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Nov

2025

A woman in cap and gown at college graduation, smiling and holding her degree.

The Complete Guide to Out of State Tuition

By Anna Davies | Going to College, Student Loans, student_loan | Comments Off

Table of Contents

What Does Out-of-State Tuition Mean?
Lowering the Bills on Out-of-State Tuition
Should You Go Out-of-State for College?
FAQ

When considering colleges, admissions rates can seem like the biggest hurdle. But as acceptances roll in and you begin to look at tuition rates, you may see a huge difference between in-state and out-of-state options.

If you’re considering out-of-state schools, tuition can be much more expensive than it is for in-state students. In some cases, it may seem more on par with what you might have expected to pay for private schools.

Does that mean you should exclusively look within your state? That depends on your goals, finances, and what you want out of your college experience. Some people decide to go out of state for programs that aren’t offered in local institutions, some are drawn to a new adventure, and some welcome the opportunity to move away from home.

Regardless of where your first choice college may be, understanding the financial implications can help you decide on financial aid packages and know what you’re getting into, finance-wise, before you make a final decision.

Key Points

• Out-of-state tuition is typically much higher than in-state tuition at public universities.

• Reciprocity programs and tuition exchanges may lower out-of-state costs for eligible students.

• Establishing residency before enrollment can help qualify for in-state rates but has strict requirements.

• Starting at a community college or securing strong financial aid can reduce total costs.

• Comparing aid packages and planning ahead for how you’ll fund college, including possible private loans or refinancing later, can be helpful.

What Does Out-of-State Tuition Mean?

As you decide which colleges you’ll apply to, you may have public and private colleges on your list. Public colleges are colleges that are funded by a state and receive significant public funds, including taxpayer dollars, to function. Private colleges are not owned by the state and are privately held, with funding coming from tuition, research grants, endowment funds, and charitable donations.

Private colleges do not differentiate their tuition plans based on residency. Public colleges and universities, on the other hand, rely on tax dollars, so they do base their tuition plans on residency. That’s because residents are already “paying” for the university or college through their tax dollars. Out-of-state students, who are not paying local or state colleges, are given a higher price tag.

Whether you’re applying in-state or out-of-state, it’s important to remember that the “price tag” of college tuition is independent of any financial aid, scholarships or grants, or loans you might have available.

Lowering the Bills on Out-of-State Tuition

Out-of-state tuition can cause sticker shock — and may lead to sizable loans. According to Education Data, the average cost of tuition at a public out-of-state college or university is $28,386. In-state tuition averages around $9,750 for the same degree. This number is independent of additional costs, such as housing and books.

While the sticker shock is real, there may be some workarounds that open up your options without piling on unnecessary expenses.

Reciprocal Tuition and Tuition Exchanges

Some states, such as Wisconsin and Minnesota, offer what’s called reciprocal tuition — in-state tuition offered for residents of both states. There are also some tuition exchanges and discount programs.

For example, the New England Board of Higher Education offers a tuition break program that offers discounts to New England residents when they enroll in another New England college. This savings may be as much as $8,600. Certain rules and restrictions apply. For example, you may have to prove the degree you wish to receive is not offered within public universities in your state.

Speaking with your guidance counselor or your financial aid office may be helpful in determining whether these types of programs are available and eligible for you.

Becoming a Resident

“Residency” for in-state tuition isn’t as simple as moving into the dorms. Residency rules vary by state and university. In some cases, residency requires that individuals live in the state for at least 12 months, be financially independent (if your parents/guardians aren’t living in the same state), and have “intent”— i.e., there’s a reason why you’re living in-state beyond just attending school. In some cases, intent to remain in a state can include getting a driver’s license, filing taxes, or registering to vote in that state. States may have differing requirements for defining intent, so it can be worth confirming requirements for the state in which you plan to attend school.

Because residency rules can be strict, establishing residency may not make sense for everyone. But if you’re considering grad school or are going to undergrad as an independent or nontraditional student (someone who doesn’t fit the mold of a recent high school graduate attending college), then it may make sense to establish residency first. This can also help you familiarize yourself with the university and assess whether it’s where you want to spend the next few years.

Starting at Community College

If you have your heart set on a pricey out-of-state school, one way to potentially save is to begin your education at a community college. Like public colleges and universities, community colleges receive government subsidies that can make tuition more affordable. By commuting to a community college and obtaining general education credits, you can then potentially transfer to an out-of-state institution to finish your education and potentially minimize loans.

Considering aid packages

Some private and public schools offer free or reduced-cost college tuition. These “free tuitions” are generally earmarked for students coming from families who make less than a set adjusted gross income, usually around $65,000 per year.

Some public universities also may offer generous scholarship packages to out-of-state students who reflect academic or athletic talent. If you get accepted to a school and receive a financial aid package, it may be worth speaking with the financial aid office to make sure you understand what the package entails.

Typically, financial aid packages encompass grants, scholarships, and federal student loans.

Should You Go Out-of-State for College?

There is no right answer when it comes to which college is the best choice for you. But to prepare for college decisions, it can be a good idea to look beyond the honor of admission and consider the financials.

Comparing financial aid packages, assessing additional sources of tuition payment, including family contributions and private scholarships, and assessing how you might pay back your student loans can all help you decide the best option for your future and for your wallet. It’s also important to remember that nothing is set in stone.

Regularly assessing your college experience — including the financials — can help determine whether you’re on a path that makes sense for you.

