.

FAQ

What are the downsides of a double major?

Downsides of a double major include increased workload, additional requirements to graduate, and possibly additional tuition costs.

Is a double major worth it?

If a student is very interested in two fields of study, a double major can be a worthwhile pursuit. It allows a student to pursue their interests and may open doors career-wise in two different fields.

Is double majoring stressful?

Double majoring can be stressful as it often involves an increased workload. Using time management techniques can help you tackle the obligations of a double major without feeling overwhelmed.

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SoFi Private Student Loans
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Terms and conditions apply. SOFI RESERVES THE RIGHT TO MODIFY OR DISCONTINUE PRODUCTS AND BENEFITS AT ANY TIME WITHOUT NOTICE. SoFi Private Student loans are subject to program terms and restrictions, such as completion of a loan application and self-certification form, verification of application information, the student's at least half-time enrollment in a degree program at a SoFi-participating school, and, if applicable, a co-signer. In addition, borrowers must be U.S. citizens or other eligible status, be residing in the U.S., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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.

SOISL-Q325-097

Aug

2025

What Happens to Student Loans When You Die?

By SoFi Editors | Debt Payoff, Fresh Out of School, Student Loans, student_loan | No Comments

Table of Contents

What Happens to Federal Student Loans?
What Happens to Private Student Loans?
What Happens If You Have a Cosigner?
What Can You Do to Protect Loved Ones?
How Student Loan Refinancing Can Help

No one plans for their student loans to outlive them. We all expect to have paid off loans for college or graduate school long before middle age, let alone within our lifetimes. But it’s important to have a grasp of what happens to student loans when you die. Not knowing the policy can cause you a lot of anxiety. Will the loan be wiped away? Will the burden fall on your parents or spouse? The answers depend on what kinds of loans you have.

If you die before your student loan is paid off, your loan will be “discharged” (canceled) -– but only if it’s a federal loan. Your family will not be responsible for repaying a federal student loan. With a private loan, it will also most likely be discharged, but in certain cases there could be complications. And if you had a cosigner, it’s more likely there will be complications.

According to EducationData.org, 6.3% of federal borrowers are 62 years of age and older. The average 62-year-old federal borrower owes $42,780 in federal educational debt, including Parent PLUS loans. So if you’re one of these older borrowers, getting the facts now may help put your mind at rest. Here’s what can happen to your loans in a variety of scenarios.

What Happens to Federal Student Loans?

If you took out student loans from the federal government, the loans will be discharged when you die. When a loan is discharged, the balance becomes zero and the government won’t try to collect on the loan.

There is currently no tax burden once loans are discharged as a result of death. However, this is only true until the end of 2025, at which point this tax code expires and policies could change.

Also, your parent’s PLUS loan will be discharged if your parent dies or if you (the student on whose behalf your parent obtained the loan) die.

You’ll likely want to make sure that your loved ones have the information they need now -– at a minimum, the name of your loan servicer and, ideally, your loan ID numbers and your Social Security number.

Family or friends would need to provide your loan servicer with that documentation to confirm the death, usually an original or copy of your death certificate. They can call your loan servicer to ask about the specific requirements.

The bottom line: If you have any kind of federal student loan, you don’t need to worry about your relatives being burdened with the debt if you pass away.

💡 Quick Tip: Get flexible terms and competitive rates when you refinance your student loan with SoFi.

What Happens to Private Student Loans?

More than 91% of all student loan debt is made up of federal student loans, according to EducationData.org. What happens to private student loans when you die? The rules are different from those covering federal student loans. It is possible that with a private student loan, someone will be pursued for repayment after you die.

The Consumer Financial Protection Bureau says, “Unlike federal student loans, private student lenders are not legally required to cancel private student loans for borrowers who die or become disabled. Because of this, in some instances, private student loan debt may pass on to a spouse or cosigner of the loan.”

Some private lenders will cancel the loan upon the loan holder’s death, but it typically depends on the type of loan and the laws in your state. Make sure to read your private loan agreement carefully now to see what protections your lender offers. If you have questions, it might be wise to consult a lawyer. In the case that your lender doesn’t discharge your loans after death, the lender would first try to collect the money from your estate.

If you don’t have an estate, they would turn to your student loan cosigner, if you have one. If there isn’t one, then the lender would likely try to collect from your spouse. Whether your spouse would actually be liable depends on the state in which you live. If you live in a community property state – Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin – and took out the student loan while you were married, your spouse could be responsible.

What Happens If You Have a Cosigner?

Federal student loans almost never involve a cosigner, but private loans often do in order to improve a borrower’s financial profile. Enterval Analytics said that in 2025, 93% of undergraduate private loans were cosigned.

