When the interest rate and annual percentage rate (APR) are calculated for a loan — especially a large one — the two can produce very different numbers, so it’s important to know the difference when evaluating what a loan will cost you.
Basically, the interest rate is the cost of borrowing money, and the APR is the total cost, including lender fees and any other charges.
Let’s look at interest rates vs. APRs for loans, and student loans in particular.
Key Points
• The interest rate is the cost of borrowing the principal amount, expressed as a percentage.
• The annual percentage rate (APR) includes the interest rate plus additional fees, providing a total cost view.
• Higher interest rates result in higher monthly payments and total costs over the loan term.
• Additional fees in the APR include closing costs, origination fees, and mortgage points.
• Considering both interest rate and APR is crucial for making informed loan decisions.
What Is an Interest Rate?
An interest rate is the rate you pay to borrow money, expressed as a percentage of the principal. Generally, an interest rate is determined by market factors, your credit score and financial profile, and the loan’s repayment terms, among other things.
How Interest Rates Work
Most people who take out a home mortgage loan opt for a fixed-rate mortgage. The borrower repays the amount borrowed, plus interest, in equal monthly installment payments over a period of 10, 15, 20, or 30 years. The higher the interest rate, the more they will pay each month and over the life of the loan. To see how interest rates affect payment amounts, try plugging different rate numbers into a mortgage calculator.
Some homebuyers opt for an adjustable-rate mortgage. In this scenario, there is typically an introductory period with an interest rate that might be lower than the available rate on a fixed-rate loan. But after that, the rate can periodically adjust (up or down), following market rates.
What Is APR?
If a loan were to have no other fees, hidden or otherwise, the interest rate and APR could be the same number. But because most loans have fees, the numbers are usually different.
How APRs Work
An APR is the total cost of the loan, including fees and other charges, expressed as an annual percentage. Compared with a basic interest rate, an APR provides borrowers with a more comprehensive picture of the total costs of the loan. The bulk of mortgage fees come in the form of closing costs and origination fees. Generally, closing costs average 3% to 6% of your mortgage loan principal, but each lender is different. Some borrowers also pay for mortgage points, also known as discount points, to lower the interest on their home loan. All of this would factor into the APR. Understanding these costs can help you get a clear picture of the total cost of a loan.
The federal Truth in Lending Act requires lenders to disclose a loan’s APR when they advertise its interest rate. In most circumstances, the APR will be higher than the interest rate. If it’s not, it’s generally because of some sort of rebate offered by the lender. If you notice this type of discrepancy, ask the lender to explain.
APR vs. Interest Rate Calculation
The bottom line: The interest rate percentage and the APR will be different if there are fees (like origination fees) associated with your loan.
How is APR Calculated?
To calculate APR, you first need to add the interest and the total fees for your loan. Then you divide by the principal amount borrowed. Divide the result by the total number of days in your loan term (for a 20-year loan, for example, you would divide by 7,300). Multiply the result by 365 (to get a yearly number) and then again by 100 (to arrive at an APR percentage).
Here’s the APR formula:
APR = ((Interest + Fees / Loan amount) / Number of days in loan term) x 365 x 100
Let’s say you’re comparing loan offers with similar interest rates. By looking at the APR, you should be able to see which loan may be more cost-effective, because typically the loan with the lowest APR will be the loan with the lowest added costs.
So when comparing apples to apples, with the same loan type and term, APR may be helpful. But lenders don’t always make it easy to tell which loan is an apple and which is a pear. To find the best deal, you need to seek out all the costs attached to the loan.
You may find that a low APR comes with high upfront fees, or that you don’t qualify for a super-low advertised APR, reserved for those with stellar credit.
How Are Interest Rates Calculated?
Calculating the total interest you’ll pay on a home loan is pretty simple with online tools. You can see the total interest you’ll pay on a loan quickly by plugging your loan amount, interest rate, and loan term into a mortgage calculator. (If you want to see what your monthly payment will be when you factor in property taxes and home insurance, use a mortgage calculator with taxes and insurance.)
How APR Works on Home Loans
Not all homebuyers understand the true cost of their mortgage loans. If you’re considering multiple loan offers (perhaps you’ve gone through mortgage prequalification with a few lenders), you can look at the APRs on the offers to compare them against one another.
One caveat regarding APR: Because fees associated with a home mortgage are usually paid at the beginning of the loan, the APR won’t reflect the true annual cost of the loan if you sell the property or refinance before the mortgage term is up.
How Interest Rates Work on Home Loans
Most home mortgages are amortizing loans, so although the monthly payment on a fixed-rate loan remains constant, the amount of interest you’ll pay with each payment will differ. Typically, more of a borrower’s monthly payment is made up of interest early in the life of the loan; as the loan ages, the reverse is true and more of the payment chips away at the principal. An amortization table for your loan should be provided in your loan documents.
Benefits of Government-Backed Mortgages
Some would-be homeowners find themselves comparing different types of mortgages (as well as different interest rates and APRs) when considering how to finance their purchase, and government-backed mortgages will have a different profile than conventional loans.
A government-backed mortgage such as an FHA loan or a VA loan may have a low down payment (or no down payment), which is a key benefit, especially for first-time homebuyers, who typically have fewer resources to pull from. It may also have different upfront fees than a conventional mortgage. An FHA loan, for example, usually requires mortgage insurance. If the borrower makes a down payment of 10% or more, after 11 years the lender can remove the mortgage insurance requirement, but many borrowers need to refinance to get rid of the insurance payment. The cost of this mortgage insurance factors into the APR.
The Takeaway
APR vs. interest rate is a key factor you’ll want to consider when deciding on a loan, because the APR reflects the fees involved in the loan. Even when it comes to government-backed home loans, fees are part of the story. So don’t just look at a loan’s interest rate — take the time to compare the APR as well.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
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FAQ
What’s a good APR?