For example, students who did take out student loans for college or graduate school may consider refinancing after they graduate. In some cases, refinancing your student loans can help qualifying borrowers secure a lower interest rate, which may make the loan more affordable in the long-term.

Just be aware that refinancing federal loans eliminates them from borrower protections, like income-driven repayment plans and student loan forgiveness, so it’s not the right choice for all borrowers.

There is no “right” or “wrong” school or path and the right plan for you depends on a variety of factors. Speaking with people who graduated from your prospective school in your intended major can give you an idea of career paths. It can also be helpful to take advantage of any financial aid talk or info session available to get a realistic look at what it may be like when you begin to pay back loans.

The Takeaway

At the end of the day, the best decision for you about whether to go to college out-of-state may be the one that addresses your goals and your finances. Understanding different tuition discounts, including geographic-based tuition exchanges, could open up avenues to less-expensive degree paths. For some students, including grad students, establishing residency may make sense to obtain in-state tuition.

Tuition is complicated, and scholarships, grants, federal loans, private loans, and family contributions are all part of paying for school. You also may use this time to assess the what-ifs: What if circumstances change and a tuition fee that was possible this year becomes impossible next year due to job loss or other change in circumstance? What sort of private loans are available, and what terms do they offer?

Assessing the tuition price of each place you’re accepted — and considering private loan options, if necessary, or student loan refinancing in the future — can be an integral factor in making a decision that makes sense for all aspects of the next step in your educational journey.

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

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

FAQ

How can I get in-state tuition when I live out-of-state?

To get in-state tuition when you live out-of-state, look for reciprocal tuition that some states offer, such as Wisconsin and Minnesota do. These programs give residents of both states in-state tuition rates. Other states or regions, including those in New England, offer tuition exchange programs that give discounts to students that are residents of the area — look for such programs. You could also work to establish residency in the state in question, but the rules and requirements tend to be strict.

Am I a resident if I go to college in a different state?

Probably not, unless you meet specific requirements of the state. Each state determines residency in a different way. Most states require about 12 months of residency before a student begins college before the student is considered a resident. States may have other residency requirements as well, such as filing taxes or registering to vote in the state to be considered a resident.

What determines a person’s place of residency?

What determines a person’s place of residency depends on the state; each has different requirements. For example, you typically need to reside in a state for a certain amount of time and show intent to make the state your permanent residency, such as filing taxes there, obtaining a driver’s license, and setting up a bank account. Check with the state in question to determine their specific residency requirements.

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

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., Puerto Rico, U.S. Virgin Islands, or American Samoa, and must meet SoFi’s underwriting requirements, including verification of sufficient income to support your ability to repay. Minimum loan amount is $1,000. See SoFi.com/eligibility for more information. Lowest rates reserved for the most creditworthy borrowers. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change. This information is current as of 4/22/2025 and is subject to change. SoFi Private Student loans are originated by SoFi Bank, N.A. Member FDIC. NMLS #696891 (www.nmlsconsumeraccess.org).

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.

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

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

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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

SOSLR-Q425-009

Nov

2025

A stack of thick textbooks is shown to illustrate the concept of need-based financial aid.

What Is Need-Based Financial Aid?

By Sarah Li Cain | Going to College, Student Loans, student_loan | Comments Off

Table of Contents

Defining Need-Based Financial Aid
What’s the Difference Between Need-Based Financial Aid and Merit-Based Aid?
Do I Need to Pay Back Need-Based Financial Aid?
Should I Apply for Need-Based Financial Aid?
FAQ

Paying for college can be expensive, but there are several types of financial aid available to students. Some aid awards are determined based on your family’s financial situation. Known as need-based financial aid, amounts are awarded based on several factors, and in some cases, it may not have to be repaid.

If you’re unsure whether you’ll qualify for need-based aid, how much you’ll receive, or whether you need to pay it back, here’s what you should know.

Key Points

• Need-based financial aid helps students cover college expenses based on their financial circumstances.

• Completing the Free Application for Federal Student Aid (FAFSA®) is essential for assessing eligibility for federal, state, and institutional aid.

• Financial aid options include grants, scholarships, work-study programs, and federal Direct Subsidized Loans.

• Pell Grants are for undergraduate students with significant financial need.

• Federal work-study programs offer part-time employment, allowing students to earn money for educational expenses.

Defining Need-Based Financial Aid

To put it simply, need-based financial aid is money to help students pay for the costs of attending college that’s awarded based on their financial situation.

Depending on your circumstances, you may qualify for federal or state aid or aid from the institution you attend. Typically, need-based aid is determined based on the information provided on the Free Application for Federal Student Aid, or FAFSA®.

Most college students take advantage of what’s offered in their federal financial aid package, which may include the following types of need-based federal financial aid.

Direct Subsidized Student Loans

The federal government will subsidize (or cover) any interest that accrues on Direct Subsidized Loans for undergraduate students while they are enrolled in school at least half-time and during the six-month grace period after graduation.

After the grace period, interest will start to accrue. This is unlike Direct Unsubsidized Loans, which begin accruing interest as soon as they are disbursed.

There is a limit to how much a student can borrow in federal loans and the amount they borrow cannot exceed their financial need. The maximum amount first-year undergraduate students can borrow cannot exceed $5,500 (or $9,500 for independent students), $3,500 of which is in subsidized loans. The maximum amount you can borrow increases each year you’re enrolled.

Pell Grants

Pell Grants are for undergraduate students who have demonstrated exceptional financial need. They depend on factors such as your expected family contribution, your enrollment status, and how much your schooling will cost.

