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The Secured Overnight Financing Rate (SOFR) is the benchmark interest rate that has replaced the London Interbank Offered Rate (LIBOR) in the U.S. In fact, for the past several years, lenders have been gradually switching from using LIBOR to determine rates for consumer loans, such as student loans, to using SOFR.

Here’s what you need to know about SOFR, including how it differs from LIBOR, and how you might be impacted by the change.

What Is the Secured Overnight Financing Rate (SOFR)?

Financial institutions now use Secured Overnight Financing Rate, or SOFR, as a tool for pricing corporate and consumer loans, including business loans, student loans, mortgages, and credit cards. SOFR sets rates based on the rates that financial institutions pay one another for overnight loans (hence the name). The SOFR rate is published daily by the Federal Reserve Bank of New York.

SOFR is a popular benchmark because it is risk-free and transparent. It is based on more than $1 trillion in cleared marketplace transactions. This in contrast to the index it has replaced, the London Interbank Offered Rate, better known as LIBOR. LIBOR was based on hypothetical short-term loan rates. This has historically made LIBOR less reliable and more vulnerable to insider manipulation.


💡 Quick Tip: You can fund your education with a low-rate, no-fee private student loan that covers all school-certified costs.

How Does the SOFR Work?

When large financial institutions lend money to one another, they must adhere to reserve and liquidity requirements. They do this by using Treasury bond repurchase agreements, known as “repos”. Using repo agreements, Treasurys are used as collateral and banks are able to make overnight loans.

The SOFR interest rate index is made up of the weighted averages of the interest rates used in real, finalized repo transactions. Every morning, the New York Federal Reserve Bank publishes the SOFR rate it has calculated for repo transactions on the previous business day.

Current SOFR Rates

The New York Federal Reserve publishes the SOFR rate every business day. The latest rate is:

5.06% on July 25, 2023

The History of SOFR

Financial institutions, banks, and lenders rely on certain indexes to determine interest rates. Before the 1980s, there wasn’t one particular index that was used internationally. However, during the 1980s, increased complexity in the market resulted in the need for more standardized use of a benchmark tool for determining adjustable rates.

The international financial industry adopted LIBOR as the standard because it was viewed as a trusted, accurate, and reliable index. Other indexes were still used, but the majority of institutions used LIBOR. LIBOR rates were once the basis for about $300 trillion in assets around the world.

Fast forward to around 2008, and certain large financial institutions were manipulating interest rates illegally in order to increase their profits. This was possible in part because LIBOR is based on hypothetical rates. Manipulation of rates was one factor that led to the financial crisis.

Once that manipulation was discovered, there was a global demand for a new rate benchmark and a call to end the use of LIBOR. As a result of the 2008 financial crisis, banking regulations led to less borrowing and a lessening of trading activity. Less trading made LIBOR even less reliable.

In 2017, the Federal Reserve formed a group of large financial institutions known as the Alternative Reference Rate Committee (ARRC) to work on finding an alternative to LIBOR. They ultimately chose SOFR.

Both LIBOR and SOFR were being used by banks and lenders until June 2023, when SOFR became the standard in the U.S.

How SOFR Is Different From LIBOR

There are some key differences between SOFR and LIBOR, which help explain the shift towards SOFR and away from LIBOR. Here’s a look at some of the biggest.

•   SOFR is based on completed transactions, whereas LIBOR is based on the rates that financial institutions said they would offer each other for short-term loans. Because it’s based on hypotheticals, LIBOR is more vulnerable to manipulation.

•   Lending based on LIBOR doesn’t use collateral, making it unsecured. Loans using LIBOR include a premium due to credit risk. SOFR, on the other hand, is secured, as it is based on transactions backed with Treasurys. Therefore, there is no premium included in the interest rates.

•   SOFR is a daily (overnight) rate, while LIBOR has seven variable rates.

Recommended: What’s the Average Student Loan Interest Rate?

How SOFR Could Affect You

There has been some concern that the shift away from LIBOR would cause great market disruption. However, the changeover was designed to be slow and gradual and, generally, hasn’t caused any sudden changes for borrowers.

In fact, if you have a federal student loan or a private student loan with a fixed-rate, the change from LIBOR to SOFR has not — and will not — have any impact on your loan, since the rate is fixed for the life of the loan. If you are entering into a new loan, SOFR rates are already being used.

