26 Tax Deductions for College Students and Other Young Adults_780x440

21 Tax Deductions for College Students and Other Young Adults

If you’re a student or a recent grad, you are likely just starting your financial life and looking for ways to economize. One way to do that is to learn about the tax deductions and credits that can often help you lower your tax bill whether you’re still in school or just got your degree.

Here, you’ll learn about more than 20 possible ways you can save on your tax bill. But keep in mind: Taxes can get complicated. If you have any outstanding questions or concerns about your specific situation, consider consulting with a tax professional.

Smart Tax Deductions for Young Adults

1. American Opportunity Tax Credit

If someone is still in school, they might qualify for The American Opportunity Tax Credit (AOTC). The AOTC allows people to take a student tax credit of up to $2,500 for tuition, fees, and course materials they paid for during the taxable year for an undergraduate education.

In addition, 40% of the credit, or up to $1,000, is refundable, which means that someone can receive it even if they happen not to owe any taxes for the year. To qualify, the taxpayer or their dependent needs to be pursuing a degree and enrolled half-time at the very least. A taxpayer can only take advantage of this for four years, no matter how long it takes the student to finish the degree.

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2. Lifetime Learning Credit

Unlike the AOTC, the Lifetime Learning Credit (LLC) is available to vocational, graduate, and non-degree or vocational students, too. The maximum benefit? Up to $2,000 is allowed per tax return. To learn more about the differences between the LLC and AOTC and which one might be right for you, see this IRS chart.

3. Student Loan Interest

Students and parents of students paying for a child’s education through student loans can use the student loan interest tax benefit for education. With this deduction, they can deduct up to $2,500 in interest they paid for the year.

4. Moving Expenses

Perhaps instead of going to college, a young adult enrolled in the military instead. If they are a Member of Active Forces on active duty and had to move due to a military order, then they could take a deduction for themselves, their spouse, and their dependents. On Form 3903, active members of the military can claim expenses related to a military move like transportation and storage of household goods and personal effects and travel (including lodging) from the old home to the new home. They cannot include the cost of meals.

The IRS has an interactive tool to help taxpayers determine whether or not their moving expenses may qualify for a moving deduction.

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5. Self-Employment Tax

If a young adult chose to go into business for themselves after graduating, then they can deduct one-half of their self-employment tax, which is 12.4% for Social Security and 2.9% for Medicare. They can do this when figuring their adjusted gross income on Form 1040 or Form 1040-SR.

6. Home Office

Someone who works at home, whether they’re working at their job remotely or after hours, or they are self-employed, can take a deduction for their home office. Someone can deduct expenses that keep their home office running such as utilities, insurance, and general repairs, but they cannot deduct unrelated expenses like a gardening bill or the paint they used for a room that is not their office. There is a simplified method for this deduction as well as a regular one. With the simple one, taxpayers can deduct $5 per square foot of the home used for business, with a 300-square-foot maximum (see both methods on the IRS’ website ).

Recommended: Do You Qualify for Home Office Tax Deductions?

7. Standard Mileage Rate

If a young adult is using their car for business purposes, then they may be able to deduct their standard mileage rate, which is 67 cents per mile for tax year 2024. They need to keep in mind, however, that if they use the standard mileage rate, they cannot use the car expenses deduction as well. They cannot deduct lease payments, gasoline, car depreciation, vehicle registration fees, oil, or insurance.

8. Car Expenses

When a young adult does not use the standard mileage rate, then they can deduct car expenses that involve business purposes from their taxes. If they use the vehicle for personal and business expenses, then they need to split the deductions.

9. Meals While Traveling

When traveling for business, young adults who are entrepreneurs or self-employed can take a 50% deduction for their unreimbursed business meals. They can either take a standard meal allowance through the IRS or keep records of their actual costs for their meals and take those deductions.

10. Other Travel Expenses

The IRS also allows taxpayers to deduct some travel expenses. If young adults own their own business or are otherwise traveling for professional purposes, they could deduct things like travel by airplane, car, or train, fares for taxis to and from the airport to the hotel, the shipping of baggage, dry cleaning, and laundry, and business calls made on the trip.

11. Business Interest

If a young entrepreneur took out a business loan vs. a personal loan to get their startup running, then they can deduct the interest they paid. If they utilized the loan proceeds for more than one type of expense, then they need to allocate the interest based on how they used the loan’s proceeds.

12. 401(k) Contributions Deduction for Employed People

The government doesn’t tax money that an employee diverts directly from their paychecks into a traditional 401(k). For tax year 2024, the 401(k) contribution limit for individuals is $23,000; for tax year 2025, the limit is $23,500.

13. IRA Deduction for Self-Employed People

If someone does not have a job that provides a 401(k), they may be eligible to deduct their contributions to a traditional Individual Retirement Account (IRA). This can be a common tax deduction when you are self-employed.

You can learn more about the various kinds of IRAs and possible deductions from the IRS website.

14. Employee Pay

A young entrepreneur who has hired someone as an independent contractor may be able to deduct the income they pay that person on their tax return. You may want to check in with a tax professional if you hire contract workers or salaried individuals to make sure you stay on top of your taxes.