The maximum amount may vary — it’s $7,395 for the 2025-26 academic year. It may also be possible for students to receive up to 150% of their scheduled award, though qualification requirements will vary.

To be eligible for the Pell Grant, students will need to fill out the FAFSA each year that they are enrolled in undergraduate studies.

Work-Study Programs

The federal work-study program offers part-time jobs for undergraduate or graduate students based on their financial needs. The goal is to provide the opportunity for students to earn money towards education-related expenses and one that’s related to their field of study. There may be jobs both on- and off-campus and the program is administered by participating schools.

The type of job you get and how much you earn will be influenced by factors like when you apply and how much funding your school has. At a minimum, program participants will be paid at least the current federal minimum wage.

If you are awarded work-study as a part of your federal aid package, you can’t earn an amount that’s more than what was awarded.

💡 Quick Tip: Often, the main goal of refinancing is to lower the interest rate on your student loans — federal and/or private — by taking out one loan with a new rate to replace your existing loans. Refinancing may make sense if you qualify for a lower rate and you don’t plan to use federal repayment programs or protections. Note that refinancing with a longer term can increase your total interest charges.

What’s the Difference Between Need-Based Financial Aid and Merit-Based Aid?

Whereas need-based financial aid is based on the student and their family’s financial circumstances, merit-based aid doesn’t consider finances. Instead, this type of financial aid looks at things like standardized test scores or grade point average (GPA). In some cases, financial aid is based on other merits such as your class rank.

Some scholarships are also based on your class rank. Usually, scholarships are awarded based on merit, though there are plenty based on financial need. Before applying for any financial aid, it’s important to look at the eligibility requirements so you know whether you’ll qualify.

Recommended: How to Get Merit Aid for College

Do I Need to Pay Back Need-Based Financial Aid?

Even though the point of aid based on financial need is to help you cover college expenses you otherwise wouldn’t be able to afford, you may have to pay some of it back. For instance, the Pell Grant or other types of grants don’t need to be repaid. Scholarships are another type of aid that recipients are not required to repay. If you participate in the work-study program, the money you’ve earned is also yours.

However, Direct Subsidized Loans will need to be repaid. You won’t, however, need to pay any interest while you’re enrolled at least half-time since the government will cover that. Direct Unsubsidized loans (which aren’t awarded based on need) will also need to be repaid and borrowers will be responsible for the full amount of accrued interest.

In some cases, you may not need to pay back the entire amount if you qualify for student loan forgiveness. There are several types of forgiveness with varying eligibility requirements that depend on factors such as your career path.

For instance, the Public Service Loan Forgiveness, or PSLF program, will forgive the outstanding balance on a Direct Loan after you’ve made 120 monthly qualifying payments. These payments need to be paid while you’re working full-time for a qualifying employer and under a qualifying repayment plan.

To see whether you qualify for a forgiveness program, it may be helpful to speak with your loan servicer or check ways to qualify for forgiveness at the office of Federal Student Aid.

Should I Apply for Need-Based Financial Aid?

In a nutshell, yes. Filling out the FAFSA will allow you to determine how much federal aid you qualify for. Some schools will also use the FAFSA to determine additional aid awards.

The FAFSA will require information about your financial situation and your family’s financial situation to help determine how much aid you’ll receive. There is also the CSS Profile, which some colleges may use to determine financial aid awards. To fill out the CSS Profile there is a small fee, though some students may qualify for a fee waiver.

That being said, you may not receive enough financial aid even if you qualify for it. For instance, Pell Grants are typically given on a first-come, first-served basis. It may help to submit the FAFSA as soon as possible. That way, you may be able to find out sooner what you may qualify for.

You can submit your FAFSA as soon as October 1 for the following school year. That’s one of the important FAFSA deadlines to know.

The Takeaway

Even if you’re not sure if you qualify for need-based aid from the federal government, you may be able to qualify for aid at the state, local or college level. There is also merit-based aid in the form of scholarships and some grants.

Many organizations also award grants and scholarships for specific demographics and those pursuing certain fields. It’s far better to accept free money through grants and scholarships before taking out any loans.

If you do end up borrowing money to pay for college, you may want to consider refinancing your student loans. Doing so can help qualifying borrowers reduce their interest rate, which could lower the amount paid over the life of the loan.

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

FAQ

What is the meaning of need-based aid?

Need-based financial aid is money to help students pay for the cost of attending college. The amount awarded is based on a student’s financial situation. To determine how much need-based financial aid they might qualify for, a student should complete the Free Application for Federal Student Aid (FAFSA).

What salary is too high for FAFSA?

Technically, there is no specific salary that is too high for the FAFSA. Factors such as cost of attendance at a college are also considered. No matter what your family earns, you should fill out the form to determine your eligibility for federal loans and other aid.

How do I know if I qualify for need-based financial aid?

Filling out the Free Application for Federal Student Aid (FAFSA) will determine how much financial aid you may qualify for. The information you provide on the form is used by the financial aid department at your college to calculate your Student Aid Index (SAI). To determine your need, your SAI is subtracted from the cost of attendance (COA) at your school. Additional factors may also play a role, such as your year in school and your enrollment status.

Photo credit: iStock/MicroStockHub

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

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

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

SOSLR-Q425-007

Nov

2025

Tips For Navigating Life After College

By Janet Siroto | Building Your Career, Fresh Out of School, Student Loans, student_loan | No Comments

Table of Contents

Life After College
Getting to Work
Taking Your Health into Your Own Hands
Continuing Your Learning
Getting Your Finances Organized
The Takeaway
FAQ

Graduating college is a big deal. The time you spent in school has likely taught you a lot about the subjects you studied, being organized and meeting deadlines, and life in general. Once you have your degree, you’ll put those skills to good use as you embark on your career and independent life. No more dining hall, no more dorms. It’s time to launch adult life and figure out how to make your own way.