If you have a student loan (or any other type of loan) with a variable rate, the shift from LIBOR to SOFR may have impacted your loan — but likely not in any noticeable way. Switching from one index (LIBOR) to another, largely similar index (SOFR) — in the absence of any other market changes — won’t have much impact on a loan’s interest rate, according to the Consumer Financial Protection Bureau .

The rate on an adjustable-rate loan can go up and down over time. These changes, however, are largely due to general ups and downs in interest rates across the economy. Loan rates have been going up across the board, but that is not due to the shift from LIBOR to SOFR. Rather, it’s the result of efforts by the Federal Reserve to tamp down inflation.


💡 Quick Tip: It’s a good idea to understand the pros and cons of private student loans and federal student loans before committing to them.

The Takeaway

If you have a student loan, you may have received a notice from your lender or servicer about a change in the index rate for your loan. Instead of LIBOR, lenders in the U.S. are now using SOFR. The indexes work in a similar way and it should not have a major impact on your loan. If you’re in the market for a new loan, you won’t be affected by the switch, since U.S. lenders have already made the shift to SOFR.

Keep in mind, though, that interest rates on loans are based on numerous factors, including general market conditions and your (or your cosigner’s) qualifications as a borrower.

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.

Photo credit: iStock/Nicholas Ahonen

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

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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

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If you’re passionate about food, a career in the culinary arts may be right for you. Going to culinary school can help you acquire the knowledge, skills, and hands-on experience required to work in the field.

But how much does it cost to go to culinary school compared to trade school or traditional college? It depends on where you go and the type of degree you pursue. Getting a bachelor’s degree at a private school can run as high as $120,000. However, going to an in-state public culinary school and/or pursuing a shorter (associate) degree can cost significantly less.

This guide will examine culinary school cost factors and payment options to help you decide if it’s the right move for your future.

Tuition Rates for Culinary Schools

The cost of culinary school will depend on what degree you pursue and whether you go to a private or public culinary school.

Getting an associate degree at a public school can run $35,000 to $40,000 if you live in-state, or $40,000 to $50,000 if you live out-of-state.

An associate degree at a private culinary school, on the other hand, can run $50,000 to $56,000.

Pursuing a bachelor’s degree in the culinary arts generally comes with a higher price tag. At a public school, it can cost $47,000 to $50,000 (if you live in-state) and $50,000 to $100,000 (if you live out-of-state). The cost of getting a bachelor’s degree at a private school can run around $120,000.

When evaluating a program’s sticker price, keep in mind that tuition pricing may reflect a standalone semester, rather than the entire program cost. Depending on your field of study and type of degree you pursue, you may need anywhere from four to eight semesters to finish a program or degree.


💡 Quick Tip: Fund your education with a low-rate, no-fee SoFi private student loan that covers all school-certified costs.

Why Is Culinary School So Expensive?

Culinary schools can have an intensive structure. Condensed schedules can translate to more time spent in both the classroom and kitchen than typical college students.

Whereas a lecture hall can accommodate hundreds of students for an Intro to Economics course, culinary students typically receive more one-on-one instructions in smaller class sizes. Also, culinary coursework that involves cooking and baking has the added cost of buying ingredients and materials.

Culinary school costs might also include purchasing cooking equipment, such as knives, cutting boards, and a kitchen uniform. Depending on the program, these may be automatically factored into the tuition price or tacked on as an additional fee.

Recommended: What Is the Average Cost of College Tuition in 2023?

Types of Culinary Degrees Available

You have a variety of options to choose from for a culinary degree. The types of schools offering culinary degrees include technical schools, community colleges, four-year colleges, and independent culinary institutes.

Students can choose from certificate programs, an associate’s degree, or a bachelor’s degree in culinary arts.

Certificate programs are usually the shortest to complete with one to two semesters of coursework and training. Associate’s programs generally last two years and may incorporate a mix of hands-on training, internships, and coursework. Bachelor’s degrees require more time ― generally four years ― to complete but can help further develop culinary skills and knowledge in related subjects like business and nutrition.

Culinary degrees can also focus on a specific discipline, such as baking and pastry arts or hospitality and restaurant management. Interested students can explore this list of accredited culinary schools to find a program that suits their needs and career goals.

