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The thrill of opening college acceptance letters and sitting down to decide where to spend the next four years is undeniably special. After making such an exciting decision, making logistical ones may not seem as appealing, especially when it comes time to choose a student loan to help pay for college.

The expense of attending college can be intimidating, but fortunately student loans can help make financing college more manageable. Broadly, students can borrow federal student loans or private student loans to help pay for their education. For the most part, students will rely on a combination of funding, including loans, scholarships, grants, and work-study to pay their way through college.

There are many student loan options that may be accessible to students, and it’s worth considering all viable options before making a decision. Keep reading to learn more on how to pick a student loan (or loans) for college.

Are You Eligible for Federal Student Loans?

Federal student loans are available for students who meet the general eligibility criteria as outlined by the U.S. Department of Education. In addition to demonstrating financial need (for most programs), students must be a citizen of the U.S. or eligible non-citizen in order to apply. Additionally, students need to be enrolled at least half-time in an eligible degree-granting institution.

Types of Federal Loans You Can Get

The U.S. Department of Education issues loans through the William D. Ford Federal Direct Loan (Direct Loan) Program, and each loan has unique benefits and eligibility requirements. They offer four types of federal loans.

1. Direct Subsidized Loans: Direct Subsidized Loans are for eligible undergraduates who demonstrate financial need to help cover the costs of receiving a higher education at a college or career school.

2. Direct Unsubsidized Loans: Direct Unsubsidized Loans are for eligible undergraduate, graduate, and professional students. Need is not a determining factor.

3. Direct PLUS Loans: Direct PLUS Loans are for graduate or professional students and the parents of dependent undergraduate students. These loans help pay for education expenses that other forms of financial aid did not cover. This is not a loan based on financial need but requires a credit check, and certain credit history standards must be met to qualify.

4. Direct Consolidation Loans: Direct Consolidation Loans allow students to combine all of their eligible federal student loans into just one loan serviced by a single loan servicer.

Students may not be eligible for each of these loan types, but the information provided on the SAR is used by college financial aid offices to determine what financial aid to offer to a student. Researching each option carefully before deciding which loan to choose can be a helpful and responsible step to take.

Recommended: Subsidized vs. Unsubsidized Loans: What Is the Difference?

How to Apply for a Federal Loan

In order to qualify for federal student loans, students must complete the Free Application for Federal Student Aid (FAFSA) form. The process is relatively easy and straightforward.

Filling out the FAFSA form will require personal information about the student and their financial circumstances. The following information or documents may be necessary to help fill out the application.

•   Student’s Social Security number

•   Parents’ Social Security numbers, for dependent students

•   Student’s driver’s license number, if applicable

•   An Alien Registration number for non-US citizens

•   Information regarding federal taxes and tax returns for the student or, for dependent students, their parents

•   Records of untaxed income for students or, for dependent students, their parents

•   Information regarding liquid assets, investments, and business or farm assets of the student or, for dependent students, their parents

FAFSA forms completed online take three to five days to process, while paper applications require seven to 10 days. Post-processing, the student will receive their Student Aid Report (SAR), which summarizes the information provided on the FAFSA, so it’s important to review this report to ensure its accuracy. If a mistake is found, students should correct their FAFSA as soon as they can.

The SAR includes the Student Aid Index (SAI), which helps colleges determine eligibility for the Federal Pell Grant and other federal and nonfederal student aid such as gift aid and federal student loans.

The Pell Grant is a federal grant awarded to undergraduate students who demonstrate exceptional financial need.

The colleges the student submitted the FAFSA to are responsible for creating their award package and distributing their financial aid. Contacting the financial aid office at each college a student is considering is advisable, as each college may have a unique process for applying for aid.

Each year, the student can renew their FAFSA form using their FSA ID which will allow them to skip some of the more basic questions on the form.

How to Accept a Federal Loan

When the student aid office at your school sends an aid offer, it will include an option for you to select which types of aid you would like to accept or reject. To do this, follow the instructions provided by your financial aid office. If you have any questions, contact the financial aid office at your school.

Generally speaking, aid that does not need to be repaid, such as scholarships or grants, should be prioritized over loans, which will need to be repaid.

What if Your Federal Loans Aren’t Enough?

If your student loans aren’t enough to pay for college, you have a couple of options. One is to explore scholarships and grants from your school or local community. You can also search for unclaimed scholarships to help find additional money.