To help you deal with some of the basics, like a job and banking, read on. You’ll find valuable tips to help you through the first steps of post-grad life.

Key Points

• For college grads, extensive networking and using school resources can help in job searching.

• Regular health check-ups and understanding health care plan resources are crucial as new grads begin to navigate life on their own.

• Continuing education through certifications or online classes could assist college grads in learning new skills and boosting their career.

• Creating a monthly budget could help manage student loan debt.

• Maintaining a balanced lifestyle with activities for physical and mental well-being is important.

Life After College

Congrats on your degree! Now, on to the next challenge. It’s time to tackle adulting, which can include such things as getting set up in your new living situation, finding your favorite brunch spot, and making new friends if your college pals have scattered to different places.

In addition, there are some major daily-life tasks to wrangle:

• Finding and holding a job

• Taking control of your health and your health insurance

• Keeping your brain active, which may lead to more schooling

• Managing your money.

Below, get some helpful advice on these last four topics (you can probably find the best brunch spot in your new neighborhood without too much help).

💡 Quick Tip: Enjoy no hidden fees and special member benefits when you refinance student loans with SoFi.

Getting to Work

Hopefully you enjoyed a few weeks off post-grad to travel or kick back and relax after four years of hard work. But for many people, what to do after college is find work.

When you’re ready to begin your job search, it can feel overwhelming. Chances are, it’s time to focus on taking steps towards building your career.

First off, don’t let job searching totally stress you out. While entry-level hiring has slowed in 2025, and there is higher unemployment for new grads, it is still possible to find a job.

It could just require more time and patience. Some good advice? Research, network, and network some more.

• Your school’s career services office may provide job leads, and its alumni office may be able to network you with people in your field who can share insights.

• Search for jobs online. There are many job boards, such as Indeed and ZipRecruiter, to access.

• Put out the word among friends, families, past internship supervisors, and others.

• To gain intel on starting salaries, try an online salary calculator. You provide some basic info like your location and experience, and their tool tells you what the average salary for your desired role is. While this tool can only provide an estimate, it may help you determine if you should try to negotiate for a higher salary when you receive a job offer.

Taking Your Health into Your Own Hands

As part of learning how to navigate life on your own, make sure you take the reins of your healthcare. Mom and Dad likely aren’t scheduling those biannual dental checkups for you anymore.

Whether you’re still on your parent’s policy or buying your own health insurance, getting more familiar with the resources your healthcare plan provides is never a bad idea.

It can help you stay on top of scheduling check ups, dental cleanings, and eye exams. You may also need to learn the ropes of finding in-network doctors as you move to a new place or get your own policy.

And you might want to start saving for any unexpected medical or dental bills that may arise. Having an emergency fund at the ready can be an important step to financial wellness in this new chapter of your life.

Speaking of wellness: You may feel swamped by post-grad life, but it’s such an important time to prioritize your well-being. It might be helpful to make time to go to the gym each week, meditate, cook healthy meals, and get a good night’s sleep. Getting into good health habits is an excellent adulting accomplishment.

💡 Quick Tip: Refinancing could be a great choice for working graduates who have higher-interest graduate PLUS loans, Direct Unsubsidized Loans, and/or private loans.

Continuing Your Learning

It’s normal after college to need a little break from learning. For the first time in your life, there is no one telling you what to read or what classes you have to take. But once the dust has settled and you’ve had a rest from hitting the books, you might try to prioritize learning. Not only does it keep your brain sharp, it can also help boost your career by enhancing or expanding your skills.

For example, you could consider obtaining a professional license related to your career or industry. According to the most recent intel from the Bureau of Labor Statistics, 24% of employed workers had some sort of professional license or certification in 2024. Having one may give you a competitive boost at work or while job searching. You can go the extra mile to develop more skills needed in your career through an online class or professional conference.

What’s more, additional learning and training could lead to a profitable side hustle or gig work. For instance, you might be able to pick up extra cash during tax season supporting professional tax preparers.

Learning-wise, not all of what you do after graduation has to go towards career advancement, of course. Take that cool history of film class at your local community college. Join a book club or just load up your bookshelf with books you’re dying to read. Exploring your passions can help you feel motivated, fulfilled, and inspired. Now is the time in your life to open doors, not close them.

Getting Your Finances Organized

Once you graduate from college and join the working world, it’s likely time to look at whether your current banking partner suits your needs.

It can be a wise move to look for a bank that offers a good interest rate on your deposits, convenient access, and tools that help you track your money in a quick and convenient way.

As you organize your money (and don’t forget to start that emergency fund mentioned above), you may realize that one expense that may really be bringing you down is your student loan debt payments.

The average federal student loan debt is currently $39,075, according to the Education Data Initiative. Is student loan debt weighing you down? There are a few strategies you can use to help pay off your student loan debt quicker. You might start your journey to a student loan-free life by creating a monthly budget that can help you get out of debt.

• To create a budget that can assist with paying off debt, you could begin by gathering all of your bills and recent receipts. Review exactly what you need to spend on necessary living expenses (rent, food, health insurance, minimum debt payments), how much you are spending on the wants in life (travel, entertainment, clothing), and how much you can save or put toward additional debt payment.