A cosigner has agreed to pay the debt if you default, which means they will be just as responsible for the loan as you are. If you die, a private lender could seek to collect payment from the cosigner. However, some lenders may waive the remaining debt if the primary borrower (student) dies. Again, you need to check the policy.

If you have a loan with a cosigner and want to take this burden off of them, you could consider trying to refinance the loan in only your name. This could be an option if your credit, income, and employment history have improved since you took out the loan, and you can now qualify on your own.

It’s worth asking what happens if the situation is reversed: What if your cosigner dies? In some cases, your loan would go into “student loan auto-default,” meaning the lender would immediately require you to pay the full amount of the remaining loan, even if you’ve been making payments regularly until then.

If you cannot pay the full amount as requested, the holder on the loan could put you into this immediate default. That would harm your credit rating for a number of years.

However, not all banks will invoke the “auto-default” if your cosigner dies. Also, this depends on the bank being aware that the cosigner is no longer alive.

If you are in the terrible situation of knowing that your cosigner will die soon, you might want to be proactive to avoid the auto-default possibility. You may want to ask your lender for a release of the cosigner. Be aware that it might not be easy to obtain a release if your credit profile isn’t strong.

What Can You Do to Protect Loved Ones?

It is pragmatic to worry about what happens to student loans when you die. To ensure that your spouse or cosigner doesn’t end up with a large debt burden in the event of that happening, one course of action is to pay off your student loans faster.

You can do this by increasing the amount you pay every month, going above your minimum monthly payment, or possibly shortening the payment term through refinancing. Note that refinancing federal loans means losing access to federal programs.

Another option is to build a savings cushion that can be put toward your debt if you die.

How Student Loan Refinancing Can Help

Do student loans die with you? Not always. But there are things you can do now, including releasing any cosigners to make it less likely they’ll be pursued for the debt after your death. Refinancing your student loans may also be a good way to speed up repayment, leaving less of a potential obligation behind in case you die.

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.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

SoFi Student Loan Refinance
Terms and conditions apply. SoFi Refinance Student Loans are private loans. When you refinance federal loans with a SoFi loan, YOU FORFEIT YOUR ELIGIBILITY FOR ALL FEDERAL LOAN BENEFITS, including all flexible federal repayment and forgiveness options that are or may become available to federal student loan borrowers including, but not limited to: Public Service Loan Forgiveness (PSLF), Income-Based Repayment, Income-Contingent Repayment, extended repayment plans, PAYE or SAVE. Lowest rates reserved for the most creditworthy borrowers. Learn more at SoFi.com/eligibility. SoFi Refinance Student Loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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.

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.
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.

SOSLR-Q325-065

Aug

2025

A woman sitting in front of her laptop, with her glasses in her hand, staring off into space as she contemplates what to do after college.

Do Part-Time Students Have to Pay Back Student Loans?

By Kayla McCormack | Debt Payoff, Student Loans, student_loan | No Comments

Beginning August 1, federal student loan holders who are enrolled in the SAVE Plan will see interest accrue on their student loans, but payments are still suspended. Eligible borrowers can apply for and recertify under the Income-Based Repayment (IBR), Income-Contingent Repayment (ICR), and Pay As You Earn (PAYE) Repayment Plans, as well as Direct Consolidation Loans. Many changes to student loans are expected to take effect July 1, 2026. We will update this page as information becomes available. To learn the latest, go to StudentAid.gov.

The timeframe when part-time students need to begin paying back student loans depends on the types of loans they have. Essentially, if a student meets their college’s requirements for half-time enrollment, they are generally not required to make payments on federal student loans while in school. However, private student loans have their own terms. Depending on the lender, students may be required to make payments on their loan while they are enrolled in school.

Students may be part-time because of their financial situation, caregiver or parental duties, medical issues, or other reasons. Knowing how part-time student loan repayment works can help students budget and plan ahead.

Table of Contents

What Is a Part-Time College Student?
When Do I Have to Start Paying Back My Student Loans?
How Do I Pay Back My Student Loans?
The Takeaway
FAQ

Key Points

• In general, part-time college students don’t have to pay back student loans while they are enrolled in school at least half time.

• Part-time students with federal student loans will get a six-month grace period after graduating, withdrawing, or dropping below half-time enrollment before they have to repay their loans.

• Borrowers with private student loans who attend college part-time may not get a grace period before they need to start repaying their loans.

• Each private lender has different terms. Some private lenders may require students to repay their loans while in school.

• Methods to repay federal student loans include the standard repayment plan and income-driven repayment plans; private loan borrowers may want to consider refinancing.

What Is a Part-Time College Student?

A part-time college student is someone who is not taking a full course load during any given academic quarter or semester. Individual schools set the standards for what counts as a full- or part-time student, but in general, full-time students may take about 12 credits or four classes at a time.