Another option is to look into borrowing a private student loan. Federal and private student loans have a few important distinctions. Federal student loans are provided by the United States government, whereas private loans come from private lenders.

More specifically, federal student loans have terms and conditions that are pre-determined by law. Federal student loans have benefits that private lenders are not guaranteed to offer, such as having fixed interest rates and offering income-driven repayment plans. For this reason, federal student loans are generally prioritized over private student loans when students are creating a plan to finance their education.

Recommended: I Didn’t Get Enough Financial Aid: Now What?

Understanding Private Student Loans

Private student loans can be found through banks, credit unions, and online lenders. The lender will set the terms and conditions, and these types of loans are typically more expensive than federal ones.

Interested students will apply for private student loans directly with the lender of their choice. When applying for private loans, it’s important to understand any credit requirements. Most federal student loans don’t require a credit check, but private lenders often require a minimum credit score and income, and typically want to see a history of on-time loan repayments.

Using a cosigner with a more established credit history — which most students don’t have — can make qualifying for a private undergraduate loan easier. The cosigner will have to assume responsibility for the loan if the student misses payments. This private student loan guide has even more detailed information.

Recommended: A Complete Guide to Private Student Loans

How to Pick a Private Student Loan Lender

Most private lenders will allow you to find out if you prequalify for a loan and at what terms and interest rates. This can allow you to effectively compare interest rate types (fixed vs variable), the interest rate amounts, repayment options, loan terms, hardship options, and any perks or discounts the lender may offer before making a final decision.

Once you have selected a preferred lender, you can fill out a formal application. At this point, the lender will conduct a hard credit inquiry (which may impact your credit score).

Determining How Much to Borrow

Determining what to look for when picking a student loan will vary greatly by the student’s financial and educational needs, including how much to borrow. When it comes time to choose how much money to borrow through student loans, the amount will depend on what types of loans the student chooses. For example, federal student loan amounts vary greatly.

•   Undergraduate student loans borrowed through Direct Subsidized Loans and Direct Unsubsidized Loans range from $5,500 to $12,500 per year, varying by what year of school the student is in and their dependency status.

•   Graduate and professional students can borrow up to $20,500 annually in Direct Unsubsidized Loans. These funds can also help cover the remainder of college costs not covered by other financial aid.

•   Parents of undergraduate students can utilize a Direct PLUS Loan to cover the remainder of their child’s education costs that financial aid didn’t cover.

Which of these options a student and their family pursues will vary based on how much financial aid they receive and how much of their education costs they want to cover out of pocket.

When to Turn to Private Student Loans

Typically, students and their families turn to private student loans if their federal financial aid and loan options don’t cover all of their academic expenses. To determine how much in private loans to take out, students should aim to cover the following expenses for the entire school year: tuition, fees, housing, food, textbooks, school supplies, and travel.

To find the final amount required in private student loan funding, students can subtract any money they’ve received from gift aid such as scholarships and grants, financing they will receive from work-study programs, any college savings they or their families have, and whatever federal loans they received.

The Takeaway

Choosing the right student loan is a critical step in financing your college education. By thoroughly evaluating federal and private loan options, understanding interest rates, repayment terms, and borrower protections, you can make informed decisions that align with your financial goals.

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 the first step in securing financial aid for college?

The initial step is completing the Free Application for Federal Student Aid (FAFSA), which determines eligibility for federal loans, grants, and work-study programs.

What types of federal student loans are available to undergraduates?

Undergraduate students may be eligible for Direct Subsidized Loans, which require financial need, and Direct Unsubsidized Loans, which do not require financial need.

When should students consider private student loans?

Students should explore private student loans after exhausting federal aid options, especially if additional funds are needed to cover the full cost of attendance.

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SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student loans are not a substitute for federal loans, grants, and work-study programs. 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.

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.

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

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Figuring out how to pay for school can be stressful, so it’s important to compare financial aid vs student loans so that you can reduce your financial burden as much as possible and find out what’s right for you.

When college financial aid isn’t enough, people use federal or private student loans to help cover costs. Private student loans can also close gaps between what you qualify for and how much you need. We’ll compare student loans vs financial aid and explore some features that can help you determine what makes the most sense for your financial situation.

What Is Financial Aid?

Financial aid is funding that is available to students to help make college or career school more affordable. College financial aid comes in several forms and helps students pay for higher education expenses, including tuition and fees, room and board, books and supplies, and transportation.