• There are different budgeting methods, and it’s a good idea to spend a bit of time finding the one that works for you. For instance, you might like the 50/30/20 budget rule, which says to allocate 50% of your take-home pay to necessities, 30% to wants, and 20% to savings and extra debt payoff.

Whichever technique you choose, do compare the cost of your living expenses to your paystubs to see how much you can afford to pay towards debt each month. Creating a budget can help you not only pay off your debt, but avoid accumulating more debt in the future.

The Takeaway

Life after college is exciting, but it can also be challenging. You’ll need to find a job, take control of your health, keep sharpening your skills, and learn to manage your finances, including setting up a budget.

Once you have your monthly budget under control, you might consider refinancing your student loans as part of how you navigate life post-college. You may be able to lower your interest rate, lower your monthly payments by extending your repayment term, or release a cosigner from a previous loan.

Do note that lengthening your repayment term can increase the interest you’ll pay throughout the life of your loan.

Refinancing comes with many benefits, but keep in mind that you lose federal benefits and protections when you refinance federal loans with a private lender. But if you are not planning on taking advantage of these benefits, refinancing might be for you.

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

FAQ

What’s the biggest challenge grads face after college?

One of the biggest challenges grads face after college is finding a job that utilizes their skills and talents and pays well. In addition, new grads are facing other challenges, such as getting settled in their new life — possibly in a new home in a new city — working on managing their finances, perhaps for the first time, and starting to pay off student loan debt.

Why is it so hard for recent college graduates to get a job now?

College grads are currently facing a slowing job market for entry-level jobs, economic uncertainty, and higher unemployment. Networking, brushing up on or learning skills that employers are seeking, and putting the word out to family, friends, and former employers that you are job searching are some ways to potentially help boost your job search.

How important is your first job out of college?

A first job doesn’t define your career, and in this challenging job market it’s important to be flexible. Grads might end up with an entry-level job that is different from one they might have envisioned. That said, a first job can help a new grad develop skills and build a professional network. If possible, look for a position that aligns with your career goals as much as possible and that also allows you to use the skills you have while developing new ones.

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

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

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

SOSLR-Q425-011

Nov

2025

A young woman with pink hair and turquoise headphones writes in a notebook while looking at a laptop.

Pros and Cons of Online School

By Anna Davies | Going to College, Student Loans, student_loan | Comments Off

Table of Contents

What is Online School?
Pros of Online School
Cons of Online School
Additional Considerations for Online School
The Takeaway
FAQ

Whether you’re attending college for the first time or returning to finish your degree, you may have the opportunity to choose online vs. in-person classes. Though online college has been a niche offering in higher education for over a decade, it has grown rapidly in popularity as technology advances and more students seek flexible learning options. Today, many institutions offer fully online or hybrid programs to meet the demand for remote learning.

Online school offers benefits like flexibility and convenience. On the other hand, online learning can make it difficult for students to connect with their peers. It can also make it harder to grasp concepts that require more hands-on learning. What follows is a closer look at the pros and cons of online school.

Key Points

• Online schools can offer flexible scheduling for students.

• Costs for online programs are frequently lower than traditional on-campus options.

• Access to a wider range of programs and courses may be available.

• Development of technology skills is a significant benefit.

• Social interaction and hands-on learning opportunities are often limited in online settings.

What is Online School?

Online school is a format of education where classes are conducted virtually. Some colleges are designed specifically for online learning. Other colleges and universities may offer both in-person and remote learning options for students. Depending on the program, classes may be offered synchronously, where students attend via an online forum at a specific time; asynchronously, where lectures are recorded and can be viewed at a student’s leisure; or a hybrid model of the two.

While detractors of online learning argue that it can’t fully replicate the in-person learning experience, there are several key advantages, including convenience and cost.

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

Pros of Online School

Online learning offers a variety of benefits that make it appealing to students with different needs, goals, and lifestyle. Here are some advantages to consider.

Cost May Be Lower

In many cases, online programs are more affordable than traditional in-person options. Because schools don’t need to maintain classroom space and physical campus resources for online students, tuition is often lower. In addition, students can save money on commuting, housing, and campus-related expenses like parking or meal plans.

That said, not all online degree programs are cheaper, especially at universities that prices online and in-person tuition the same. To get the best value, it’s worth looking at schools that specialize in online learning, as they typically build their pricing structure around remote education and pass those savings on to students.

Recommended: How to Pay For Online College

More Convenient

A huge benefit to online school is flexibility. Many programs are designed for students balancing school, work, and family responsibilities. Asynchronous classes allow learners to complete coursework on their schedule rather than attend lectures at fixed times.

That said, the time commitment required to succeed shouldn’t be underestimated — there will be deadlines, exams, and assignments to manage.

Self-Directed Course of Study

Online courses often give students more control over their learning experience. This independence can be empowering, allowing students to move at their own pace and tailor their schedules. However, this may mean you need to be more proactive about scheduling office hours with professors, blocking out time to study, and making sure that assignments are turned in on time.

Broader Access to Programs

One of the most appealing advantages of online learning is the ability to attend schools or programs located anywhere in the country – or even internationally — without having to relocate. This opens up far more educational options, allowing students to find the best program for their goals rather than being limited by geography.

Improved Technology Skills

Because online students use digital tools to attend lectures, collaborate, and submit assignments, they naturally build stronger technology skills and learn how to communicate effectively in remote environments. These abilities can be valuable in today’s increasingly digital workplace and may give graduates a competitive edge in the job market.