How Can You Pay for Culinary School?

A combination of funding sources may be required to cover tuition, equipment, and related expenses. Prospective students and parents can consider the following options to pay for culinary school.

Grants and Scholarships

Figuring out how much culinary school is going to set you back starts with filling out the Free Application for Federal Student Aid (FAFSA) to determine eligibility for federal financial aid. You may qualify for assistance in the form of grants if you have significant financial need.

There are also numerous culinary-specific scholarships that you can apply for. The National Restaurant Association awards merit-based scholarships between $2,500 to $10,000 for students pursuing undergraduate degrees in culinary arts and related fields.

Some additional grant and scholarship opportunities include:

•   The James Beard Foundation This nonprofit organization awards scholarships, tuition waivers, and work-study grants to students attending accredited culinary schools.

•   The American Institute of Wine and Food (AIWF) Full-time students attending accredited culinary schools can apply for an AIWF scholarship from local chapters in California and Kansas.

•   Rachel Ray, Yum-o! The famous Food Network chef’s nonprofit funds culinary scholarships in partnership with the National Restaurant Association Education Foundation.

You can also explore grants for college from state government and private organizations for additional funding.

Federal Student Loans

Students may need to use student loans when scholarships and grants aren’t sufficient, and they cannot afford to pay out of pocket.

Through the Federal Direct Loan Program, you can access both subsidized and unsubsidized loans to pay for school. Subsidized loans are awarded based on a student’s financial need. The Department of Education pays the interest on subsidized loans while you are studying at least half-time, and during the six-month grace period after leaving school. You may be eligible to defer loan payments further if you attend graduate school, join the military, or experience financial hardship.

Unsubsidized loans don’t require you to have financial need to be eligible. Schools determine how much students can borrow based on the cost of attendance and a student’s total financial aid package. Interest on unsubsidized loans begins accruing as soon as the loan is disbursed.

Dependent students can get up to $31,000 in federal student loans for four years of full-time study. Only $23,000 of this can be subsidized loans. Independent students, however, can take out up to $57,500 in federal loans, with subsidized loans also capped at $23,000.

Recommended: Types of Federal Student Loans

Employment

If financial aid isn’t enough to cover culinary school costs in full, working while studying could help pay the remainder.

Students with financial need may qualify for part-time employment through the Federal-Work Study program. Work-study jobs are typically geared towards a student’s area of study or community service. Awards can vary according to the student’s need, the timing of application, and how much total funding is available at a given participating school.

Finding part-time work at a restaurant or food-related enterprise is another funding option that also supports professional development.

Private Student Loans

If financial aid and other sources aren’t enough to pay for culinary school in full, you can consider a private student loan.

You can obtain private student loans from banks, credit unions, and online lenders. Some students may need a cosigner to qualify for private student loans due to a lack of credit history and income.

Private student loan interest rates and loan terms vary by lender, which gives borrowers more choice in term length. However, private student loans do not carry the same borrower protections as federal student loans, such as income-driven repayment plans, deferment or forbearance, or the Public Service Loan Forgiveness program. You may want to consider private student loans as an option only after you have exhausted all other sources of aid, including federal student loans.


💡 Quick Tip: It’s a good idea to understand the pros and cons of private student loans and federal student loans before committing to them.

The Takeaway

While many food service and restaurant jobs don’t require education beyond a high school diploma, completing culinary school could lead to a higher-paying career. According to the Bureau of Labor Statistics, the average salary in 2022 for chefs and head cooks at restaurants was $56,130. With experience, you can earn considerably more. According to Glassdoor, the average annual pay for an executive chef in New York City is $87,629.

There are numerous ways to cover the cost of culinary school, including federal and private student loans, work-study, financial aid, and scholarships.

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.

Photo credit: iStock/visualspace

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

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

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

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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Graduate school can be expensive. On top of tuition, you typically need to cover the cost of books and living expenses. At the same time, you may be juggling undergrad student debt.

One way to ease costs is to get a graduate assistantship. If you’re not familiar with the concept, a graduate assistantship is a salaried employment opportunity for graduate students. Graduate assistants work a set number of hours per week and, in return, receive a tuition waiver and/or a monthly living stipend.