15. Educator Expenses

A young graduate who is working as a teacher is able to deduct up to $300 of the expenses they put towards things they used in the classroom, such as books, courses, and computer equipment. If they teach a course in physical education or health, then athletic supplies would count towards the deduction as well.

16. Health Savings Account

If a taxpayer chose to use a tax-deductible Health Savings Account (HSA) for their healthcare expenses in 2024, then they can contribute up to $4,150 for self-only coverage; in 2025, they can contribute up to $4,300. Note: An HSA is only available to people who have a high-deductible health insurance plan.

Recommended: HSA vs. FSA: What Are the Differences?

17. Home Mortgage Interest

If a young adult is fortunate enough to own their own home, they may qualify for the home mortgage interest deduction, which allows them to deduct home mortgage interest on the first $750,000 of their debt.

18. State and Local Tax Deduction

Under federal rules, taxpayers who itemize may be able to deduct up to $10,000 of certain state and local taxes from their taxable income.

19. Charitable Contributions

Young adults who itemize may be able to deduct charitable donations on their return. Just remember that federal law limits cash contributions to just 60% of their AGI for the year. It’s always best to keep receipts and records of charitable contributions in order to take the deduction.

20. Medical Expenses

Healthcare is very expensive, but the IRS allows taxpayers to deduct the amount of total medical expenses that exceed 7.5% of their adjusted gross income (AGI). Medical expenses include payments for diagnosing, preventing, and mitigating disease.

21. Residential Energy Credit

If a young adult is lucky enough to own their own home and invests in qualifying clean energy (think heat pumps, solar panels, geothermal energy), they may be able to claim up to 30% of the costs as a tax credit.

The Takeaway

Making smart use of tax deductions can help maximize a tax refund or minimize tax liability. Even if you are a student or a young person, you may be able to claim deductions and credits that make a difference on your tax return. You might even qualify for a tax refund that you could use to pay down debt or sock away in the bank to 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.


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About the author

Kylie Ora Lobell

Kylie Ora Lobell

Kylie Ora Lobell is a personal finance writer who covers topics such as credit cards, loans, investing, and budgeting. She has worked for major brands such as Mastercard and Visa. Read full bio.



SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. 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 (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer 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 Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% 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 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 a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% 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 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 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 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 Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% 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 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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What Happens If I Miss the Tax Filing Deadline?

If you miss the annual deadline for filing your income taxes, you don’t necessarily need to panic. Missing that tax filing deadline may not mean a big penalty, and you may have more options than you think. However, it can be wise to take steps to remedy the situation as soon as possible.

For 2024 tax returns, the deadline is set for April 15, 2025. If you’re wondering what might happen if you miss that date, read on.

Key Points

•   Missing the tax filing deadline can result in “failure to file” and “failure to pay” penalties, each with a monthly rate.

•   An extension for tax filing can be requested by submitting IRS Form 4868 by the original deadline, usually April 15.

•   Filing taxes early avoids late penalties, can speed up refund processing, and may reduce stress.

•   No late-filing penalties will usually apply if you are due a refund, but delays in receiving the refund can occur.

•   Typically, unclaimed refunds after three years become property of the U.S. Treasury, and the IRS will no longer issue them.

When Is the Tax Filing Deadline?

Usually, the tax-filing deadline is April 15 for the prior year. So if you are filing your return for tax year 2024, April 15 of 2025 would be the due date.

Worth noting: If April 15 falls on a weekend or holiday, the next business day is used. In the case of 2023, April 15 fell on a Saturday, but on Monday, April 17, the Emancipation Day holiday was observed in Washington, D.C. For this reason, the federal tax-filing date was actually on Tuesday, April 18, that year.

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Reasons Why Someone Might Miss the Tax Filing Deadline

Turning in school papers, paying your credit card bill, applying for rebates: Life is full of deadlines that sometimes are missed. Missing the deadline for taxes is no exception. Here are some common reasons why people don’t file on time:

•   You think you don’t owe any money and figure, why bother to file?

•   You think you do owe money but can’t afford to pay your tax bill, even if you deplete your savings account, so you avoid it entirely.

•   You are missing tax documents and didn’t have time to hunt for them or know where to find them.

•   You ran out of time to get organized and file or simply procrastinated.

•   You had trouble understanding taxes, got stressed out by the process, and didn’t get it finished.

•   You couldn’t afford a tax preparer but realized you didn’t know how to file on your own.

•   You got sick or injured or had a family emergency that interfered with filing.

•   You had a change in status (i.e., were in the middle of a divorce or became widowed) and didn’t know how to file in those new circumstances.

Recommended: 7 Tips to Managing Your Money Better

Are There Penalties for Missed Tax-Filing Deadlines?

“What happens if I miss the tax deadline?” you may wonder. The answer is: It can cost you. For individuals, the IRS can levy penalties for a few infractions related to the annual tax filing deadline. Here’s a closer look:

The most common punishment for this offense is a late payment penalty that’s equal to 0.5% of the money owed. But it’s important to be aware of these finer points:

•   The IRS can penalize a taxpayer for “failure to file,” which occurs when a person fails to file their tax return by the appropriate April date or by the date specified if the person requests and receives an extension. The IRS can levy a penalty of 5% of the taxes owed per month for each month that the taxes are owed after the April filing deadline passes if you didn’t get an extension. This hits a cap of 25% after five months and can’t go any higher.