Cons of Online School

While some people thrive in an online environment, others may prefer to have in-person interaction. Here’s a look at some of the disadvantages of online school.

Limited Hands-On Experience

Bachelor’s degree programs with lab or clinical components can be difficult to replicate online. Some degrees offer virtual simulations, while others require in-person work. It’s a good idea to find out whether your desired degree can be completed fully online and to talk to current students in the program about their experiences.

Lack of Community

Some people find it challenging to make friends and connect with classmates in an online environment. Virtual discussions and group projects may feel less engaging than in-person interactions, which can lead to feelings of isolation.

Harder to Connect with Professors

Some professors maximize online interaction, while some may be harder to pin down and connect with. Heading to office hours, even if they are virtual, can help you build a connection and get to know the professor.

Limited Access to On-Campus Resources

If your online program is affiliated with a physical campus, there may still be valuable career services, tutoring, or networking opportunities available. However, access can vary. Be sure to check what resources are offered to online students before enrolling.

Requires Strong Self-Discipline

One of the biggest challenges of online school is staying motivated without the structure of a physical classroom. Students must manage their time effectively, avoid distractions, and hold themselves accountable — skills that not everyone naturally possesses.

Additional Considerations for Online School

Being able to pursue higher education remotely can open up possibilities for many individuals. But it can be a good idea to consider how online school will mesh with your life. Here are some tips that can help you find your best fit.

Talk With Other Students

It can be helpful to speak with current students who are in a similar position as you. Talking with a student who is also juggling family or a career can help you see how the process plays out in real life.

Sit in on a Lecture

Will the program allow you to virtually sit in on the lecture or see some course materials? Doing so can help you see what online classes are really like.

Take an Online Course First

In some cases, online school can be an expensive undertaking. Prior to applying to an official degree program, consider signing up for a single course, either for fun or for credit hours. Taking a virtual course without the pressure of a degree can help you take stock of the pros and cons for yourself, and assess whether or not online learning is right for you.

Consider How You’ll Cover the Cost

If you’re working while studying, your employer might help pay for your education, especially if the program relates to your job.

You can also apply for financial aid (including scholarships, grants, and federal student loans) through the Free Application for Federal Student Aid (FAFSA®).

If you still have gaps in funding, you might explore using private student loans. These are available through banks, credit unions, and online lenders. Loan limits vary from lender to lender, but you can often get up to the total cost of attendance, which gives you more borrowing power than with the federal government. Interest rates vary depending on the lender. Generally, borrowers (or cosigners) who have strong credit qualify for the lowest rates.

Just keep in mind that private loans may not offer the borrower protections — like income-driven repayment or forbearance — that automatically come with 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

Whether you choose online or in-person learning, pursuing a degree is a major decision. Weigh the pros and cons carefully — from flexibility and cost to motivation and interaction — to determine what type of program best suits your lifestyle and goals.

Talking with students and faculty, researching programs, and trying a course or two online can help you determine whether virtual learning is the right fit for your academic and professional future.

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

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

FAQ

What are the advantages and disadvantages of online education?

Online education offers several advantages, including increased flexibility and convenience, often lower costs, and broader access to diverse programs. However, it also has disadvantages, such as limited hands-on experience for certain subjects, potential lack of community and connection with peers and professors, and a greater need for strong self-discipline.

What is the biggest problem with online school?

The biggest challenge with online school is often the need for strong self-discipline and motivation. Without the traditional structure of a physical classroom and in-person interaction, students must be proactive in managing their time, staying organized, avoiding distractions, and holding themselves accountable for coursework and deadlines. This can be particularly difficult for individuals who thrive on external structure and immediate social interaction.

Is online school good or bad?

Online school can be both good and bad, depending on a student’s learning style and discipline. It can be beneficial for self-motivated learners who value flexibility, convenience, and access to diverse resources. However, it can be challenging for students who thrive on structure, in-person support, and social interaction. Success in online education largely depends on time management, motivation, and digital literacy. While it’s not ideal for everyone, it provides valuable opportunities when used effectively and responsibly.

Photo credit: iStock/insta_photos

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.

SoFi Bank, N.A. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

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

SOISL-Q425-008

Nov

2025

A focused student with headphones writes in a notebook at a desk with a laptop and backpack.

Are Student Loans Installment or Revolving?

By LeeMarie Kennedy | Credit, Going to College, Student Loans, student_loan | Comments Off

Student loans are considered installment loans, or loans that are repaid through regularly scheduled payments or installments.

Revolving options, like credit cards, let borrowers take out varying amounts of money each month, repay it, and take out more money as they go.

Read on to learn more about student loans, installment loans, and revolving credit — plus how student loans may affect your credit.

Table of Contents

What Is Revolving Credit?
What Is Installment Credit?
Pros of Installment Credit
Cons of Installment Credit
How Student Loans Affect Your Credit Score
Ways to Pay for School
The Takeaway

Key Points

• Student loans are installment loans, meaning they are disbursed in a lump sum and repaid in fixed, scheduled payments over time.

• Revolving credit (e.g., credit cards) allows continuous borrowing up to a credit limit, with variable repayment amounts.

• Installment loans offer predictable payments and typically lower interest rates, making them easier to budget for than revolving credit.

• Federal and private student loans are both installment loans, but federal loans generally come with more borrower protections and repayment options.

• Alternative ways to pay for school include grants, scholarships, work-study, personal savings, and federal aid.

What Is Revolving Credit?