Part-time students may take anywhere from six to 11 credit hours or two to three classes per academic period.

Students may choose to attend college part-time in order to take care of family obligations, work a day job, or because of other circumstances that don’t allow them to take four classes at one time.

Recommended: Full-time vs. Part-time Students

Repaying Student Loans as a Part-Time Student

Exactly when do part-time students have to pay back student loans? In general, part-time students may not need to pay back their federal student loans while they are attending school as long as they don’t drop below half-time enrollment — or as long as they haven’t graduated.

What does this mean in practicality? If you’re a part-time student and you are taking at least half of the full-load credit hours, you generally won’t need to start paying off your federal student loans until you graduate, withdraw, or drop below half-time enrollment. Federal loans also come with a student loan grace period, meaning you technically won’t be required to make payments for six months after graduating, withdrawing, or dropping below half-time enrollment.

For example, if a full course load at your school is 12 credits, and you’re taking six credits this semester, you are still enrolled at least half-time, and wouldn’t normally be required to start paying back your federal student loans.

If, however, you drop down below half-time enrollment by taking only one three-credit class, you would no longer be attending school at least half-time and may be required to start paying off your federal student loans.

Take control of your student loans.
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When Do I Have to Start Paying Back My Student Loans?

If you are a part-time student who graduates, withdraws, or drops below half-time enrollment, you may not need to start paying back your federal student loans right away. Many new grads, or those entering a repayment period for the first time, are given a six-month grace period, as mentioned above, before they have to start paying federal student loans back.

The exact length of any grace period depends on the type of loan you have and your specific circumstances. For example, Federal Direct Subsidized Loans and Direct Unsubsidized Loans all have a standard six-month grace period before payments are due.

Factors That May Influence the Grace Period

If you’re a member of the armed forces and you are called to active duty 30 days or more before your grace period ends, you could delay the six-month grace period until after you return from active duty.

Another situation that could impact your grace period is if you re-enroll in school at least half-time before the end of the grace period. You will receive the full grace period again on your federal student loans when you graduate, withdraw, or drop below part-time enrollment.

This is because, in general, once you start attending school at least half-time again, you’re no longer obligated to start making payments on federal student loans. In this situation, you would still get a grace period after you graduate, even though you may have used part of a grace period while you were attending school less than half-time. Note that most loan types will still accrue interest during the grace period.

You may lose out on any grace period if you consolidate your federal student loans with the federal government during your grace period. In that scenario, you’ll typically need to start paying back your loan once the consolidation is disbursed.

Repayments for Private Student Loans

If you have private student loans, you may not get a grace period before you start paying back your loans. Student loans taken out from private lenders don’t have the same terms and benefits as federal student loans, which means that private student loans may not offer a grace period at all or it may be a different length than the federal grace period.

Some lenders may require students make payments on private student loans while they are enrolled in school. If you have a private loan or are considering a private loan, check with the lender directly to understand the terms for repayment, including whether or not there is a grace period.

How Do I Pay Back My Student Loans?

When it comes to part-time student loan repayment, there are things you can do to make paying back your loans as painless as possible. When you enter loan repayment on a federal student loan, you’ll be automatically enrolled in the Standard Repayment Plan, which requires you to pay off your loan within 10 years.

However, there are currently several other types of federal student loan repayment plans available, including income-driven repayment plans, and it is always worth learning about the different plans so you can make an educated choice.

One thing to be aware of, however, is that as per the U.S. domestic policy bill that was passed in July 2025, there will only be two repayment options in total for borrowers taking out their first loans on or after July 1, 2026: the Standard Repayment Plan, which is a 10-year repayment plan, and the Repayment Assistance Program (RAP). RAP is similar to previous income-driven plans that tie payments to income level and family size.

As mentioned, private student loans have different requirements than federal student loans. Individual lenders will determine the repayment plans available to borrowers.

Recommended: Student Loan Forgiveness Guide

Take a Look at Refinancing

One option you may want to consider is student loan refinancing with a private lender. Refinancing your student loans allows you to combine your federal and/or private student loans into one new, private loan with a new interest rate — ideally, a lower rate — and new terms.

You can use a student loan refi calculator to see how much refinancing might save you.

It’s important to remember, however, that student loan refinancing isn’t right for everyone. If you refinance your federal loans, they will no longer be eligible for any federal benefits or repayment assistance, such as the Public Service Loan Forgiveness (PSLF) program or income-driven repayment plans.

The Takeaway

Part-time student loans who are enrolled at least half-time, based on the definition at their school, are generally not required to make payments on their federal student loans. Private student loans have terms and conditions that are set by each individual lender, and may require students make payments on their loans while they are enrolled in school.