A good APR will depend on your individual profile as a borrower, with your credit score being a key factor. To see how the APR you’re being offered on a home loan compares with the national average, search for “national average XX-year mortgage APR” (with XX being your loan term in years). Then look at the percentages side by side.
What’s a good interest rate?
A good interest rate is one that’s below the posted national average interest rate for your loan type when you search online. Borrowers with less-than-stellar credit scores won’t qualify for the best rates, however, so what’s a good interest rate for you will depend on your personal credit score and financial profile.
Does 0% APR mean no interest?
Zero percent APR means that no interest is charged for a set period of time. This is a term commonly seen on credit card offers and car loans. If you go this route, make sure you note the length of the no-interest promotional period and that you make your payments on time during the period, as missing payments can trigger interest to build on the debt.
Does refinancing your mortgage help lower rates?
Refinancing your mortgage may help lower your interest rate if rates have dropped since you initially purchased your home, or if your credit score and other aspects of your financial profile have improved significantly. It’s important to consider closing costs associated with a refinance, however, before deciding that it makes sense to chase a lower rate.
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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
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.
¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
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Student loans can be used to cover more than tuition and fees. They can pay for lodging, food, commuting, a computer, and study abroad (but not spring break!).
Most qualified education loans can be used to cover the entire cost of attendance — an estimate of total costs for an academic year at a college, as determined by each campus financial aid office — minus any aid you receive.
Let’s take a closer look at what student loans can cover, what they should not, and alternative ways to pay for living expenses.
Key Points
• Student loans can be utilized for essential expenses like tuition, room and board, transportation, books, and personal supplies, as long as the student is enrolled at least half-time.
• Nonessential expenses, such as vacations, car purchases, or entertainment, should not be covered by student loans, as these could lead to financial consequences.
• Utilizing student loan funds for nonqualified expenses may not be actively monitored, but it’s important to remember that this money must be repaid with interest.
• Alternative ways to cover living expenses include part-time jobs, work-study programs, scholarships, summer employment, and selling unwanted items for extra cash.
• Borrowers should exhaust federal student aid options before considering private loans, as they generally lack the borrower protections provided by federal loans.
Can You Take Out a Student Loan for Living Expenses?
Yes, you can take out a student loan to cover living expenses while in school. Federal and private student loans typically include funds for not only tuition and fees, but also necessities like housing, food, transportation, and personal expenses.
When applying for federal student loans, schools determine your cost of attendance (COA), which includes these expenses, and financial aid is disbursed accordingly. However, borrowing should be done wisely, as any money used for living expenses will need to be repaid with interest.
Private student loans can also cover living expenses, but eligibility and terms vary by lender. These loans often require a credit check or cosigner, and interest rates may be higher than federal options.
How to Use Student Loans for Living Expenses Off-Campus
Using student loans for off-campus living expenses requires careful budgeting and adherence to loan guidelines. Once your school disburses the loan funds, any remaining balance after tuition and fees is typically refunded to you. These funds can cover rent, utilities, groceries, and other essential costs. However, it’s important to prioritize necessary expenses and avoid using loan money for noneducational purchases, as this debt must be repaid with interest.
Federal Student Loans vs. Private Student Loans for Housing Expenses
When covering housing expenses with student loans, federal student loans are often the better option due to their lower interest rates, flexible repayment plans, and borrower protections. Federal loans do not require a credit check (except for PLUS loans), making them more accessible to students. Additionally, repayment options like income-driven plans and deferment help borrowers manage their financial obligations after graduation.
Private student loans, on the other hand, may offer higher borrowing limits but typically come with stricter credit requirements and fewer repayment protections. Interest rates vary based on creditworthiness, and repayment terms are often less flexible than federal loans. While private loans can help bridge financial gaps, they should be considered after maximizing federal aid and other funding sources like scholarships and grants.
Living Off Student Loans: Do’s and Don’ts
As long as a student is enrolled at least half-time, student loans can cover a range of expenses at a qualified institution of higher education or at a hospital or health care facility that provides postgraduate internship and residency training programs.
Do
• Tuition and mandatory fees. The first thing student loans should be used to cover is tuition and fees, as these are necessary expenses for getting a degree.
• Room and board. Whether it’s a dorm or an apartment off-campus, the expense can be covered. Board means a campus meal plan or groceries.
• Transportation. Loan money can pay for maintaining, insuring, and fueling your car or for public transportation fares.
• Books and supplies. New, used, or rented textbooks are covered, as are supplies ranging from software to notebooks.
• A personal computer. You can buy or rent a computer with student loan money.
• Dependent care. Child care expenses are covered.
• Study-abroad costs. The Federal Student Aid office lists international schools that participate in the federal student loan program and describes the process.
• Personal expenses. These include cell phone bills, laundry costs, bed linens, towels, a microwave oven, and anything else you normally spend money on.
The use of student loans for nonqualified expenses could be reported to the Office of Inspector General as fraud, or a lender could call the loan balance due immediately. But in general, no one is tracking how you spend loan money.
Both federal and private student loans are disbursed to your school, which takes out tuition and fees, and if you live on campus, room and board. Any remaining money goes to you, so it would be hard for lenders to tell if you’re using the remainder as intended.
It can be tempting to go on a spending spree with your student loan refund, but remember that you will pay, or are paying, interest on that borrowed money.
Federal student loans have annual and aggregate limits that may seem generous, especially for graduate and professional students.
Private student loans can help fill gaps in need. These loans are not backed by the federal government and therefore not subject to its qualification rules. They may also lack the borrower protections available to federal loans, such as deferment. It’s a good idea to obtain a private student loan only after maxing out federal student aid. A cosigner can often help a student qualify.
Aside from using student loans, there are several ways to pay for living expenses while in school. Here are some ideas.