Securing a graduate assistantship can buoy finances and boost connections. Read on to learn how graduate assistantships work and how to find one.

What Is a Graduate Assistant?

Graduate assistants are students enrolled in graduate or professional schools who assist departments or professors in a teaching, research, or administrative capacity. A graduate assistant might be paired with a professor who is actively engaged in research or work that might complement their career goals or current focus.

Graduate assistantships often benefit both the university and the student. The university is able to fill positions that might be more costly if filled by a traditional employee. The student typically receives a tuition waiver, monthly stipend, and/or a fixed sum of money to help them pay for graduate school. Some programs may also offer class credit for these jobs.


💡 Quick Tip: Fund your education with a low-rate, no-fee SoFi private student loan that covers all school-certified costs.

Things to Consider

Overall, graduate assistant programs are meant to offer value to potential students, and to defray at least a portion of the costs associated with pursuing a graduate degree.

When combined with scholarships, grants, and other financial awards, becoming a graduate assistant can make the costs of grad school more manageable. Some schools also offer tuition waivers — for some or all of the tuition — for qualifying graduate assistants.

Compensation packages vary depending on the school but tuition waivers are more commonly offered to graduate assistants who are employed by the school already, have financial or other hardships, or are veterans (or the spouse or dependent of a veteran).

Graduate assistantships that offer tuition waivers are often competitive, so it can be a good idea to explore the assistantship options offered by your college or department and apply as early as possible.

Another thing to keep in mind: A stipend typically counts as taxable income, though it isn’t considered wages (which means you won’t pay Medicare or Social Security taxes on it). So while assistantships do bring in some extra money, Uncle Sam will collect a portion of it.

As for tuition waivers, graduate assistants can exclude up to $5,250 worth of educational assistance benefits from their income each year, according to the IRS.

Also keep in mind that many universities prefer it if graduate assistants don’t seek additional, outside employment. It’s a common policy intended to protect a graduate student’s limited bandwidth — being a full-time student with an assistantship can feel like having two full-time jobs. Adding an additional part-time job on top of that could become too much of a strain.

Recommended: Finding & Applying to Scholarships for Grad School

Tips on How to Become a Graduate Assistant

How you go about becoming a graduate assistant will depend on the program and school. Acceptance letters often include at least some initial information pointing students toward any financial aid or assistantship the program might be offering.

You can also explore graduate assistantship opportunities by looking at the school’s or department’s website, as well as websites of professors. In addition, you can check the school’s job boards and social media sites, and even just do an online search using the name of your intended school and the phrase “graduate assistant.”

What if You Need More Funding?

Stipends and/or tuition waivers that come with graduate assistantships can make graduate school more affordable. However, if you still have gaps in funding, you may want to explore scholarships, grants, and federal or private student loans.

Graduate and professional students can apply for federal Direct PLUS Loans. Eligibility is not based on financial need, but a credit check is required.

Graduate and professional students may also apply for Direct Unsubsidized Loans; again, eligibility is not based on financial need.

To apply for federal loans for graduate school, you simply need to complete the Free Application for Federal Student Aid, or FAFSA.

Because graduate students face some of the highest federal student loan interest rates, and loan origination fees, you may also want to look into private graduate school loans and compare offers. Just keep in mind that private student loans don’t come with same protections, such as forbearance and forgiveness programs, offered by federal student loans.


💡 Quick Tip: Need a private student loan to cover your school bills? Because approval for a private student loan is based on creditworthiness, a cosigner may help a student get loan approval and a lower rate.

The Takeaway

Getting a graduate assistantship position can help cover the often high-cost of graduate school. These positions can involve being a teaching, administrative, or research assistant. Compensation may be in the form of a monthly stipend and/or a tuition waiver.

If you aren’t able to get a graduate assistantship, or you have secured one but it isn’t enough to fully cover your costs, you may want to look into other sources of graduate school funding, including private grants and scholarships and federal or 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.

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

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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.

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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An income share agreement (ISA) is a type of college financing in which you repay the funds you receive using a fixed percentage of your future income. While ISAs can be useful for some students who lack other funding options, it’s important to fully understand how these agreements work, since you can potentially end up owing a lot more than you borrow.