•   Another infraction when missing the tax deadline is “failure to pay.” This occurs when a taxpayer doesn’t pay the money they owe on their tax return, even if they file on time. The most common punishment for this offense is a late payment penalty that’s equal to 0.5% of the money owed. That may not sound like much, but it’s due every single month, until the tax is paid in full. And that penalty can be as much as 25% of the overdue taxes.

•   What if both “failure to pay” and “failure to file” penalties are applied in the same month? In this case, the “failure to file” penalty will be lowered by the sum of the “failure to pay” penalty applied that month.

•   The IRS can also penalize taxpayers for failure to pay estimated taxes over the course of a year. The penalty will be calculated based on the amount of the underpayment, how long the taxes were left unpaid, and the interest rate the IRS charges.

•   Another reason the IRS may charge a penalty is if your check to the government bounces. You will likely be assessed an additional 2% on the amount owed to the government.

One last note: You may wonder what happens if you file just a day or two late. It does matter! Even a single day late counts against you; the IRS takes deadlines very seriously.

Recommended: Tax-Deductible or Not? A Guide to Year-End Donations

How Do Extensions Work?

There are years when completing your taxes by the April deadline is just too much to accomplish. Preparing for tax season and completing a return isn’t always simple. As a taxpayer’s financial life evolves, filing can become quite complex and time-consuming. And even if you use a professional tax-preparer, April can be an extremely hectic time for them, and they may not be able to fit you in before the big deadline.

So what happens if you’re missing the tax deadline? Don’t just sit back. This is when an extension may come in handy.

•   The way to get one is to file an IRS Form 4868 , which is an application for permission to take an extra six months (until October) to file your taxes. Taxpayers, however, can’t be late when requesting the extension. You have to submit the form by the April deadline.

•   You can file for an extension online or by mail.

•   An extension only applies to filing your return. It’s important to note that you still have to send the IRS a check for your estimated taxes by April 15 or whatever the due date is in a given year.

•   If you take, say, another month to file the complete return and you owe more than you estimated on Form 4868 in April, you may face penalties for the shortfall.

•   Those penalties will typically grow with each month you take to file, even with the extension.

•   If you overestimate the taxes you owe and pay too much by the April deadline, then you’ll receive a refund after you eventually file.

What Deadlines Mean If You’re Owed Money

All of this discussion about deadlines and penalties ignores one issue: What does all of this mean if you expect to get money back from the government in the form of a tax refund?

A tax refund happens if you overpay your taxes over the course of a year, whether through your regular paycheck deductions, quarterly payments, or other means. When you file your return, it’s a chance to get that money back. Tax refunds are quite common — in terms of 2023 returns filed in 2024, the IRS issued 120.9 million refunds to individuals, totaling about $461.2 billion.

All of the deadlines and penalties described so far apply to anyone who owes money to the IRS in a given year. For taxpayers who are owed money by the government, the rules are different. Some specifics:

•   There is no late-filing fee for taxpayers who file returns requesting a refund from prior years.

•   The annual tax filing deadlines have a different significance for people who will receive a refund check from the IRS. For these taxpayers, there’s a real incentive to file taxes ahead of the deadline. The sooner you file, the sooner you’re likely to receive your refund. The IRS says it issues roughly 90% of its refunds in under three weeks, though it warns that some returns require additional review and may take longer as a result.

•   After a return is three years overdue, the IRS will no longer pay that money. The good news is that there is no late-filing fee for taxpayers who file returns requesting a refund from prior years.

It may seem unlikely that people would leave money unclaimed, but consider this: In 2023, the IRS announced a last call for more than $1.5 billion in unclaimed income tax refunds due to individual taxpayers who never got around to filing their federal income tax returns in a past year. Those unclaimed funds eventually become property of the U.S. Treasury.

So, as you see, it could definitely pay to file that return.

Tips for Filing a Late Tax Return

If you missed the tax filing deadline or know that’s going to happen, here’s advice:

•   You can file the IRS Form 4868 requesting an extension by the tax filing deadline. Even if you do file for a tax extension, however, know that any funds owed are still due by the April date, but you may be able to send in the actual return later.

•   Always file your return as soon as possible. You may want to contact a tax professional to assist you with this, or you can reach out to the IRS for help. You might want to call the IRS Tax Help Line at 1-800-829-1040 or visit your local IRS office.

•   If you owe money but can’t pay it all at once, pay as much as you can, as soon as you can, and look into available options, such as payment plans with the IRS. These can give you an extended timeframe in which to pay what you owe. You may want to consult the IRS’ online Payment Plan tool.

Tips for Getting Your Taxes in on Time

Now that you’ve read about how complicated it can be if you miss the tax filing deadline, here are a few tips to help you get those returns in on time:

•   Get organized early. Gather all the records you’ll need to file (such as a W-2) as they become available.

•   Check against last year’s return to see if there were any forms you had then (say, a Form 1099 reflecting interest on a bank account) that you don’t have now. Track down anything that’s missing.