Part-Time Job
Getting a part-time job can help students make extra money to cover costs. Generally, these side hustles offer flexible hours so students can more easily juggle work and class. Some students may also be able to find a job that’s related to their major or career of choice.
Federal work-study may be offered as part of a student’s federal aid package and is based on financial need. Work-study programs are available to undergraduate, graduate, and professional students, regardless of whether you are a full-time or part-time student.
Becoming a Resident Assistant
A resident assistant (RA) is usually assigned to a particular floor or wing of a dormitory to oversee dorm residents. RAs might lead mandatory floor meetings, organize monthly social gatherings, and referee the occasional roommate disagreement. Not only do you typically get a better room than others on your dorm floor, you also get free housing.
Scholarships
Merit scholarships are often awarded to a student based on their skill or ability for a certain speciality. They’re offered through private companies, nonprofit organizations, colleges and universities, and professional and social organizations. As you’re researching scholarships that you might be eligible for, pay attention to any requirements. Some awards have certain conditions, such as requiring that the money be used only for tuition, while others allow you to use the funds for whatever you want.
Tuition bills are due.
Prequalify for a no-fee student loan.
Summer Job
As an alternative (or addition) to a part-time job, you might want to consider a summer job or paid internship. During the summer, students may have more free time to work more hours and rack up cash to help cover their housing and living expenses for the following year.
Selling Unwanted Items
Cleaning out your closet? Selling castoffs on buy-and-sell apps and websites can be a quick way to earn money.
The Takeaway
Student loans can be used to cover housing, food, transportation, supplies, and other college essentials. Funds shouldn’t be used for “nonessential” expenses, like vacations, new clothes, pricey meals, or other debt. In general, no one tracks how you spend loan money. But remember, this is borrowed money that will have to be repaid, with interest. A part-time job, work-study program, and scholarships are different ways to earn extra money for expenses.
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
Which living expenses are most often paid for with student loans?
Student loans commonly cover essential living expenses such as housing (rent or dorm fees), utilities, groceries, transportation, and personal expenses. They may also help pay for school-related costs like books, supplies, and technology. Federal and private loans can be used for these necessities but should be borrowed responsibly.
Do you have to tell the lender if you change housing?
Yes, you should inform your lender if you change housing, especially if it affects your residency status or financial situation. Keeping your contact information updated ensures you receive important loan-related communications, including billing statements and repayment details, helping you avoid missed payments or potential issues with your loan.
Can you take out more funds if your living expenses increase?
If your living expenses increase, you may be able to request additional student loan funds by appealing to your school’s financial aid office. They may adjust your cost of attendance, allowing you to borrow more. However, federal and private loan limits still apply, so additional funding isn’t always guaranteed.
Can you use student loan money on monthly car payments?
No, student loans are meant for education-related expenses, including tuition, housing, and supplies. While transportation costs like gas or public transit may be covered, using student loan money for monthly car payments is generally not allowed.
Can you use student loans to pay for a gym membership?
Student loans shouldn’t be used to cover membership to a gym. Many schools have a gym or fitness center on campus that’s available to students and included in the cost of tuition.
What should you do with leftover student loan money?
It’s a good idea to return the excess money to the lender — it lowers the total cost of the loan. You could also use the funds to pay for qualified educational expenses, like tuition, housing, child care, or transportation.
Can you use a student loan to pay a tuition bill that is past due?
In some cases, you can use a student loan to pay a past-due tuition bill, but it depends on the lender and school policies. Federal and private loans typically apply to current or future expenses. Some schools may offer emergency loans or payment plans for overdue tuition balances.
SoFi Private Student Loans Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
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., 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 04/24/2024 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org).
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SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Want to squeeze in a couple of classes this summer but not sure how to pay for them? You have several options, including federal and private student loans. The summer loan application process is generally the same as it is for the regular academic year. But the federal government limits how much you can borrow, so it’s important to consider your choice carefully.
Here’s what you need to know about paying for summer classes.
Key Points
• Students can utilize federal loans like Direct Subsidized, Direct Unsubsidized, and Direct PLUS Loans to finance summer courses.
• Completing the Free Application for Federal Student Aid (FAFSA) is essential, as it determines eligibility for federal aid applicable to summer sessions.
• If federal aid doesn’t cover all expenses, private loans are an option, typically allowing borrowing up to the school’s certified cost of attendance.
• Private student loans usually cover only one academic year, so a separate application may be necessary for summer term funding.
• Student loans can be used not only for tuition and fees but also for living expenses during the summer term.
Costs of Going to School in the Summer
Tuition is one of the biggest costs associated with going to school in the summer. That said, some colleges offer summer courses at a reduced cost, or you may be able to take classes at a community college for a lower price and transfer the credits to your school. If you don’t plan on living at home, you’ll also need to budget for housing, food, transportation, and other personal expenses.
The short-term cost of going to school during the summer may be worth it in the long run, though. Taking extra classes can help you finish your degree — and start drawing income from a full-time job — faster.
Ways You Can Find and Get Money for Summer Classes
Just like during the fall or spring terms, financial aid is available during the summer. Let’s take a look at some common types of assistance.
Grants
Grants can help offset the cost of summer courses and typically don’t need to be repaid. One popular type of grant is the Pell Grant, which is awarded by the federal government and based on financial need. Qualifying students can receive Pell Grants for 12 semesters, and in certain circumstances, they may be eligible to receive additional funds for the summer term.
Some schools offer grants to students who are enrolling in summer classes. Contact the financial aid office to see if your school offers this option. Your state may also provide grants to help students cover the cost of summer classes. Visit the website of your state’s department of education to find out if this option is available to you.
