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If you are gearing up to go to college, you are likely focused on maintaining a good GPA, but getting involved in extracurriculars in high school can be another important factor.

One type of extracurricular that you may want to consider is joining a club. High schools usually have a variety of clubs available for students to join. Joining a club comes with many benefits and can also make your high school experience more fun and memorable. Read on to learn more about why clubs are important and how to get involved.

Benefits of Joining a Club

The list of things to do while in high school can seem pretty overwhelming at times, especially when you add college preparation to the mix. There are classes to stay on top of, events and parties to attend, and soon enough college applications roll around. Balancing coursework and a social life can be a struggle, but one way to combine social life with college preparation is by joining a club.

There are a lot of benefits to joining a high school club. Many colleges like to see that applicants are well-rounded, so academic success isn’t the only way to stand out among other applicants. Clubs provide colleges with insight into what a student’s interests and passions are. In addition, they help students develop time management skills and responsibility.

Learning to balance work and fun while in high school can help make it easier to maintain that balance after entering college.

Joining a club in high school can also provide an opportunity for students to relax and have some fun. Having fun is a vital piece of creating a memorable high school experience and it can help students perform better in class.

Not only is the social time enjoyable for some students, but participation in clubs can also help students develop their “soft” skills, such as effective communication and learning to work with others.

In addition to making friends, being in a club gives students the opportunity to bond with their faculty advisor, who is usually a teacher. Building a relationship with teachers during high school is important for getting quality letters of recommendation to add to those college applications.

Common High School Clubs

The list of high school clubs that are available at each school will differ. Generally, a school will have a variety of clubs available. These can range from clubs that are academic, like a foreign language club, to clubs that are artistic, like a creative writing club, or something that’s related to a student’s hobbies, like a videogame club.

Usually, high schools will also have clubs that participate in some kind of volunteer work or community service. These can be clubs that do work in the community hospitals, in meal programs for the homeless or elderly, and much more.

Some clubs are high-tech, like the robotics club, and some are more old-school, like the chess club. Schools will usually have a lot of variety in the types of clubs that exist, and there may be some clubs that are unique to just your school. Since students can often start their own clubs, there isn’t one set list of clubs that will exist at every school.

Recommended: How to Get Involved on Campus in College

Starting a Club

If students don’t like the selection of clubs available at their school (why doesn’t every school have a waffle club?) then they are generally able to start their own. Starting a new club has a lot of benefits for the students who choose to put in the work to get one up and running.

There is no list of “correct” clubs to start in high school, most colleges value students who show commitment to something they care about. It’s about the quality of the activities they spend time in, not the quantity.

Seeing that a student has started a new club will show college admissions that the student has developed leadership and organizational abilities. Starting a club shows initiative, and sometimes, students who start clubs will end up in one of the leadership positions, like President, Vice President, Secretary, or Treasurer.

Each school will have its own process for starting a club, but there are a few steps that will be the same everywhere.

•   The first step is, of course, figuring out what the club is about. Is it going to focus on community service, something academic? Will it be focused more on fun and entertainment?

•   After a topic for the club is chosen, students should figure out what the purpose and goals of the club are. If the club is about chess, will students be learning how to play? Will club members be entering tournaments together? Figuring out the purpose of the club and what its goals are before members join will help limit confusion and manage everyone’s expectations.

•   At most schools, the club will have to get registered after its name and purpose are defined by founding members. Registering the club makes it official and once this step is complete students can actually begin enjoying their club.

•   Gaining new members and planning the first club meeting is an important next step.

Once the club is official and ready to start, it’s time to focus on recruitment and preparing for the first meeting. Students should choose a date, time, and location for the first meeting before recruiting, that way they have information to give interested students on when activities will be beginning.

Before the meeting, club members should know what they plan on discussing with the new recruits and how long they want the meeting to last. Usually, the first meeting is a good time to go over the club’s purpose and goals and to get contact information from the new members.

Sometime in the first few meetings, it may be a good idea to assign leadership roles for the club. These usually include President, Vice President, Secretary, and Treasurer. The way these roles function can differ from club to club, but their usual responsibilities are as follows:

•   The President will lead the club and supervise meetings and activities.

•   The Vice President assists the President and takes over their roles whenever the Present isn’t available.

•   The Secretary takes notes during meetings and helps keep all members up to date on the club’s plans.

•   The Treasurer will manage the club’s budget and keep track of expenses.

Assigning leadership roles will help keep the club running smoothly and make it easier for the club to meet its goals.

Planning Ahead for College

It’s really never too soon to start planning, as well as saving, for college. The process of researching schools and then applying can be time-consuming, so the earlier students begin their research, the less last-minute cramming they’ll have to do.

A vital piece of planning for college is figuring out how to finance college. Most schools come with a pretty large price tag, but there are a variety of ways that students can help fund their college tuition.

To apply for federal financial aid, students will need to fill out the Free Application for Federal Student Aid (FAFSA). This will allow you to find out if you are eligible for different forms of financial aid, including grants, scholarship, federal student loans, and work-study. Grants and scholarships usually do not need to be repaid, whereas loans do need to be repaid.