•   Create or log into an account at IRS.gov to make tracking your progress easier. You can make payments there, too.

•   Make sure you’ve withheld enough money so that you don’t owe too much when you file. If you do wind up having to pay a significant amount, develop a plan early to pay it on time or as close to on time as possible.

•   Know your banking details or open a bank account so that you can use direct deposit, which is usually the fastest way to get a refund.

The Takeaway

Life happens: Sometimes, despite your best intentions, deadlines get missed. When that happens with tax filing, though, there can be some very real financial penalties involved. That’s why it’s important to know when your tax returns are due and then do everything in your power to file on time.

If you can’t get your return finished by Tax Day in mid-April, know the right moves to request an extension and possibly look into a payment plan for money owed that you can’t pay all at once. Having your bank account information handy, especially when you are due a refund, can be valuable.

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 4.00% APY on SoFi Checking and Savings.

FAQ

When is the tax deadline?

The deadline for tax-filing is usually April 15 for the previous year’s taxes. However, if that date falls on a weekend or holiday, it will move forward by up to a few days.

How long are the tax extensions given if I miss the tax deadline?

The usual tax extension is six months. However, this is a longer timeline to file your return. Funds owed are still due in April. It can be wise to pay as much as possible towards your total debt to the IRS by Tax Day, and then send the remainder as soon as possible, perhaps via a payment plan with the IRS.

What happens if you miss the tax deadline by one day?

The IRS takes deadlines seriously. For every month that you are late filing your return, you will be assessed a penalty on the total amount owed. That wording of “a month” does not mean the first 30 days after the deadline are a kind of freebie during which you can send in your return and any payment due without penalty. Rather, being even a single day late puts you into that “one month” late category.


SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.


SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. 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 (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer 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 Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% 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 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 a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% 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 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 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 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 Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% 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 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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/.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOBNK-Q424-074

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toothbrush and floss

How to Pay for Dental School

The demand for dentists, like other health care professionals, is on the rise, partly due to an aging U.S. population and partly due to more attention on dental health with each generation. The aging population is likely to need additional oral care, some of which can include complicated procedures.

By learning about the average tuition costs and ways to pay for dental school, prospective students can figure out if a dental career is the right choice for their future.

Keep reading to learn more on the employment outlook for dentists, ways to pay for dental school, how to pay for dental school without loans, and more.

Key Points

•   To pay for dental school, seek scholarships and grants from professional organizations, universities, and private institutions. These awards often require strong academic performance, community service, or specific career goals, and they don’t need to be repaid.

•   Programs like the National Health Service Corps (NHSC), Indian Health Service (IHS), and military scholarships cover tuition and provide living stipends in exchange for a service commitment after graduation.

•   You can also apply for federal loans through FAFSA, such as Direct Unsubsidized Loans and Grad PLUS Loans, which offer competitive interest rates and flexible repayment plans tailored to students.

•   Many dental schools offer work-study opportunities, allowing students to earn money to offset education costs. Additionally, part-time jobs or teaching assistant positions can provide supplemental income while in school.

•   Private lenders can help cover gaps in funding, but they often have higher interest rates and stricter terms. Compare options and ensure you understand repayment terms before committing.

Employment Outlook for Dentists

The U.S. Bureau of Labor Statistics (BLS) projects there to be a 5% increase in available dentist jobs from 2023 to 2033. Dentists can work in a variety of settings, such as private practice — either on their own or with a partner — or in an outpatient care center, among others.

The median annual salary of a general dentist was $170,910 in 2023. For perspective, the median annual U.S. income in the same year was $65,470.

While dentistry pays well, it also costs a lot to become a dentist. Dental school programs typically take four years to complete after students have already completed a bachelor’s degree. A degree from an accredited dental school will be either a D.D.S. (Doctor of Dental Surgery) or a D.M.D. (Doctor of Dental Medicine).

Individual universities determine which degree is awarded, but they are both approved by the Commission on Dental Accreditation (CODA), a part of the American Dental Association (ADA). Whichever degree a dental graduate is awarded, chances are they may also have hundreds of thousands of dollars worth of student loan debt to contend with after graduation.

How Much Does Dental School Cost?

The range of dental school costs depends on whether a student is in-state (resident) or out-of-state (non-resident), and whether attending a public or private school. In-state public school tuition is typically going to be the least expensive option for most students.

According to the ADA, the average first-year cost of dental school (public or private), including tuition and mandatory fees, in 2023-2024 was $44,608 for residents and $75,163 for non-residents.

The cost difference between public schools and private schools can be substantial. The average resident cost for the first year of a public dental school program was $41,711, while the first-year cost for private dental school was $84,842 in 2023-24. After four years in school, students are looking at an average of $293,900 in debt.

Prospective students can compare the cost of dental schools and then determine how much they are willing to pay for their education. According to the ADA, there are 81 accredited dental schools throughout the United States and 10 in Canada.

Ways to Pay for Dental School

Even though dental school tuition can be expensive, students have options when figuring out how to pay for dental school. Students can explore scholarships, grants, fellowships, and service programs to help pay for dental school.