Scholarships
Like grants, scholarships usually do not need to be repaid, and in general, you’re free to use the funds for a summer term. There are thousands of available scholarships based on financial need or merit offered by a variety of sources. Searching scholarship databases can help you narrow your options.
Federal Work-Study gives students with financial need part-time employment to help them earn extra money to pay for education expenses. Check with your college’s financial aid office to find out if the school participates in the program.
Student Loans
The loans you apply for to pay for the regular school year can also be used to cover summer courses. There are different types of federal student loans to explore: Direct Subsidized Loans, Direct Unsubsidized Loans, and Direct PLUS Loans.
Once you’ve exhausted federal aid options, you may consider private loans to pay for summer classes. Generally, lenders allow you to borrow up to the school-certified cost of attendance.
Federal vs Private Student Loans: How They Compare
Federal student loans are funded by the federal government and offer borrowers protections such as deferment, forbearance, and the option to pursue Public Service Loan Forgiveness. Most federal student loans do not require a credit check, and interest rates are fixed for the life of the loan. Students must fill out the FAFSA annually and be enrolled at least part-time to qualify for aid.
The federal government limits the amount of money students can borrow per academic year and in total, and this includes any aid you receive for summer classes. The limit is based on your dependency status and how long you’ve been in school. For example, in the 2024-25 academic year, a first-year dependent undergraduate may qualify for up to $5,500 in student loans, with a limit of $3,500 on what can be subsidized. An independent first-year undergraduate student may qualify for up to $9,500 in student loans, with a limit of $3,500 on what can be subsidized.
Private Loans
Private loans are offered by private lenders, such as banks, credit unions, and online lenders. Interest rates may be fixed or variable and are determined by the lender based on criteria including an applicant’s financial history and credit score. Many lenders require students to be enrolled in school at least part time.
Depending on the loan terms, borrowers may be required to make payments while they are enrolled in school, and they may or may not provide a grace period. Private student loans also lack the borrower protections afforded to federal student loans.
Students who take out the maximum amount of federal aid may consider private loans as an option to pay for summer classes. Generally, private lenders allow you to borrow up to the school-certified cost of attendance.
FAFSA applications for the following academic year are typically due around the end of June. The application requires borrowers to check the school year in which the funds will be used. If you’re submitting a FAFSA for the summer term, ask your school which year to check on the form and if any other forms are required. The sooner you submit the application, the more likely you are to receive funding, since many sources of aid are offered on a first-come, first-served basis.
What You’ll Need to Apply
To help the FAFSA application process go smoothly, it helps to have some information and a few documents on hand. This includes your Social Security number (or Alien Registration number if you’re an eligible noncitizen); your federal income tax returns, W-2s, and other records of income; bank statements and any record of investments; records of untaxed income, if applicable; and your FSA ID. Dependent students will need most of that information for their parents.
If you’re applying for a private student loan, you’ll apply directly with the lender. Applicants typically need to have a solid credit history, proof of income, be at least 18, and be a U.S. resident. Adding a cosigner to the loan may be an option that can help potential borrowers strengthen their application.
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Understand Your Loan Options
When considering student loans for summer classes, it’s important to explore all available options. Federal student loans, such as Direct Subsidized and Unsubsidized Loans, may be available if you meet eligibility requirements and have remaining aid from the academic year.
If federal aid isn’t enough, private student loans can help fill the gap, offering flexible borrowing limits based on your school’s cost of attendance. However, private loans typically require a credit check and may have higher interest rates than federal options.
Comparing loan terms, interest rates, and repayment options will help you choose the best financial solution for your summer coursework.
How to Pay for Summer Classes
There are several ways to finance your summer coursework, depending on your financial situation and eligibility. Consider the following options to cover tuition and related expenses:
• Federal student aid: Use remaining federal loans or apply for a Pell Grant if eligible.
• Private student loans: Borrow from private lenders if federal aid isn’t sufficient.
• Scholarships and grants: Search for summer-specific funding opportunities that don’t require repayment.
• Work-study programs: Earn money through on-campus or part-time jobs while taking classes.
• Personal savings or payment plans: Use savings or set up a tuition payment plan with your school.
Evaluating these options carefully can help you find the most cost-effective way to pay for your summer courses.
The Takeaway
If you’re considering enrolling in summer classes, financial aid can help you cover the bill. Grants, scholarships, work-study, internships, and part-time jobs are all options to explore, as are 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
Can federal student loans be used to pay for summer classes?
Yes, federal student loans, including Direct Subsidized, Direct Unsubsidized, and Direct PLUS Loans, can be applied toward summer courses. To determine eligibility, students should complete the Free Application for Federal Student Aid (FAFSA).
What should students do if federal aid isn’t sufficient to cover summer class expenses?
If federal aid doesn’t fully cover summer class costs, students might consider private student loans. Private lenders typically allow borrowing up to the school’s certified cost of attendance. It’s important to note that private loans usually cover only one academic year at a time, so a separate application may be necessary for summer term funding.
Are student loans applicable to expenses beyond tuition during the summer term?
Yes, student loans can be used to cover not only tuition and fees but also living expenses during the summer term. This includes costs such as housing, food, transportation, and other related expenses.
Photo credit: iStock/Prostock-Studio
SoFi Private Student Loans Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
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., 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 04/24/2024 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org).
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
College financial aid includes grants, scholarships, work-study, and federal student loans.
You apply for federal aid by filling out the Free Application for Federal Student Aid (FAFSA®). Once submitted, students can expect to receive a financial aid award that details the type and amount of aid for which they qualify. Financial aid can be incredibly helpful when trying to finance your college education, but it’s possible that you may not receive enough to foot your tuition bill. If that’s the case, there are other options available to help you pay for your education.
Continue reading for more information on understanding your financial aid package and the options to consider should you find yourself in need of additional funding.
Key Points
• Financial aid packages may include scholarships, grants, work-study opportunities, and federal student loans. Understanding each type helps in assessing the aid offered.