Read on for a closer look at income share agreements, including their pros and cons, who might consider them, and how they compare to other types of college financing.

What Is an Income Share Agreement?

With an income share agreement (ISA), you receive money to pay for college and contractually agree to pay it back using a fixed percentage of your post-graduation income for a set period of time. ISAs are offered by some colleges. They are also offered through several private lenders.

The income percentage and terms of an ISA will vary depending on the lender. Typically, the repayment percentage will range between 2% and 10% of the student’s future salary, and terms can be anywhere from two to 10 years.

Unlike other types of student loans, ISAs do not accrue interest. However, students commonly end up paying back more than the original amount that they borrowed.


💡 Quick Tip: Fund your education with a low-rate, no-fee SoFi private student loan that covers all school-certified costs.

How Income Share Agreements Work

Typically, you start repaying an ISA after you leave school and pass a specific income threshold, often $30,000 to $40,000 per year. If you earn less than the threshold in any month, you can waive your requirement payment that month. Some ISAs will count months in which you earn less than the minimum salary toward your repayment term, while others will extend the length of your loan.

You can typically exit your ISA at any time, provided you’re willing to pay the maximum repayment cap for your plan upfront.

With an ISA, your payment rises when your salary rises. However, the repayment term and total repayment amount are usually capped. The cap is the most you’ll have to repay under your ISA. With many plans, though, the cap can be as high as two (or more) times what you borrowed.

Income Share Agreement Example

To illustrate how an income share agreement might work, let’s say you sign an ISA agreement for $10,000 with the maximum number of monthly payments of 88, an income percentage of 4%, an income threshold of $30,000 (or $2,500 per month), and a payment cap of $23,000.

In this case, you would pay 4% of your income for any month you earn at least $2,500 and continue to do so until you make 88 payments or pay a total of 23,000 — whichever comes first. If you only earn the minimum, you will end up paying back $100 a month for 88 months for a total repayment of $8,800 (which is less than what you borrowed). However, if you make $55,000, you’ll pay $183 per month for 88 months, for a total repayment of $16,133, which is $6,000 more than you borrowed.

Keep in mind that the income percentages, terms, and repayment caps can vary considerably from one ISA provider to the next.

Recommended: How to Pay for College With No Money Saved

The Advantages of Income Share Agreements

Some of the pros of income share agreements include:

•   ISAs typically do not require a cosigner or good credit, so they can be easier to qualify for than other types of financing.

•   Payments won’t exceed a certain percentage of your monthly income.

•   Your ISA contract could expire years earlier than a traditional student loan.

•   Schools that offer ISA programs are incentivized to help you earn the highest paying jobs.

•   Depending on your future income, you may end up paying less than you would pay with a traditional student loan.


💡 Quick Tip: Even if you don’t think you qualify for financial aid, you should fill out the FAFSA form. Many schools require it for merit-based scholarships, too. You can submit it as early as Oct. 1.

Potential Pitfalls of Income Share Agreements

There are also some significant cons to ISA loans that you’ll want to keep in mind:

•   In some cases, the ISA provider will cap payment more than twice the amount you receive.

•   Unlike other types of student loans, there’s uncertainty regarding how much your loan will cost.

•   In many cases, an ISA could cost more over the long run when compared to federal or private student loans.

•   Income-driven repayment plans are already an option with federal student loans, and federal loans also offer the potential for student loan forgiveness.

•   ISAs are not widely available and may be restricted to certain majors or programs.

Who Should Consider An ISA?

Income share agreements can end up being costly, especially if you enter a high-earning field and the ISA has a high payment cap. However, you might consider looking at ISA if:

•   You’ve maxed out federal loan options but are unable to qualify for private student loans.

•   You have a poor credit score and would receive high rates on student loans.

•   Your school offers an ISA with reasonable terms and a low payment cap.

•   You’re planning to earn a degree in a field that doesn’t have steep salary growth potential.

If these scenarios don’t apply to you, you’re likely better off using federal student loans to pay for higher education, or even private student loans if you have good credit. Before signing up, you’ll want to compare your options side by side and run the numbers to see which is the better deal.

Recommended: Private Student Loans vs Federal Student Loans

Considering Private Loans

You generally want to exhaust all your federal options for grants and loans before considering other types of debt, but if you’re looking to fill gaps in your educational funding, it may be worth considering private student loans before signing an ISA.