Here are several types of financial aid available to students:

•   Scholarships: A scholarship is a form of financial aid that’s awarded to students to help pay for college. Scholarships are typically awarded based on academic or athletic achievement, community involvement, job experience, field of study, financial need, and more.

•   Grants: A grant is a form of financial aid that doesn’t have to be repaid and is generally based on financial need.

•   Federal Work-Study programs: The Federal Work-Study Program offers funds for part-time employment to help eligible college students in financial need.

•   Federal student loans: Federal student loans are borrowed money from the federal government or private lenders to help pay for college.

Financial aid can come from federal, state, school, and private sources. Federal Student Aid, a part of the U.S. Department of Education, is the largest provider of student financial aid in the U.S. Federal aid is distributed to 13 million students each year, totaling $120 billion.

What Are Student Loans?

Student loans are money borrowed from the government or a private lender to help pay for school with the expectation that you will pay it back. Like most other types of loans, the amount borrowed will accrue interest over time. Student loans can be used on school-related expenses including tuition, room and board, and other school supplies.

Loans are different from grants or scholarships and it’s essential that you understand the differences between financial aid vs student loans. If you receive a grant or a scholarship, you typically don’t have to pay that money back. Student loans are also different from work-study programs, where students in financial need to work part-time jobs to earn money to help pay for school.

It’s common for college students to take out student loans to finance their education, but you should first compare federal vs private student loans. Federal student loans offer some borrower benefits that make them preferable to private student loans.

Federal Student Loans

Federal student loans are loans that are backed by the U.S. government. Terms and conditions of the loan are set by the federal government and include several benefits, such as fixed interest rates and income-driven repayment plans.

To qualify, students must fill out the Free Application for Federal Student Aid (FAFSA®) every year that they want to receive federal student loans. The FAFSA also allows students to apply for federal aid including scholarships, grants, and work-study. Colleges may also use the information provided on the FAFSA to determine school-specific aid awards.

There are four types of federal student loans available:

•  Direct Subsidized Loans: Direct Subsidized Loans are student loans for undergrads in financial need to help pay for expenses related to higher education. The government covers the accruing interest on this type of loan while the borrower is enrolled in school at least half-time and during the loan’s six month grace period after graduation.

•  Direct Unsubsidized Loans: Direct Unsubsidized Loans are made to eligible undergraduate, graduate, and professional students. Eligibility is not based on financial need. Borrowers are responsible for all accrued interest on this type of loan.

•  Direct PLUS Loans: Direct PLUS Loans are made to graduate or professional students, known as the Grad PLUS Loan, or parents of dependent undergraduate students, known as the Parent PLUS Loan. These loans are meant to help pay for education expenses not covered by other financial aid.

•  Direct Consolidation Loans: Direct Consolidation Loans allow students to combine all eligible federal student loans into a single loan.

Private Student Loans

Private student loans can also be used to help pay for college. Private student loans are offered by banks, credit unions, and online lenders.

While federal student loans are generally the first option potential student borrowers pursue, private student loans may be an option for those that don’t receive enough federal aid to cover the cost of attendance. Unlike federal student loans, which have terms and interest rates set by the federal government, private lenders set their own conditions that vary from lender to lender.

Private student loans are also credit-based. The lender will review an applicant’s credit history, income and debt, and whether they’re enrolled in a qualified educational program. Applicants who may lack credit history, or have a less than glowing credit score, may consider applying with a cosigner to improve their chances of approval.

Keep in mind that private student loans don’t come with the same borrower protections as federal student loans, and are generally only used as a last resort option.

Financial Aid vs Student Loans Compared

When comparing financial aid vs student loans, you need to be aware of the similarities and differences. Here are some key comparisons.

Similarities	Differences
They can both be used to help fund education-related expenses.	Grants and scholarships, a type of financial aid, typically do not need to be repaid. Student loans must be repaid within a given loan term, plus interest.
FAFSA must be filled out for financial aid and federal student loans.	Financial aid and student loans may be paid out differently.
Financial aid and student loans have certain eligibility requirements.	Some financial aid, like scholarships, may be awarded based on merit. Federal student loans can be both need and non-need based. Lending criteria on private student loans is determined by the lender.

Similarities

Financial aid and student loans are both used to help fund education-related expenses, like tuition, room and board, books and classroom supplies, and transportation.

Financial aid and student loans backed by the federal government also require students to fill out FAFSA for each year that they want to receive federal student loans or federal financial aid. Financial aid and student loans also have some sort of eligibility requirements, whether that be based on financial need, merit, or creditworthiness.