• The cost of attendance (COA) encompasses tuition, fees, room and board, and other expenses. Comparing the COA with the total aid offered is crucial to determine out-of-pocket costs.
• Subtracting grants and scholarships from the COA provides the net price, which is the actual amount you need to pay or cover through loans and other means.
• Carefully compare financial aid packages from different institutions, considering factors like the balance between loans and grants, to make an informed decision.
• If you don’t have enough federal student aid to cover the cost of college, you can rely on private student loans. Private student loans do not offer the same protections and benefits as federal student loans, so should be used as a last resort.
What Is Financial Aid?
Financial aid is financial assistance provided to students to help cover the cost of higher education, including tuition, fees, books, and living expenses. It can come from the federal government, state agencies, colleges, and private organizations. Financial aid is typically awarded based on financial need, academic merit, or other eligibility criteria.
Types of financial aid include grants, scholarships, work-study programs, and student loans. Grants and scholarships do not need to be repaid, making them the most desirable forms of aid. Work-study programs allow students to earn money while in school, while student loans must be repaid after graduation. Understanding financial aid options can help students reduce their educational costs and manage their finances effectively.
How Does Financial Aid Work?
Financial aid works by providing students with funding to help cover the costs of higher education, such as tuition, fees, books, and living expenses. Students typically begin by completing the Free Application for Federal Student Aid (FAFSA) or the CSS Profile to determine their eligibility for various types of aid. Based on financial need, merit, or other qualifications, students may receive grants, scholarships, work-study opportunities, or student loans.
How Do I Apply for Financial Aid?
In order to get any financial aid package for college, the first step is generally to fill out a Free Application for Federal Student Aid, commonly known as FAFSA.
The FAFSA for the 2025-26 school year became available Dec. 30, 2023, and the application cycle ends on June 30, 2025. Some states and colleges have separate deadlines for the FAFSA to determine aid. Contact your school’s financial aid office for questions about the deadline for your state or school.
Filling out the FAFSA requires some basic financial and income information. If you’re a dependent student, then you’ll need your parents’ financial info as well.
All federal loans, both subsidized and unsubsidized, require a FAFSA in order to determine eligibility. Colleges may also use the FAFSA to determine their own financial aid awards and packages, based on things like the Student Aid Index and financial need.
After you fill out the FAFSA, the Office of Federal Student Aid at the U.S. Department of Education will process your FAFSA and send you a Student Aid Report (SAR), which is essentially a summary of your information. It’s usually worth reviewing this information in detail to confirm that all of the information is accurate. If you find a mistake after reviewing your SAR, you’ll likely need to update or correct your FAFSA.
The SAR will include the calculated Student Aid Index (SAI), which is how much you and/or your family can be expected to contribute personally toward your education.
Then, colleges use this information to determine eligibility for university, local, state, and federal financial aid. Sometimes schools may ask for additional information, particularly if you are applying for school-specific scholarships.
The schools will then assemble a financial aid package that could be made up of grants, loans, work-study, and other waivers, and send you an “award letter.” Reviewing your award letter carefully can help you choose the financial aid mix that is right for you.
What Are the Different Types of Financial Aid?
A financial aid package is a list of different amounts of money in different forms of loans, grants, work-study, or other tuition waivers that should add up to cover the cost of the college, minus your Student Aid Index.
Here are the different types of financial aid you may see in your financial aid package:
Grants and Scholarships
Grants and scholarships don’t have to be repaid, so they are sometimes referred to as “gift aid.” These could be school, state, or federal scholarships and grants you qualified for and were awarded.
This is part-time work you will do and be paid for. You’ll be paid at least the federal minimum wage, but depending on the job, you could earn more. Being granted work-study in your aid package does not always guarantee a job. Depending on the school you attend, you may be matched with a job or you may have to apply for and secure your own job.
Federal Student Loans
Federal loans can be either subsidized or unsubsidized, and usually have lower interest rates than private loans. There is also typically a cap on how much you can borrow.
Subsidized loans are for undergrads and are awarded based on financial need; additionally, the government pays the interest on them while you’re in school at least half-time, during your grace period, and during periods of deferment.
Unsubsidized loans are available to undergraduate and graduate students and are not awarded based on financial need. This type of loan accrues interest while a student is enrolled at least half-time, during the loan’s grace period, and during other periods of deferment.
Borrowers have the option to make interest-only payments during this time, but are not required to do so. If the interest on the student loan accrues, at the end of the deferment period it will be capitalized or added to the principal value of the loan.
There are also PLUS Loans for parents and graduate students, which are also unsubsidized.
Beyond Federal Financial Aid: Private Student Loans
Private student loans are not part of a federal financial aid package. Private student loans can be borrowed from a private lender, which typically have more stringent financial qualifications and, like federal loans, must be paid back with interest. Typically, that interest also accrues while you’re in school.
Check the terms of any private student loans you’re considering and the interest rate being offered to get a sense of how they stack up to federal loans. Federal loans also offer benefits that private student loans do not, such as income-driven repayment plans and deferment options.
In order to make the decision that’s best for you, you’ll want to compare the total cost of attendance, how much gift aid is being awarded, and the loans you’ve received and their terms. This should give you a better idea of how much any federal loans will cost you, and whether there is a gap in funding.
The total cost of college may change over a student’s enrollment, so it generally needs to be calculated each year. Consider things like fluctuation in tuition rates, federal interest rates, and your financial aid award which, among other factors, have the potential to change.
Financial aid deadlines vary depending on the type of aid and the institution, so it’s crucial to stay informed and apply on time. Federal aid deadlines are set by the U.S. Department of Education, while state and institutional aid may have earlier deadlines.