Private student loans are only offered through private lenders, and come with either fixed or variable rates. For borrowers with excellent credit, rates may be relatively low. Unlike federal loans, however, undergraduate private student loans often require a cosigner. The cosigner is an adult who agrees to take full responsibility for your student loans if you default. Cosigners are almost always required by private lenders since undergraduates have not had much time to develop a credit history.

If you expect to have a high salary after graduation and/or can qualify for a low rate on a private student loan, you could end up paying less than you would for an ISA.

The Takeaway

An income share agreement, or ISA, is an agreement between the borrower and the school or a lender that states the borrower will receive funds to pay for college and then repay those funds based on a certain percentage of their future salary for a set amount of time.

While ISAs may sound like a different type of college funding, they are, essentially, loans. And in many cases, you will end up paying back significantly more than what you borrow.

Generally, you would only want to consider ISAs after exhausting any undergraduate federal student loans and aid available to you. It’s also a good idea to compare ISA offers with traditional private student loans before deciding on the best funding option for your situation.

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.

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

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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.

SOIS0723016

Millions of students have earned a GED diploma and gone on to get a college degree. In fact, 97% percent of colleges accept the GED credential just as they would a high school diploma.

Some competitive schools and programs, however, require a certain minimum GED test score for admission, and possibly other tests and requirements. Here’s what you need to know to get into college with a GED.

What Is a GED Diploma?

A GED diploma is an alternative to a high school diploma for students who didn’t complete the requirements to graduate from high school. To earn a GED, you need to take a series of tests that will indicate whether or not you have a high school level of education. This is known as the GED (or General Educational Development) test.

The test covers four subject areas: Social Studies, Science, Mathematical Reasoning, and Reasoning Through Language Arts. Each test is administered separately (so you can space them out), timed, and covers several topics in the subject area.

•   Social Studies (70 minutes):

◦  Reading for Meaning in Social Studies

◦  Analyzing Historical Events and Arguments in Social Studies

◦  Using Numbers and Graphs in Social Studies

•   Science (90 minutes):

◦  Reading for Meaning in Science

◦  Designing and Interpreting Science

◦  Experiments

◦  Using Numbers and Graphics in Science

•   Mathematical Reasoning (115 minutes):

◦  Basic Math

◦  Geometry

◦  Basic Algebra

◦  Graphs and Functions

•   Reasoning Through Language Arts (150 minutes):

◦  Reading for Meaning

◦  Identifying and Creating Arguments

◦  Grammar and Language


💡 Quick Tip: SoFi offers low fixed- or variable-interest rates. So you can get a private student loan that fits your budget.

Preparing for and Taking the GED Test

The first step to getting your GED is to create an account on GED.com. Once you have an account, you’ll be able to access free study guides and practice tests, register for low-cost online and in-person prep classes, and purchase a voucher for the official GED Ready practice test.

You can register to take the GED test online or at a local test center through your GED account. Some states require that you take the GED practice test to register for the official GED test in-person or online. You can look up your state’s requirements here.

Each of the four tests is taken and scored separately, and there are three scoring levels.

•   GED Passing Score: Scoring a 145 on each test subject is a passing score, the minimum needed to obtain a GED diploma.
•   GED College Ready Score Level: Scoring between 165 and 174 on each test subject indicates a readiness for college-level coursework.
•   GED College Ready + Credit Score Level: Scoring between 175 and 200 indicates not only a readiness for college-level coursework, but possible eligibility for college credit, depending on the college program.

Test scores are typically available in your GED.com account within 24 hours of taking the test, though it can sometimes take up to three business days. The scoring section of your account will also include a detailed report of each subject test’s score and skills you can work on to improve their score.

Can You Go to College With a GED?

Absolutely! Nearly all colleges accept a GED diploma in lieu of a high school diploma. These include community colleges, vocational schools, private universities, and public universities. In some cases, however, you may need to meet a few specific requirements, or take a few extra steps, in order to be admitted with a GED.

Certain colleges, for example, may require a GED grad to show they’re ready for college-level courses either by submitting a high enough ACT or SAT score to the college or by taking the college’s placement test. The placement test score will be a factor in the admissions process.