With SoFi, refinancing is fast, easy, and all online. We offer competitive fixed and variable rates.

FAQ

Do part-time students qualify for federal student loans?

Yes, federal student loans, including federal Direct Subsidized and Unsubsidized loans, are available for part-time students as well as full-time students. To qualify, a student will need to fill out the Free Application for Federal Student Aid (FAFSA®) to see what they are eligible for.

Because you will be taking fewer classes as a part-time student, you may be offered less than the annual cap of $5,500 for federal loans for first-year dependent undergraduate students. Lenders for private student loans typically allow part-time students and full-time students to borrow up to the total cost of attendance at their school.

When does the grace period begin for part-time students?

The grace period for part-time students with federal student loans who graduate, withdraw, or drop below half-time enrollment is typically six months.
The exact length of any grace period depends on the type of loan you have. For example, federal Direct Subsidized Loans and Direct Unsubsidized Loans have the standard six-month grace period before payments are due. Private student loans may not have a grace period at all. Check with your lender to find out about the specifics for your loan.

Can I defer student loans as a part-time student?

Yes, part-time students can typically defer federal student loans in specific situations. This includes when they are in school at least half-time — their loans are usually put into deferment automatically in this case. Other types of deferment a part-time student might be eligible for include economic hardship deferment and unemployment deferment. Students need to apply for these types of deferment at studentaid.gov.

Are repayment options different for private vs federal loans?

Yes, repayment options are different for private vs. federal student loans. Federal student loans currently offer several different repayment options, including the 10-year Standard Repayment plan and income-driven repayment plans that base monthly payments on your discretionary income and family size.

Private lenders don’t offer the same terms and benefits that federal student loans do. Some private lenders may require students to make payments on their loans while they are enrolled in school. If you have a private loan, check with the lender directly about the terms for repayment.

What happens if I drop from full-time to part-time enrollment?

If you drop from full-time to part-time enrollment in school, it could affect your financial aid award. You may end up with less federal aid. For instance, the annual cap on federal loans for full-time first-year dependent undergraduate students is $5,500. If you become a part-time student you may no longer be eligible for that amount. If you are considering dropping from full-time to part-time enrollment, discuss the idea with your school’s financial aid office to see how your aid might be impacted.

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.

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.

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.

SOSLR-Q325-028

How Are IPO Prices Set?

What Is IPO Price?

Initial Public Offerings 101

Why Do Companies Go Public?

Benefits to Investors and Employees

Cultivating Market Attention

Steps in IPO Valuation

How Underwriting Works in IPOs

Process of Determining IPO Prices

Institutional Investors in IPO Process

Determining Opening Price Point

Retail Investors in IPO Process

Post-IPO Trading

IPO Price vs Opening Price: Similarities & Differences

Do IPO Stocks Always Rise?

How to Invest in IPOs

The Takeaway

FAQ

Is it good to buy at the IPO price?

How is an IPO price determined?

Can you lose money on an IPO?

Private Equity: Examples, Ways to Invest

What Is Private Equity?

Key Characteristics of Private Equity

Alternative investments, now for the rest of us.

Explore trading funds that include commodities, private credit, real estate, venture capital, and more.

How Do Private Equity Firms Work?

Private Equity Objectives

Role of General Partners and Limited Partners

Types of Private Equity Funds

Venture Capital Funds

Leveraged Buyout

Growth Equity

Can Anyone Invest in Private Equity?

Direct vs. Indirect Investment Options

How to Invest in Private Equity

Advantages and Disadvantages of Private Equity

Advantages

Potentially Higher Returns

More Control Over the Investment

Diversification

Disadvantages

Higher Risk

Lack of Liquidity

Conflicting Interests

High Fees

Private Equity Comparisons

Private Equity vs IPO Investing

Private Equity vs Venture Capital

Private Equity vs Investment Banking

The Takeaway

FAQ

What’s the history of private equity?

How does private equity make money?

How much money do you need to invest in private equity?

What are common private equity exit strategies?

Is private equity suitable for individual investors?

Pros & Cons of Being a Double Major

What Is a Double Major?

How Many People Pursue a Double Major?

Pros of Declaring a Double Major

Getting to Study Two Areas at Once

Widening Potential Job Opportunities

Staying on Track for Graduating in Four Years

Cons of Declaring a Double Major

More Studying

Less Time for Outside Interests

Potential Increased Tuition

When It Makes the Most Sense to Double Major

One Alternative to Double Majoring

Being Financially Prepared to Go After Any Degree You Want

The Takeaway

FAQ

What are the downsides of a double major?

Is a double major worth it?

Is double majoring stressful?

What Happens to Student Loans When You Die?

What Happens to Federal Student Loans?

What Happens to Private Student Loans?

What Happens If You Have a Cosigner?

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