For the 2025-26 academic year, the FAFSA deadline is June 30, 2025. The deadline for the CSS Profile is Feb. 17, 2025.
Some scholarships and grants operate on a first-come, first-served basis, meaning funds could run out before the deadline. Missing deadlines can result in reduced aid or lost eligibility for grants and scholarships. To ensure you receive the maximum aid available, check deadlines for the FAFSA, CSS Profile, and specific schools, and submit applications as early as possible.
How Do Schools Award Aid?
Schools award financial aid based on a combination of factors, including financial need, merit, and availability of funds. They use information from the FAFSA or CSS Profile to determine need-based aid, while scholarships and grants may be awarded for academic, athletic, or other achievements.
Schools allocate funds based on their financial aid policies, federal and state regulations, and institutional resources. Once aid is determined, students receive an award letter detailing their financial aid package, which may require acceptance and additional steps to secure funding.
When Will I Receive a Financial Aid Award Letter?
The timing of your financial aid award letter depends on when you submit the FAFSA or CSS Profile and the school’s processing timeline. Typically, students who apply early can receive their award letters as early as late winter or early spring, often between February and April.
However, some schools may issue award letters on a rolling basis, especially for students who apply later. If you’re an incoming freshman, you’ll usually receive your financial aid package shortly after your college acceptance. Returning students may receive their award letters later in the spring or early summer before the next academic year begins.
Should I Appeal a Financial Aid Award?
It is possible to appeal a financial aid package, particularly if you had a change in circumstances or if there was a gap between the cost and the award. While writing an appeal letter might be a first step if your financial aid package isn’t enough to cover the cost of college, it doesn’t guarantee your award will change.
It also might be the case that circumstances change and you lose your financial aid or portions of your award package. In these situations, there are options in addition to or besides appealing.
Your financial aid package will state the amount and types of aid you receive. Financial aid includes scholarships, grants, work-study, and federal student loans. Carefully compare your financial aid awards at each college when you are making your college decision.
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 types of financial aid might be included in a financial aid package?
A financial aid package may include scholarships, grants, work-study opportunities, and federal student loans. Each type of aid has different terms and conditions, so it’s important to understand them to make informed decisions.
How can students compare financial aid packages from different colleges?
Students should carefully review each financial aid award, considering factors such as the balance between loans and grants, the total cost of attendance, and any conditions attached to the aid. This thorough comparison helps in making an informed college decision.
Why is it important to understand the components of your financial aid package?
Understanding the components of your financial aid package is crucial because it allows you to know how much financial support you’re receiving and what your financial responsibilities will be during and after your education. This knowledge aids in effective financial planning and decision-making.
SoFi Private Student Loans Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. We encourage you to evaluate all your federal student aid options before you consider any private loans, including ours. Read our FAQs.
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., 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 04/24/2024 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891. (www.nmlsconsumeraccess.org).
SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
If you are looking for some relatively painless ways to spend less, read on. There are all kinds of ways to slash expenses that don’t require much, or any, sacrifice. These can include trimming back some of your recurring bills to tweaking your typical shopping habits. You’ll even learn smart ways to avoid the temptations that can lead to overspending.
Ready to improve your cash flow? Here are 23 simple ideas for how to cut back on spending.
Key Points
• There are many relatively painless ways to spend less and keep more of your cash.
• Cancel unused subscriptions to save money.
• Reduce housing costs by downsizing or getting a roommate.
• Use the library for free books, magazines, and DVDs, and minimize streaming services.
• Consider unsubscribing from shopping apps, shopping emails, and following influencers who encourage you to spend money.
23 Ways to Cut Down Your Spending
Ready to start saving money? Pick and choose among these ideas to find the tips that suit you best.
1. Canceling Subscriptions
There’s a decent chance that you are leaking money on a subscription service that you are not getting much value from.
Scan your checking account and credit card statements for things you’re paying for on a recurring basis and consider canceling anything you don’t really need.
That might mean magazines or newspapers you rarely read, online software you aren’t using, and/or shopping services and other memberships that aren’t worth it anymore.
If you’re looking to save money faster, you might cut down on multiples. For instance, do you really need membership at two different yoga studios? Just one might be fine, and you’ll wind up with more money in your checking account.
2. Cutting the Cord
If you’re paying a high price for cable each month, you may want to think about switching to a streaming TV service. This budget-cutting move could save $40 to nearly $100 per month.
Just don’t let that get out of hand. You likely won’t save on streaming services if you sign up for Netflix, Max, Hulu, and a couple of others.
If you are not quite ready to cut the cord, you may still be able to shrink this monthly line item just by calling your cable service provider and asking for a better deal. Research better deals available elsewhere and cite those when talking to a customer service representative.
3. Revisiting Your Cell Phone Plan
Another way to significantly cut monthly spending is to take a closer look at what you’re paying for your cell phone service and exactly what you are getting.
You can then compare this with the competition and, if you see a better deal, call your provider and see if they will match it.
If you don’t see much wiggle room, you might consider going with one of the smaller MVNOs (mobile virtual network operators) that lease coverage from the major carriers, such as Cricket Wireless, Metro, and Visible.
Or, if you just need a basic plan, you can look into Consumer Cellular or H2O Wireless, which often offer affordable cell phone plans for individuals.
Before switching carriers, however, it’s a good idea to make sure that the carrier has strong coverage in your area. Saving money is great, but may not be worth it if you don’t get quality service.
4. Getting Into the Meal-Planning Habit
An easy way to cut back on food spending is to make a meal plan and a firm shopping list before you go to the grocery store. To cut spending even more, you can check your store’s weekly ads and plan meals around what’s on sale that week.
This can be as simple as picking a few basic recipes that you want to make throughout the week. You may want to try a meal planning app, such as Mealime, among others.