Revolving credit is an agreement between a lender and an account holder that allows you to borrow money up to a set maximum amount (or credit limit). The account holder can borrow what they need as they need it (up to their credit limit) and choose to pay off the balance in full or make minimum monthly payments on the account.

As the account holder makes repayments, the amount available to borrow is renewed. Account holders can continue to borrow up to the maximum amount through the term of the agreement. Examples of revolving credit include credit cards and home equity lines of credit (HELOCs).

What Is Installment Credit?

Installment credit is a type of credit that allows a borrower to receive a lump sum loan amount up front, then make fixed payments on the loan over a set period of time. Before the borrower signs an agreement for an installment loan, the lender will decide on the interest rate, fees, and repayment terms, which will determine how much the borrower pays each month.

Common examples of installment loans include federal student loans, private student loans, mortgages, auto loans, and personal loans.

And for borrowers who opt to refinance student loans, those loans are installment loans as well.

Revolving Credit vs Installment Credit

Now that you know student loans are installment and not revolving credit, it’s helpful to understand how these two types of credit compare.

Here’s a high level overview on the differences between installment loans vs. revolving credit.

Revolving Credit	Installment Credit
Account holders can borrow funds at any time (up to a set limit), repay it, and borrow more as needed.	Account holders borrow one lump sum, the sole amount of money they have access to, and repay it over a set time period.
May come with higher interest rates than installment credit.	May have stricter lending requirements than some revolving credit options, such as credit cards.
Account holders only pay interest on the amount they’ve borrowed at any time, not the total credit limit.	Account holders pay interest on the entire principal amount of the loan from the beginning.

Revolving Credit

Revolving credit is a more open-ended form of credit obligation. Let’s use the example of a credit card:

1. The cardholder uses the card to make purchases as they please, pays them off either in-full or partially each month, and continues to make charges on the line of credit.

2. The amount of money the cardholder spends is their decision (up to their credit limit), and the amount of money they repay each month isn’t set in advance by the lender.

3. The cardholder can pay off the account balance in full each month, or they can opt to pay the minimum and “revolve” the balance over to the next month (though this will accrue interest on the account).

An important note: To avoid any late fees or potential dings to your credit score, it’s important to pay your monthly revolving bill on time. It’s also wise to keep your balances low, as your credit utilization rate is a major factor in your credit scores.

Installment Credit

Installment credit is less open-ended than revolving credit. Installment credit is a loan that offers a borrower a fixed amount of money over a predetermined period of time. When a borrower signs the loan agreement, they know what the monthly payments will be and how they will need to make payments.

Let’s use the example of a student loan:

1. The student borrows a specific dollar amount. The lender specifies the interest rate and repayment terms. In the case of federal student loans, interest rates and terms are set by federal law.

2. The predetermined loan amount is released to the borrower. Typically, the funds are released in a single lump sum payment.

3. The borrower repays the loan based on the agreed upon terms. Terms will be set by the lender for private student loans, or by law for federal student loans.

An important note: If you only have revolving credit (such as a credit card), taking out an installment loan can diversify your credit mix, which is a factor in determining your credit scores. While an installment loan adds to your total debt, its balance does not factor into your credit utilization ratio (which is specific to revolving credit).

Pros and Cons of Installment Credit

Student loans for undergraduate school, as well as student loans that are refinanced, are considered installment loans, which means they come with a starting balance, are disbursed to the qualifying borrower up front and in full, and are repaid over a set amount of time through a fixed number of payments. There are advantages and disadvantages to taking out an installment loan, and it’s important to be aware of them:

Pros of Installment Loans	Cons of Installment Loans
They can be used to finance a major purchase like a house, car, or college education.	They can come with origination fees (a percentage of the loan amount)
They are paid with a set number of payments of the same amount, which can make it easier for budgeting purposes.	Missed or late payments may negatively impact the borrower’s credit score.
For some installment loans, it is possible to reduce interest charges by paying the loan off early.	Depending on the type of installment loan and the lender, there may be penalties or fees for paying off the loan early. (Generally, there are no prepayment penalties for paying off student loans early.)
They offer the option of paying the loan off over a longer period of time.	Longer terms typically mean you’re paying more in interest over the life of the loan.

Pros of Installment Credit

Here’s a closer look at two key advantages of installment credit:

Predictable Payments

Installment credit payments are made on a set schedule that’s determined by the lender. This makes them a predictable, long-term strategy for paying off debt, and also makes it easier to factor them into your budget, especially if the installment loan has fixed interest rates.

The monthly payment for an installment loan with a variable interest rate may occasionally change.

Lower Interest Rates

Installment loans often feature lower average interest rates than credit cards or other forms of revolving credit. This can result in significant savings on interest charges over time, especially for large loan amounts.

Cons of Installment Credit

But there are also disadvantages to installment credit. Two key drawbacks include:

Accumulation of Interest

While often lower than credit card rates, interest on an installment loan is paid over the entire life of the loan, which can add up to a significant amount of money over time, particularly for long-term loans.

Prepayment Penalty

Some loans impose prepayment penalties if a borrower pays their loan off early. This isn’t necessarily the case for all installment loans — as mentioned, student loans generally don’t have prepayment penalties. But it’s important to read the fine print in the loan agreement to determine whether a prepayment fee will be triggered if the loan is paid off early.

How Student Loans Affect Your Credit Score

Student loans, like other loans, are noted on your credit report and they may affect your credit in both positive and negative ways.

On the plus side, making consistent, on-time payments, can help borrowers establish a positive payment history, which is the most significant factor (35%) in a FICO® credit score. Successfully managing an installment loan can also help diversify your credit mix, which can also have a positive impact on your credit profile.