Recommended: College Application Checklist

How to Get Into College With a GED: Step-by-Step

While most colleges and universities accept the GED diploma, this diploma can sometimes be perceived as less challenging than a high school diploma. As a GED student, you may also lack other things colleges might be looking for, such as transcripts that show academic performance or class rank.

Fortunately, there are a number of steps GED grads can take to increase their chances of getting accepted to college.

Check the School’s Admission Requirements

Some schools and competitive programs require students to have a minimum GED test score or some prior college credit to be considered for admission. Other institutions require applicants who hold a GED diploma to take additional placement tests. There is also a small percentage of schools that do not accept the GED diploma at all.

You can learn about requirements on a school’s website. If you can’t find enough information online, you can always call the school’s admissions office. The admissions staff can be a great source of accurate and up-to-date information on general admission policies, as well as standards pertaining to GEDs, such as getting credit for a College Ready+ score.

Consider Taking the SAT or ACT

Many colleges are test-optional now, which means students don’t have to submit SAT or ACT scores along with their applications. However, If you take one of these entrance exams — and get a higher-than-average-score — you could potentially increase your chances of getting in. Some schools (even those that don’t require the ACT or SAT) also use these test scores for class placement or scholarships.

The SAT scores range from 400 to 1600, and the national average is 1050. The ACT scores range between 1 and 36, and the average is around 21.

Write a Compelling Essay

The college admissions essay gives GED grads an opportunity to shine. Telling a personal story, perhaps about challenges that you have overcome or ways in which you have persevered, or describing how a volunteer activity has made an impact on your life, might be the thing that makes your application stand out against a stack of others.

Include Activities on Your Application

If you participated in extracurricular activities while you were in high school or volunteered with a community organization, putting that information on your college application can give the admissions team a fuller view of who you are as a person (instead of just looking at your test scores). You may also want to include any jobs you’ve had that are to the field you want to study.

Get Letters of Recommendation

Some colleges require two or three letters of recommendation. Even if a letter of recommendation is optional, including one can help your application stand out. A highly positive letter gives the admissions team insights into your character, while also showing that someone is willing to vouch for you. Good sources include former coaches, teachers, school counselors, supervisors, local leaders, and mentors.

Apply to Multiple Schools

A common — and recommended — strategy for all students is to apply to more than one school. Even if your goal is to attend a four-year college, you may want to include a local community college on your list. Community colleges often have “open enrollment,” which means that they don’t require the ACT or SAT tests. And, if you don’t get into colleges of your choice this go around, you might opt to get an associate degree at a community college, then transfer to a four-year college to complete your bachelor’s degree.

Recommended: How to Qualify for a College Application Fee Waiver

Explore Scholarships and Financial Aid

Scholarships and other financial aid packages can reduce the cost of getting a college education. So be sure to fill out the Free Application for Federal Student Aid (FAFSA). This allows you to find out if you’re eligible for federal aid, such as grants, work-study opportunities, and even federal student loans. You can also qualify for state-level and school-based aid through the FAFSA form.

In addition, you may want to explore private scholarships opportunities using a database like Fastweb or SoFi’s Scholarship Search Tool. Your school’s financial aid office might know about more resources available, too.

If you need to borrow to pay for college, it’s generally a good idea to take out federal student loans before private ones. Federal loans have benefits that private loans don’t, including access to income-driven repayment plans and loan forgiveness programs.


💡 Quick Tip: Federal student loans carry an origination or processing fee (1.057% for Direct Subsidized and Unsubsidized loans first disbursed from Oct. 1, 2020, through Oct. 1, 2024). The fee is subtracted from your loan amount, which is why the amount disbursed is less than the amount you borrowed. That said, some private student loan lenders don’t charge an origination fee.

The Takeaway

Just because you didn’t finish high school, doesn’t mean you can’t go to college. By getting your GED diploma, you can apply to virtually any type of secondary school, including community colleges and four-year universities.

To improve your odds of getting into college, you’ll want to make sure you meet all of the school’s admissions requirements, take any necessary entrance or placement tests, and put together a strong application that includes a great essay and personal recommendations.

To make going to college affordable, it can also be a good idea to start researching ways to cover the cost of your education. Options include: savings, scholarships, grants, work-study programs, and federal or 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.

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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.

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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