Federal and private student loans are also an option. After graduating from dental school, some borrowers may consider refinancing their student loans as they pay off dental school debt. Continue reading for more details on paying for dental school.

1. Scholarships and Grants

Scholarships and grants are awards that, in most cases, don’t have to be repaid. For students without the means to pay for tuition and other costs from personal savings, exploring these options may be a good place to start.

Dental schools may offer scholarships and grants to students who meet certain academic standards or who are working towards a certain type of degree, for example. When researching dental schools, prospective students may consider asking financial aid offices about available scholarships and grants.

Along with reaching out to schools, students may want to research scholarships and grants through organizations like the American Dental Association, the American Association of Public Health Dentistry, or the American Dental Education Association. There are also a variety of online scholarship search tools that students can use to find scholarships.

Recommended: What Is a Scholarship & How to Get One?

2. Service Programs

Several service programs can help pay for dental school, including:

•   National Health Service Corps (NHSC): This federal program offers scholarships and loan repayment options to dental students who commit to working in designated Health Professional Shortage Areas (HPSAs) after graduation. Scholarships cover tuition, fees, and living stipends, while loan repayment programs reduce educational debt in exchange for a minimum service obligation of two years.

•   Armed Forces Health Professions Scholarship Program (HPSP): Provided by branches of the U.S. military, HPSP covers full tuition for dental school, offers a monthly living stipend, and may include bonuses. Participants serve as military dentists for a designated number of years after completing their education, gaining valuable clinical experience and leadership training.

•   Indian Health Service (IHS) Loan Repayment Program: This program is aimed at improving dental care access in Native American and Alaska Native communities. Dentists receive up to $40,000 in loan repayment for a two-year service commitment at an IHS or Tribal site. Participants can extend their service for additional loan repayment benefits.

•   Public Health Service Commissioned Corps: This program allows dentists to serve as officers in the U.S. Public Health Service, providing care in federal agencies like the Centers for Disease Control and Prevention (CDC), Bureau of Prisons, or the Food and Drug Administration (FDA). Participants may receive loan repayment assistance and competitive salaries.

•   State-based programs: Many states offer incentives such as scholarships, grants, or loan repayment programs to dental professionals willing to practice in rural or underserved areas. These programs vary by state and may require service commitments ranging from two to five years.

Each program offers financial relief but requires a contractual commitment to serve specific populations or organizations.

Repay your way. Find the monthly student loan
payment and rate that fits your budget.


3. Federal Student Loans

Completing the FAFSA® (Free Application for Federal Student Aid) form is the first step students should take to determine eligibility for federal financial aid. To fill out the form, they will need to provide personal identification and financial records.

Federal student loans for graduate and professional school students are either Direct Unsubsidized Loans or Direct PLUS Loans. Students may borrow up to $20,500 each year in Direct Unsubsidized Loans, and eligibility is not based on financial need.

If a student has costs in excess of that borrowing limit, they may want to consider a Direct PLUS Loan. Like a Direct Unsubsidized Loan, eligibility for a Direct PLUS Loan is not based on financial need, although a credit check is required.

Students are encouraged to ask the financial aid office at their school about school-based loans that might be available. Some federal funds are offered to schools instead of directly to students and are tied to certain eligibility requirements.

4. Private Student Loans

It’s always recommended that students exhaust all federal student loan options before considering a private student loan. But if there is still a financial need, a private student loan may be the right choice for some students. Private student loans are available from private lenders and are awarded based on factors including your income, credit history, and credit score, among other factors.

Considering Student Loan Refinancing

After graduating, dentists may consider refinancing their student loans to secure a more competitive interest rate or more favorable terms. Refinancing also allows borrowers to combine all their loans into a single loan. This won’t be the right choice for all borrowers because when you refinance federal loans you’ll lose access to any federal benefits — like any loan forgiveness options.

Should you refinance your student loans? The answer is personal and will depend on factors including the amount of student debt you currently have, your credit score, income, and whether you are your income, and whether you are refinancing with or without a cosigner.

Recommended: Student Loan Refinance Guide

5. Employment

Dental school is rigorous, but if students have the time and energy, they may want to consider working to supplement their educational costs. The federal work-study program is available to graduate and professional students with financial need, and has the same eligibility requirements and position availability as it does for undergraduate students. Financial aid offices at individual schools will have information pertaining to this program.

Training grants and fellowships, an option some dental students might find appealing, are sources of funding that often include a stipend and sometimes cover part of a student’s tuition.

These programs are designed to further a student’s education in a specific research area that interests them. They differ from simple grants in that there is a work component to them.

The Takeaway

Dental school can be expensive but can lead to a fulfilling and lucrative career. When determining how to pay for dental school, students can explore dental school scholarships, grants, federal student loans, 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

How do students afford dental school?

Students afford dental school through a combination of federal and private student loans, scholarships, grants, and work-study programs. Some seek financial aid through military service or dental school repayment programs. Budgeting, saving, and seeking loan forgiveness options also help manage the significant costs associated with dental education.

Does FAFSA cover dental school?