Differences

The biggest difference between financial aid and student loans is whether or not you need to pay back the money you are given to help pay for college. Certain types of financial aid — such as grants and scholarships — do not need to be repaid. Student loans, on the other hand, do need to be repaid, plus interest.

There may also be differences in how financial aid and student loans are paid out to the student. Private student loans are usually paid in one lump sum at the start of each school year or semester. Federal student loans are typically applied to tuition and fees, with any remainder being disbursed to you. Government grants and loans are generally split into at least two disbursements. If you have a work-study job, you’ll be paid at least once a month.

Recommended: Gift Aid vs Self Help Aid For College

Pros and Cons of Financial Aid

Pros of Financial Aid

•  Financial aid includes grants and scholarships, which typically do not need to be repaid.

•  Potential to decrease future debt by minimizing the amount you have to borrow.

•  Opens up new opportunities for many students to attend a better school than they could without financial assistance.

•  Allows students to focus on their education instead of worrying about paying tuition.

Cons of Financial Aid

•  Most financial aid does not cover all school-related costs.

•  Scholarships, grants, and work-study programs can be highly competitive.

•  You may have to maintain certain standards to meet eligibility requirements during each semester.

•  There’s less flexibility on how you can spend funds.

Pros and Cons of Student Loans

Pros of Student Loans

•  Student loans offer financial support for those who would otherwise be unable to attend college.

•  You don’t need any credit history for federal student loans and you can use a creditworthy cosigner for private student loans.

•  Student loans can be used for things beyond tuition, room and board, and books.

•  Paying off student loans may help you build credit.

Cons of Student Loans

•  You start off with debt after graduating from college.

•  Student loans can be expensive.

•  Defaulting on student loans can negatively impact your credit score.

•  If you borrowed a private student loan, the interest rate may be variable.

The Takeaway

Understanding the similarities and differences between financial aid and student loans is key to making informed decisions about paying for college. While both options help cover education costs, financial aid often includes grants and scholarships that don’t need to be repaid, whereas student loans must be paid back with interest.

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

Does FAFSA loan or grant money?

FAFSA is an application that you fill out in order to determine your eligibility for receiving a federal loan or federal student aid such as grants and scholarships. While a federal student loan is borrowed money that must be repaid after graduation, funds received through grants, scholarships, and work-study programs do not need to be repaid.

Can you get financial aid and student loans at the same time?

Yes. If you apply for financial aid at your school, you may be offered loans as part of your school’s financial aid offer to help cover the remaining costs.

Do scholarships count as financial aid?

Yes, scholarships are a type of financial aid that is considered gift aid and typically do not have to be repaid.

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Photo credit: iStock/Altayb

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.

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.

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.

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Risk is a critical component of each and every investment, and there are several things about risk, and an individual’s ability to handle it, that investors need to know. Those include the types of risk involved in investing, the relationship between risk and potential returns, and how to effectively manage it.

Investors should consider their appetite and tolerance for risk, and try to determine which assets are suitable for them. Investing involves understanding the risk profiles of the different assets, among other things, too.

Higher Risk, Higher Potential Return

The most important thing to understand about risk is something you’ve probably heard before: Generally, the higher the risk of your investment, the greater return you should expect on your money. It is, however, the nature of risk that the return you expect might not be the return you actually get.

The concept of “Modern Portfolio Theory” emphasizes that risk and reward are linked. If you hope for a higher return, you should also expect higher volatility — the variability of actual returns. The returns on an exchange-traded fund (ETF) may be up one year and down the next.

Returns on a mutual fund of emerging market stocks will likely have much wider changes in returns from year-to-year, or even month-to-month. You might make a lot more money, but you also could lose much more.


💡 Quick Tip: When people talk about investment risk, they mean the risk of losing money. Some investments are higher risk, some are lower. Be sure to bear this in mind when investing online.

How Much Risk Should You Take?

When determining a level of risk that you’re comfortable with, you want to first look at the goals you have (buying a house, saving for college, and retiring, to name a few), as well as how many years will it be before you need the money for each goal. That’s called a “time horizon.”

As seen in the visual, an investor’s risk tolerance and risk capacity are important elements to take into consideration. Generally speaking, the longer the time horizon, the more risk you can afford to take, because you have more time to recover from market downturns. Both your tolerance and capacity can change over time, as your goals change as well.

This is why young people are advised to put their retirement savings in a more aggressive portfolio. As you get closer to retirement, you’ll generally want to be more conservative. You can also consult a retirement calculator to see where you stand on your retirement goals.