Not only will this help you avoid impulse buys at the supermarket and ordering takeout, but you will likely be able to buy in bulk, cook once and enjoy the leftovers, and otherwise streamline your budget and your life.
5. Actively Paying Down Credit Cards
If you’re currently only paying the minimum on your credit cards, a big chunk of your payment is likely going toward interest and you may be doing little to chip away at the principal.
Doing this every month can increase the amount of time you’re in debt, and increase the total amount of interest you’ll end up paying. That in turn can make it harder for you to plump up your savings account.
If you can swing it, consider putting more than the minimum payment towards your bill each month. This can help you pay off credit cards faster, so you’re not spending so much money on interest.
6. Renewing Your Library Card
How else to cut back on spending? If you’re a reader and love books, a fun and easy way to cut your spending is to fish out that old library card, or if you don’t have one, stop into your local branch and apply for a card.
The library can be a great resource for more than books. For example, you can often access magazines, newspapers, DVDs, music, as well as free passes to local museums. There are also services on your computer and phone that let you stream digital media; check out Kanopy and Hoopla, for instance.
7. Carrying Cash
There’s something about using plastic that can make it feel like you are not really spending money.
That’s why an effective way to cut back on spending is to take out enough cash at the beginning of the week to cover your daily expenses for that week and then leaving your credit and debit cards at home.
Or, you might try the envelope system (a budgeting method), where you designate an envelope for each expense category, then put enough cash inside to get you through the week. When you run out, you can’t spend anymore.
Using cash can also help you become more aware of and intentional with your purchases. You see exactly what you are spending as you go through your day.
8. Eliminating Bank Fees
How to cut back on expenses can involve taking a look at just what fees your bank may be charging for your checking and savings accounts.
They might include service fees, maintenance fees, ATM fees (if you don’t use their in-network machines), minimum balance fees, overdraft or insufficient funds fees, and/or transaction fees. And all those charges can eat away at your funds.
You may be able to cut your monthly spending by switching to a less expensive bank, which could mean an online bank, which tends to offer low or no fees.
9. Clicking Unsubscribe
Do your favorite retailers fill your inbox with tempting sales alerts, whether that’s 75% off, buy-one-get-one offers, or free shipping? One effective way to cut back on spending is to get off their email lists.
Sales and great deals are happening all the time, but generally the best time to purchase something is when you really need it.
If the enticement to spend doesn’t constantly land in your inbox, you’ll be less likely to click through and buy.
One quick way to change your spending habits is to put yourself on a 30-day nonessential spending freeze.
Or, if that seems too tall an order, you might pick a category (such as clothing or wine) to stop spending on for a month.
A spending freeze can immediately pay off, by leaving more money in the bank (or fewer bills) at the end of the month. And, once you start seeing the payoff of not giving in to impulse buying, you may find yourself spending less even after the freeze is over.
A simple way to cut weekly spending on gas is to stop into a local station that offers free air once a month, and do a quick air pressure check on your car tires. If they aren’t inflated to the optimal PSI, you’ll want to fill each one to the maximum recommended amount (as stated on the tire or in your manual).
Here’s why: You can improve your vehicle’s gas mileage by an average of 0.6% and up to 3% with proper tire pressure. Which means you’re saving money on gas.
12. Working Out at Home
Instead of paying for a monthly gym membership, consider free exercise options, such as going for a walk, run, or bike ride around your neighborhood.
You can also find at-home cardio routines, resistance workouts, yoga classes and more for free online (YouTube is a great source). If you’re missing the social aspect of the gym, you always invite friends or neighbors over to work out with you.
There are also a number of free workout apps that can help keep you motivated, such as 7 Minute Workout, Freeletics, and Nike Training Club, among others.
13. Saving Before You Spend
One of the best ways to cut monthly spending is to siphon off some savings before you even have a chance to spend it. Many experts suggest 20% of your take-home pay, as is outlined in the 50/30/20 budget rule.
You can do this by automating your savings. This can mean you set up an automatic transfer from checking to put money in a high-yield savings account on the same day each month, possibly right after your paycheck gets deposited.
And it’s fine to start small. Whatever the amount, since it’s happening every month, it will build up before you know it.
If you’re thinking of hiring a company to haul away stuff you no longer want or need, think twice. It can be easy to sell your unwanted items. There are dozens of places to sell your stuff, thanks to sites such as ThredUp, Poshmark, eBay, and Facebook Marketplace. Or you could host a yard or stoop sale (just make sure to check if you need a permit).
15. Reviewing Home and Auto Insurance
Here’s another way to cut back on spending: Review your insurance payments. You may be able to considerably cut your costs by taking some time to shop around and compare prices.
Many insurance companies also offer a discount if you bundle your homeowners and auto policies together. If you currently use two separate insurers, it can be worth asking what kind of discount each would offer if you bundled the policies together.
And you don’t have to wait until your current policy is up for renewal to change insurance providers. With most companies, you can leave at any time without having to pay for the remainder of the policy. If you find a better deal, you can also give your current insurer a chance to match their quote.
16. Drinking More Water
Getting plenty of water can not only help you stay healthy, but it can also help you cut back on spending.
When you’re food shopping, for instance, you can skip over sodas and even bottled water in exchange for free tap water at home. (If you don’t like the taste of your tap water, consider getting a pitcher with a water filter.) Dining out? You can save by ordering water instead of pricey beverages.
17. Using Apps to Earn Cash Back
You can cut your spending even after you’ve made your purchases by keeping track of your receipts and using a cash back app, such as Ibotta, Fetch Rewards, or Shopkick.
While each app works a little differently, you can generally use cash back apps to download digital coupons, purchase specific items, and then scan receipts to claim your cash back.
You may also be able to add your store loyalty card number and avoid the need to submit a receipt.
18. Shutting off the Lights
A super easy way to cut monthly spending is to simply turn off the lights whenever you leave a room or leave your home. You may not notice the impact immediately, but the savings on energy costs can add up over time.