Yes, FAFSA can cover dental school by determining eligibility for federal financial aid, including Direct Unsubsidized Loans and Grad PLUS Loans. While FAFSA doesn’t directly pay for dental school, it provides access to federal loans and grants, helping students finance their education and manage costs effectively.

Is it possible to go to dental school for free?

It is possible to attend dental school for free through scholarships, grants, and service-based programs. Options include military scholarships, school-specific awards, and programs like the National Health Service Corps, which cover tuition in exchange for service commitments in underserved areas after graduation. Financial aid opportunities vary by eligibility.


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.

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

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How to File a Tax Extension

How to File a Tax Extension

You can file a tax extension in a few different ways, such as online or by mail. This process can help people who may need more time to finalize their return, whether they are missing documents, dealing with a personal emergency, or have other reasons for being behind schedule.

While a six-month extension can be a good safety net, it’s important to learn the facts. For instance, an extension doesn’t mean you have more time to pay any taxes you may owe.

Read on to learn the facts and important considerations to know when filing a tax extension.

Key Points

•   Tax extensions provide a six-month extension to file but not to pay owed taxes.

•   Filing Form 4868 electronically or by mail is typically required to request an extension.

•   Paying taxes on time usually avoids penalties and interest, even with an extension filed.

•   Common reasons for needing an extension include missing documents, life events, and complex business dealings.

•   Filing for a tax extension does not incur a fee but requires timely payment of estimated taxes.

What Is a Tax Extension?

A tax extension extends the deadline for filing your federal tax return by six months. All you have to do to get an extension is request one by April 15, 2025. Here are important points to know:

•   A tax extension does not give you extra time to pay any taxes owed. If you can’t afford to pay your full tax bill, it’s a good idea to pay as much as you can by Tax Day and then apply for an individual payment plan on IRS.gov or call the IRS (Internal Revenue Service) at 800-829-1040 to discuss payment options.

•   The agency may waive the late-payment penalty in a few cases, but it will not waive interest charges on unpaid tax bills. The interest rate is the federal short-term rate plus three percentage points. In early 2025, for individuals, the rate was 7%, compounded daily.

•   The late-payment penalty, aka failure-to-pay penalty (you filed for an extension on time but still owe taxes), is much less severe than the failure-to-file penalty (you didn’t file your tax return by the due date and did not request an extension). The failure-to-file penalty is usually 5% of the tax owed for each month or part of a month that your return is late, up to 25% of the total owed.

Either way, a penalty plus interest on taxes owed past the deadline might be a good incentive for many taxpayers to try to cough up most of their bill on time.

💡 Quick Tip: Banish bank fees. Open a new bank account with SoFi and you’ll pay no overdraft, minimum balance, or any monthly fees.

How Do Tax Extensions Work?

There are three ways to request an automatic extension of time to file your return:

1.    File IRS Form 4868 electronically using your personal computer or through a tax professional who uses e-file. You’ll be asked to provide your prior year’s adjusted gross income for verification purposes. (If you do not know your prior year’s AGI and do not have a copy of that tax return, you can find the information by signing in to your IRS online account.)

2.    Mail a paper Form 4868. (The IRS says, though, not to mail in Form 4868 if you file electronically unless you’re making a payment with a check or money order.)

3.    Pay all or part of your estimated income tax due, and indicate that the payment is for an extension, using IRS Direct Pay or the Electronic Federal Tax Payment System. You can also pay taxes with a credit card or debit card.

Special rules about filing extensions may apply to those serving in a combat zone or a qualified hazardous duty area or living outside the United States.

Recommended: Tax Season 2024 Help Center

Reasons to File for a Tax Extension

Many high earners routinely seek tax extensions because their business dealings and investments can take longer to sort out. Other people might seek a tax extension for different reasons, such as:

•   Needing extra time to track down missing tax documents, especially if you’re dealing with an extenuating circumstance (for instance, the closure of a place of employment shortly before tax documents were due to be issued).

•   A major unplanned life event interrupts your plans and makes it hard to get things together on time.

•   You’re still figuring out how to do taxes as a freelancer and want to take all the deductions you can.

•   You’re going to take the home office tax deduction as a self-employed person and want to carefully crunch the numbers because you’re skipping the simplified deduction of up to $1,500.

•   General life busyness led to the deadline sneaking up on you.

•   Maybe you’re filing taxes for the first time and you simply procrastinated.

•   You have a primary and second home and are still unsure whether to itemize and take the mortgage interest deduction.

Filing for a Tax Extension Online

Remember, you don’t need to file Form 4868 if you make a payment using IRS electronic payment options or by phone and indicate that you want an extension.

If you do need to file Form 4868, you can do so electronically by accessing the IRS e-file with your tax software or by using a tax professional who uses e-file.

IRS e-file options include Free File, which lets you prepare and file your federal income tax online using guided tax preparation at an IRS partner site (for filers with AGI of $79,000 or less) or Free File fillable forms (for any income level).

Filing for a Tax Extension by Mail

You can simply download and print Form 4868 from IRS.gov, fill it out, and mail it in, along with a check for estimated income taxes owed.

The form itself includes information about where to send the document, depending on where you live.

Recommended: High-Yield Savings Account Calculator

Can I File for a Tax Extension If I Owe Money?