However, failing to make your loan payments can negatively impact your credit. A federal student loan payment is considered delinquent even when your payment is just one day late. After 90 days of missed payments, your loan servicer will report the delinquency to the national credit bureaus. Late payments can stay on your credit report for up to seven years.

(After 270 days of missed payments, your loan will go into default, which can have very serious consequences for your credit and your financial situation in general. If you are having trouble repaying your student loans, reach out to your lender or loan servicer right away to see what your options are.)

If you apply for a private student loan or student loan refinancing, lenders will typically do a hard credit inquiry, which may temporarily lower your credit score. Most federal student loans do not require hard credit inquiries.

Ways to Pay for School

There are a variety of ways to pay for college, including student loans, savings, financial aid, and scholarships. Here’s a closer look at your options:

Federal Student Loans

Federal student loans are installment loans available to students. To apply, students fill out the Free Application for Federal Student Aid (FAFSA®) each year. Federal student loans have fixed interest rates that are set annually by Congress, offer different repayment options, and have some borrower protections and benefits such as deferment and the option to pursue Public Service Loan Forgiveness.

However, there are borrowing limits for federal student loans, and other changes are coming to the federal student loan program as of the summer of 2026, so students may need to review other sources of financing when determining how they’ll pay for college.

Private Student Loans

Private student loans are installment loans you can use to pay for a college education. Private student loans are offered by private lenders. To apply for them, borrowers can browse the offerings of individual lenders like banks, credit unions, and online lenders and decide which private student loan works best for their finances. As a part of the application process, lenders will generally review the applicant’s (or their cosigner’s) credit history and credit score among other factors.

Private student loans can help bridge funding gaps after other sources of financing — such as federal loans, grants, and scholarships — have already been exhausted. This is because private lenders are not required to offer the same borrower protections as federal student loans. If you think private student loans are an option for you, shop around to find competitive terms and interest rates, and be sure to read the terms and fine print closely.

As mentioned, a borrower may choose to refinance private student loans at a later date, especially if they can qualify for more beneficial terms or a lower interest rate. Federal student loans can also be refinanced, but if a borrower chooses this option, they will lose access to federal benefits and protections like federal deferment and forgiveness.

Personal Savings

Using personal savings to pay for college means less debt and more flexibility. Not only that, but it costs significantly more to borrow money to pay for college than it does to use personal savings.

Using personal savings to pay for college means less debt and more flexibility. Using savings also allows you to save money on interest, which can make college less expensive. That said, not everyone has enough savings to cover the full cost of attending college.

Grants

Unlike student loans, which require repayment, grants are a type of financial aid that doesn’t require repayment. Grants are typically based on financial need. Completing the FAFSA will put you in the running for federal, state, and institutional grants.

Scholarships

A scholarship is a lump sum of funds that can be used to help a student pay for school. Scholarships usually don’t have to be repaid, and can be need-based or merit-based. You can find out about scholarships through your high school guidance office, college’s financial aid office, or by using an online scholarship search tool.

Work-Study Programs

Federal work-study programs allow students with financial need to work on- or off- campus and earn money through part-time jobs. The program encourages students to do work related to their course of study or community service.

Work-study programs are funded by the federal government. Students may be awarded a certain work-study amount by filling out the FAFSA. Not all schools participate in federal work study, however, so if you are interested in this option, make sure your school offers it.

The Takeaway

Student loans are a common form of installment credit. This means they are dispersed as a lump sum and require making fixed, regular payments over a predetermined period. Unlike revolving credit such as credit cards, student loans offer predictable budgeting and often come with lower interest rates.

Managing student installment loans responsibly can positively impact your credit profile. However, late or missed payments can have serious negative consequences. Understanding the differences between installment and revolving credit, and exploring various funding options for education, can empower you to make informed financial decisions for your academic journey and beyond.

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

Is a student loan an installment loan?

Yes, a student loan is an installment loan. This means you receive a lump sum of money up front and repay it over a set period with a predetermined number of regular payments.

Is a student loan a revolving loan?

No, a student loan is not a revolving loan. Revolving loans, like credit cards, allow you to borrow varying amounts up to a set credit limit, repay, and then borrow again. Student loans are installment loans, meaning you receive a lump sum and repay it with fixed, scheduled payments over a set period.

What are the benefits of an installment student loan?

The benefits of an installment student loan include predictable payments, which makes budgeting easier, and often lower interest rates compared to revolving credit. They also allow you to finance a major purchase like an education and can help diversify your credit mix.

Can student loans help build credit?

Yes, student loans can help build credit. Making regular, on-time payments on your student loan demonstrates responsible financial behavior, which contributes positively to your payment history — a major factor in your credit score. Successfully managing an installment loan like a student loan can also help diversify your credit mix, which can further enhance your credit profile.

What’s the difference between federal and private student installment loans?

Federal student loans generally offer lower rates and more borrower protections, such as income-driven repayment and potential for loan forgiveness. Also, they typically do not require a hard credit inquiry. Private student loans, offered by banks and other financial institutions, may have fewer borrower protections and repayment options, and usually require a credit check and potentially a cosigner. Interest rates and terms for federal loans are set by law, while private loan terms depend on the lender and borrower’s creditworthiness.

Photo credit: iStock/SDI Productions

SoFi Bank, N.A. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

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

Third Party Trademarks: Certified Financial Planner Board of Standards Center for Financial Planning, Inc. owns and licenses the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®

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

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