It can also be helpful to unplug any unused electronics and chargers that aren’t in use.
19. Cutting Back on Bigger Expenses
If you’re looking to have more money after paying bills, you may want to address the biggest expenses in your overall budget. For instance, in terms of housing, you might consider downsizing, moving to a more affordable area, or getting a roommate. This could significantly reduce your monthly expenses.
Also take a look at car payments, if you have them. If they account for more than 10% of your take-home pay, consider trading in your car for one with a lower monthly payment. Or, you might want to think about buying a less expensive vehicle with cash.
20. Unfollowing Social Media Influencers Pushing Products
If you, like many people, shop from social media because you see new products being promoted, you may want to unfollow those accounts. That FOMO (fear of missing out) feeling can be powerful when you see an influencer pushing new kitchen gadgets, comfy socks, or other products. By eliminating that temptation, you can cut back on spending.
21. Uninstalling Shopping Apps on Your Phone
Shopping apps can be hugely convenient; maybe too convenient. If you find that apps encourage you to one-click your way to too many products and credit card charges, delete them. You can always reinstall them later if you have more wiggle room in your budget.
22. Buying Used and Second-Hand
A fun and frugal way to shop can be buying used and second-hand. You might hit a local thrift store for clothes, cookware, and other items. Check out a local library’s book sale for new reading material, and if you need a new kitchen appliance, see what major retailers have in their “open box” section (items that were returned with minimal or no use or perhaps floor models).
23. Do Some Bulk Buying
Check out the deals to be had by buying in bulk. That can mean joining a wholesale club, like Costco, or shopping at a local grocery store that has grains, nuts, and pasta sold from large containers to help you save at the cash register.
If you don’t have room to store, say, a pack of 12 cereal boxes or 24 rolls of paper towel, split purchases with a friend or two. You can all cut back on expenses that way.
The Takeaway
Cutting back on spending doesn’t have to involve a complete overhaul of your lifestyle. You can focus on lowering your recurring expenses (housing, insurance, utilities) and also cut back on unnecessary spending, especially impulse buys. If you pay with cash, delete shopping apps, and unsubscribe to marketing emails, you may find there’s a lot more breathing room in your budget. And you might be able to stash more cash and earn interest.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 3.80% APY on SoFi Checking and Savings.
FAQ
How do I cut back on unnecessary spending?
Often, a mix of two tactics can help you cut back on unnecessary spending. First, look at how to reduce recurring basic bills, such as dropping a streaming channel or two, lowering your car insurance, and avoiding excessive banking fees. Next, tackle daily spending. You might reduce your daily latte habit, and look for free concerts and museum nights in your area vs. pricey entertainment. Also: Don’t let yourself give in to marketing ploys, like “buy one, get one” and free shipping, which can encourage you to overspend.
How can I drastically cut my spending?
To drastically cut your spending, try creating and sticking to a budget and using cash instead of credit so you are less likely to ring up debt. Also consider deleting shopping apps, emails, and influencer accounts that encourage you to shop, and putting yourself on a one-month shopping freeze, meaning no purchases except true necessities.
How do I mentally stop spending money?
If you are overspending, think about your triggers. Do you shop when bored or as a weekend activity? Find other ways to fill your time, whether that means reading or taking up a sport. You might also try the 30-day rule, which means that if there’s something you feel you must have, you might make a note of it in your calendar for 30 days in the future. Don’t buy it unless 30 days later you still feel it’s vital. Such feelings often dissipate over time.
SoFi members with Eligible Direct Deposit activity can earn 3.80% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Eligible Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Eligible Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below).
Although we do our best to recognize all Eligible Direct Deposits, a small number of employers, payroll providers, benefits providers, or government agencies do not designate payments as direct deposit. To ensure you're earning 3.80% APY, we encourage you to check your APY Details page the day after your Eligible Direct Deposit arrives. If your APY is not showing as 3.80%, contact us at 855-456-7634 with the details of your Eligible Direct Deposit. As long as SoFi Bank can validate those details, you will start earning 3.80% APY from the date you contact SoFi for the rest of the current 30-day Evaluation Period. You will also be eligible for 3.80% APY on future Eligible Direct Deposits, as long as SoFi Bank can validate them.
Deposits that are not from an employer, payroll, or benefits provider or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Eligible Direct Deposit activity. There is no minimum Eligible Direct Deposit amount required to qualify for the stated interest rate. SoFi members with Eligible Direct Deposit are eligible for other SoFi Plus benefits.
As an alternative to Direct Deposit, SoFi members with Qualifying Deposits can earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
SoFi Bank shall, in its sole discretion, assess each account holder’s Eligible Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving an Eligible Direct Deposit or receipt of $5,000 in Qualifying Deposits to your account, you will begin earning 3.80% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Eligible Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Eligible Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Eligible Direct Deposit or Qualifying Deposits until SoFi Bank recognizes Eligible Direct Deposit activity or receives $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Eligible Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Eligible Direct Deposit.
Separately, SoFi members who enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days can also earn 3.80% APY on savings balances (including Vaults) and 0.50% APY on checking balances. For additional details, see the SoFi Plus Terms and Conditions at https://www.sofi.com/terms-of-use/#plus.
Members without either Eligible Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, or who do not enroll in SoFi Plus by paying the SoFi Plus Subscription Fee every 30 days, will earn 1.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 1/24/25. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
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We do not charge any account, service or maintenance fees for SoFi Checking and Savings. We do charge a transaction fee to process each outgoing wire transfer. SoFi does not charge a fee for incoming wire transfers, however the sending bank may charge a fee. Our fee policy is subject to change at any time. See the SoFi Checking & Savings Fee Sheet for details at sofi.com/legal/banking-fees/. 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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