Yes, you can still file for a tax return extension if you owe the government money — but the money itself is still due on the original due date.

Unfortunately, there’s no way to file for an extension of taxes owed. Rather, your best bet is to pay as much of your estimated taxes as you can when you file for the extension. Then apply for a payment plan online or call the IRS to learn about your options for complete repayment if you don’t have enough money in your bank account to cover what you owe.

Can Someone Be Denied a Tax Extension?

Yes, but it’s uncommon. If your tax extension was denied, it was probably because of a mistake in your personal information on Form 4868.

You can resubmit your request and make sure to enter your current address, name, and Social Security number correctly.

How to Know If You Owe Taxes

While self-employed individuals must estimate their taxes and pay on a quarterly basis, those who file using W-2 wage reports may not do this kind of taxation math.

There are several easy ways to find out if you owe Uncle Sam.

•   You may receive a notice in the mail from the IRS, but ensure that it’s official correspondence and not a note from a scammer. The IRS will never email, text, or reach out to individuals via social media.

•   “Your Online Account” on IRS.gov allows you to see how much you owe in taxes. This user profile also allows you to pay any owed taxes directly.

•   You can always call the IRS at 800-829-1040 to confirm any amount of back taxes you might owe.

The Takeaway

Is it hard to file a tax extension? Not really. What may prove difficult is paying all taxes owed by the filing deadline (aka Tax Day) or paying a balance still owed plus a penalty and interest after the April date to file taxes.

It’s important to have a handle on your tax status and tax bill as April 15th arrives. It’s also wise to have a good banking partner and accounts that allow easy payment of any money you owe or refunds you receive.

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 4.00% APY on SoFi Checking and Savings.

FAQ

How do I know if I’ve been approved for a tax extension?

Extension requests are rarely denied, but news of a denial would come by email. In the event of an error in an address or name, a taxpayer will be given a few days to remedy the error and file a tax extension again. Usually, you can get an automatic extension of time to file your tax return by filing Form 4868 electronically. You’ll receive an electronic acknowledgment of your request.

Is there a fee to file for a tax extension?

No. Filing for a tax extension is free.

Is the process for filing a tax extension easy?

Yes. You simply submit Form 4868 electronically or by mail before the filing deadline, or make a tax payment through approved methods and indicate you want an extension of time to file your federal return.

What happens if I file my taxes late and without an extension?

If you don’t pay your tax balance by the filing deadline and you did not file for an extension, you’ll get hit with a failure-to-file penalty (in most cases) and interest. Interest also compounds daily on any unpaid tax from the due date of the return until the date of payment in full.


Photo credit: iStock/Delmaine Donson

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
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SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. 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 (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer 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 Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% 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 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 a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% 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 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 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 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 Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% 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 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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/.
*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

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

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SOBNK-Q424-073

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college student in classroom

Finding Free Money for College

Paying for college can be daunting, but there’s good news: Plenty of “free money” is available to help cover the costs. Unlike loans, scholarships and grants don’t require repayment, making them a valuable resource for students looking to reduce debt.

By exploring these options, students can significantly offset tuition expenses and make their college dreams more affordable.

Key Points

•   Grants and scholarships aid are often referred to as “free money” because they typically don’t require repayment, unlike loans.

•   Scholarships can be merit-based, awarded for academic or extracurricular achievements, or need-based, provided to students demonstrating financial need.

•   Completing the Free Application for Federal Student Aid (FAFSA) is a crucial step in determining eligibility for various grants and scholarships.

•   Leveraging scholarship search tools can help students discover a wide range of opportunities tailored to their qualifications and needs.

•   Early and thorough research, along with timely applications, can enhance the chances of securing scholarships and grants, thereby reducing the reliance on student loans.

Free Money for College‽

Students can find free money for college through scholarships and grants. Both are gifts that do not need to be repaid, and they reduce the need to take out student loans.

According to the Education Data Initiative, average federal student loan debt based on degree is as follows:

•   $19,270 for associate degree holders

•   $26,190 for bachelor’s degree holders

•   $106,850 for graduate degree holders

To bring these numbers down, students can apply for grants and scholarships, federal work-study, or work a part-time job to help pay for some of their college expenses.

What Are Scholarships?

Scholarships are financial awards designed to help students pay for their education. Unlike loans, scholarships don’t require repayment, making them a valuable form of “free money.” They are typically awarded based on specific criteria and can come from schools, private organizations, nonprofits, or government programs.

Merit-based scholarships reward students for their achievements in academics, athletics, leadership, or other areas of excellence. These awards often require maintaining certain standards, such as a high GPA.

Need-based scholarships, on the other hand, focus on financial need, aiming to assist students from low-income families in accessing higher education opportunities without excessive debt.

Recommended: What Types of Scholarships Are There?

What Are Grants?

Grants are a form of financial aid provided to students to help cover educational expenses, such as tuition, fees, and books. Like scholarships, grants do not need to be repaid, making them a valuable resource for funding education.

Grants are often awarded based on financial need, with eligibility determined through applications like the Free Application for Federal Student Aid (FAFSA®). Common sources of grants include federal and state governments, colleges, and private organizations.