Recommended: Risk Tolerance Quiz: How Much Investment Risk Are You Comfortable With?

What Types of Risk Are There?

There are several types of risk that every investor should be aware of. Here are a few:

•   market

•   business-specific

•   price volatility

•   interest rate

•   concentration

Some risks you can’t avoid, like market risk or beta. The market goes up and down, and this often affects all stocks. Investors can measure the risk in their stock holdings by finding their portfolio’s beta. This will show how sensitive one’s portfolio is to volatility in the market.

You can, however, reduce other risks. For example, if you buy individual stocks, you open yourself up to business-specific risk. But, if you buy an index fund, you are buying assets in multiple companies. If one of these companies falters, it will impact the index, but it won’t have the same harsh impact on your investment. This is why seasoned investors tend to emphasize portfolio diversification so much.

How Should You Manage Risk?

On a broad level, how do you use these concepts to manage your investing risk? One method is to utilize asset allocation strategies that map to your goals and risk profile.

For example, if you wanted to take a particularly low-risk, or conservative position, you could allocate your portfolio to contain more bonds than stocks. Bonds tend to be safer investments than stocks (though it’s important to remember that there’s no such thing as a “safe” investment), and as such, may be less volatile if the market experiences a downturn or correction.

If you still wanted to play it safe but allow for some risk (and potentially bigger returns), you could split your portfolio’s allocation — that could include 50% stocks, 50% bonds, or something along those lines. Further, if you feel like you have a high risk tolerance, you could take an aggressive position, and invest most of, or your entire portfolio in stocks.


💡 Quick Tip: How to manage potential risk factors in a self-directed investment account? Doing your research and employing strategies like dollar-cost averaging and diversification may help mitigate financial risk when trading stocks.

Managing Specific Types of Risk

If you want to get more granular, you can try to manage specific types of risk in your portfolio, such as interest rate risk, business-specific risk, etc.

Interest rate risk, for one, has to do with investment values fluctuating due to changing interest rates. This generally involves bond investments, and one way to try and manage it is through diversification, or even by participating in hedge funds — though that can be its own can of worms, so do your research before jumping into hedge funds.

Business-specific risk refers to specific or particular companies or industries. For example, the aerospace industry faces a different set of challenges and risks than the food production industry. So, changes to the Federal Aviation Administration could, as a hypothetical, cause price fluctuation to aerospace stocks, but not other types of stocks. Again, this can largely be addressed through diversification.

There are numerous other types of risks, too, and managing them all is difficult, if not impossible, for the typical investor. You can consider consulting a financial professional for further advice, however.

The Takeaway

Risk is unavoidable when investing, and as such, it’s important to understand the nature of the risk, avoid taking risks you can’t afford, and monitor and adjust your investments over time to align with your risk tolerance. Think about it like driving a car: It’s risky, but you understand that risk and mitigate it by maintaining your car, obeying traffic laws, and buying insurance. The return is the peace of mind of having your future destination in sight.

There are no guarantees in investing, but you can make an informed choice of the amount of risk you are willing to take and invest intelligently to reach your goals.

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

Opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.¹

FAQ

What is risk tolerance?

Risk tolerance in investing refers to an investor’s appetite for risk, or how much risk they’re willing to assume in order to try and achieve higher returns. Some investors have higher risk tolerance than others.

What are common types of investing risk?

There are numerous types of investment risks, but some of the most common include market risk, business-specific risks, price volatility, interest rate risk, and concentration risk.

What strategies can be used to manage risk?

Some common strategies used to mitigate or manage portfolio risk include diversification and strategic asset allocation, and dollar-cost averaging.

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

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

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


¹Probability of Member receiving $1,000 is a probability of 0.026%; If you don’t make a selection in 45 days, you’ll no longer qualify for the promo. Customer must fund their account with a minimum of $50.00 to qualify. Probability percentage is subject to decrease. See full terms and conditions.
Dollar Cost Averaging (DCA): Dollar cost averaging is an investment strategy that involves regularly investing a fixed amount of money, regardless of market conditions. This approach can help reduce the impact of market volatility and lower the average cost per share over time. However, it does not guarantee a profit or protect against losses in declining markets. Investors should consider their financial goals, risk tolerance, and market conditions when deciding whether to use dollar cost averaging. Past performance is not indicative of future results. You should consult with a financial advisor to determine if this strategy is appropriate for your individual 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®

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