Examples include the Federal Pell Grant, which supports low-income students, and specialized grants for specific fields of study or demographics. Grants make higher education more accessible and affordable.

How Much Does Free Money for College Help?

Scholarships and grants can make a big difference in lightening the college debt load. Below is a chart on how families pay for college.

How Families Pay for College

Average college expenditure in the 2022-23 academic year $28,4209
Parent and student income and savings 37%
Scholarships and grants 27%
Borrowed money 12%
Relatives and friends 2%
Source: Sallie Mae “How America Pays for College 2024” report

Finding Scholarships and Grants

With federal and institutional grants, you are automatically considered for need-based financial aid when you submit the FAFSA.

Finding private scholarships can take more time and effort, though. Ideally, students should start looking for scholarships the summer after their junior year of high school.

Researching Scholarships

Here are ideas to look for scholarships:

•   Consider using a database like Scholarships.com that lets you create a profile with all of your information, which could help you match with scholarships and grants.

•   Use the Department of Labor’s CareerOneStop site to sort more than 9,500 opportunities for financial aid.

•   Use SoFi’s Scholarship Search Tool.

•   Ask college financial aid offices about their scholarship availability and process.

•   See if your employer or your parents’ employers offer college aid.

•   Look for scholarships offered by foundations, religious or civic groups, local businesses, and organizations related to your field of interest.

You don’t have to be a scholar or standout athlete to get a scholarship. Students may have success finding non-academic scholarships for their heritage, interests, or area of study.

Finding those private scholarships and completing the essay and application will take time, however.

Recommended: Search Grants and Scholarships by State

Researching Grants

Researching grants for college requires proactive effort and the use of multiple resources. Follow these steps to find the right opportunities:

•   Complete the FAFSA, as this determines eligibility for federal and state grants, such as the Pell Grant.

•   Check with your college’s financial aid office for institutional grants.

•   Explore websites like Grants.gov or Fastweb for a comprehensive list of grants.

•   Look for grants offered by private organizations, nonprofits, and community groups

Grants are typically awarded in a federal financial aid package. In addition to federal grants, schools may award institutional grants.

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Other Options to Help Pay for College

There are many ways to pay for school, and students and their parents may use a combination of methods to cover the cost of attendance, an estimate of the total cost of attending a particular college for one year.

Student Loans

Roughly 70% of college students leave school with debt due to the expense of tuition and fees, room and board, books, and living expenses.

When it comes to private vs. federal student loans, it’s best to use federal student loans first, as they come with borrower protections and benefits that private loans do not offer.

One type of federal student loan is a Direct Subsidized Loan. The government pays the interest on those loans as long as the student is enrolled at least half-time. The interest is also covered for six months after the student leaves school, graduates, or enters a period of deferment.

With federal student loans, borrowers may qualify for an income-based repayment plan, Public Service Loan Forgiveness, or federal deferment or forbearance down the road.

Not all students or parents will be able to rely solely on federal aid to cover all their bases, though, and that’s where a private student loan could come in handy.

Private student loans don’t come with all the borrower protections and programs that federal student loans do, but they can be used to cover any remaining school-certified costs, here or abroad, from transportation to books and lodging.

Federal Work-Study

The federal work-study program allows students to earn money that can be used to pay day-to-day expenses. Students who demonstrate financial need may be eligible for jobs on or off campus.

Not all colleges participate in the program, so it’s best to speak with your specific college if federal work-study is something you’re interested in.

Does a Student Ever Have to Repay a Grant?

You might have to repay all or part of a federal grant if:

•   You withdrew early from the program for which the grant was given to you.

•   Your enrollment status changed. If, for example, you switch from full-time to part-time enrollment, your grant amount will be reduced.

•   You received outside scholarships or grants that reduced your need for federal student aid.

•   You received a TEACH Grant, but you did not meet the service obligation. In that case, the grant could be converted to Direct Unsubsidized Loans.

If you don’t meet the expectations of a scholarship, such as GPA or credit-hour minimums, you could lose the gift and have to pay out of pocket.

When it comes to sports, the head coach decides whether an athletic scholarship will be renewed. Injury or poor academics can sack an athletic scholarship.

Recommended: FAFSA Tips and Mistakes to Avoid

The Takeaway

Students can get free money for college through grants and scholarships. Grants and scholarships are worth seeking out because they reduce the need to take out student loans. But if you still need to borrow, you can rely on federal student loans, followed by private student loans.

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

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

FAQ

What is “free money” for college, and why is it important?

“Free money” for college refers to financial aid like scholarships and grants that do not need to be repaid. It’s important because it helps reduce the cost of education, minimizing the reliance on student loans and lowering the financial burden on students and families.

How can students find scholarships and grants?

Students can find scholarships and grants by completing the FAFSA, consulting their school’s financial aid office, using online scholarship search tools, and exploring opportunities from private organizations, nonprofits, and government programs tailored to their qualifications or financial needs.

What are the key differences between scholarships and grants?

Scholarships are often merit-based, awarded for achievements in academics, athletics, or other areas, while grants are primarily need-based, focusing on financial circumstances. Both provide non-repayable funds to help cover educational expenses.


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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.

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

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

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