It’s recommended that students exhaust their federal aid options before looking into private student loans. Federal student loans vs private loans come with certain benefits.

If students are not eligible for federal aid, or the financial aid they receive is not enough to meet their needs, there are other options, such as private scholarships and private student loans.

Scholarships are widely available and the eligibility criteria varies for each one. Some scholarships are need-based, while others are merit-based. Scholarships are available through schools, local communities, and corporations.

Taking out private student loans is another option for helping to fund a college education. These loans are available through private lenders, including banks, credit unions, and online lenders. Rates and terms vary, depending on the lender. Generally, borrowers (or cosigners) who have strong credit qualify for the lowest rates.

The Takeaway

As you prepare for college, academics are important but so are extracurricular activities. One good way to build up the latter is to join or even start a club in high school that allows you to pursue a topic you’re passionate about while gaining teamwork, organizational, and communication skills. This can help you stand out when applying to a school and applying for financial aid.

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.

FAQ

Is joining clubs in high school important?

Joining clubs in high school can help develop and showcase such skills as leadership, teamwork, and problem-solving. It can also be a key component of a college application in addition to academic credentials.

What are the benefits of joining a club?

Joining a club in high school can provide social interaction, a sense of community, pursuit of interests, and skill development. It can also help round out a college application.

Does starting a club in high school look good?

Yes, starting a club in high school can have a positive impact on a college application. It can show leadership, initiative, and organizational skills, which may add to a student’s college profile.

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.

SOISL-Q325-106

Online college classes give you the flexibility to study from anywhere — your bedroom, home office, or even a coffee shop. Having the option to take some (or all) of your classes online can also make it easier to balance school with other commitments, such as a full-time job or family responsibilities.

However, online learning also comes with some challenges. It can be difficult to focus if you’re not in an actual classroom. Plus, virtual learning can make it harder to make connections with professors and other students at the school.

Read on for a closer look at how online classes work, their pros and cons, and how to make the most of virtual learning.

Types of Online Classes

There are two main types of online classes. Here’s a closer look at each.

Hybrid Approach

A hybrid course is a mix of in-person instruction and remote learning. The exact schedule will vary by school, class, and instructor, but may include several hours of live or prerecorded virtual learning per week with one in-person session. For example, a chemistry course could include virtual learning and in-person lab work.

Hybrid courses offer the benefits of remote learning without fully abandoning in-person instruction, making it a prime choice for students concerned that online classes may not meet their needs.

Exclusively Virtual

Classes that are all virtual never meet in person. Instruction is given through live webinars, prerecorded video, and physical or digital material.

Depending on the format of the course, students can fit sessions into their schedule as they see fit, an option not provided by a hybrid or traditional class.

Benefits and Potential Pitfalls of Virtual Courses

While virtual learning is ideal for some students, it may be frustrating for others. Here’s a look at some of the pros and cons of taking college courses online.

Pros of Online Courses

Flexibility: The ability to learn whenever and wherever can be a huge advantage for a student with a hectic schedule. Though there are still deadlines and due dates to abide by, learning can typically take place around work, social commitments, and personal preferences. While some courses may include live remote sessions, they’re typically recorded and available for students to view at a later time.

Real-life experience: Online courses tend to put more responsibility on the student. Learning how to prioritize instruction in a flexible schedule can help prepare students for careers.

Potential savings: If a course was designed to be taught in person but has recently been adapted for online instruction, a discount may not be available. But for courses originally built for virtual learning, students often find they can save on the average credit cost. An online degree might also have a condensed schedule. allowing you to get your degree faster.

There are other savings to consider. With online instruction, students generally don’t have to worry about paying for parking, gas, or lunch on the go. Plus virtual learning can allow you to pursue an education while working full or part time, an option not always available to in-person students.

Recommended: How to Find the Right College

Potential Cons of Online Courses

Minimal social benefits: One potential downside to taking a class online is lack of personal interaction. You might find it harder to ask the teacher questions and make connections with fellow students. And, some students simply respond better to in-person vs. online learning, and might struggle to concentrate when learning virtually.

A lack of professional networking: Students often discover opportunities to build relationships with professors and assistants that can lead to careers. Virtual learning makes these relationships more difficult to find and develop.

Scheduling conflicts: While the flexibility of online classes can be appealing, it can create scheduling conflicts. If you are challenged by time management, you may find yourself procrastinating and struggling to manage your workload along with other everyday responsibilities.

Tips for Online Classes

Here are some words to the wise for taking online courses, for both newbies and experienced virtual students.

•   Respect the course. Do you suspect that an online course has less value than in-person instruction? The educational value is the same. It’s just being delivered in a different fashion.

•   Think about time management. Even experienced virtual students can often improve their time management skills. Review the syllabus at the start of the semester, note major assignments, and look for potential conflicts.

•   Try to avoid distractions. When taking online courses, it might be best not to set up in front of the TV, as tempting as it may be. Consider cobbling together a home office that blocks distractions and creates a productive environment.

•   Participate. While an online class can be an introvert’s dream, there are still opportunities to participate. Many online courses offer a forum for students and instructors to discuss course materials, comment on one another’s work, and ask questions as needed.

Funding the Virtual Voyage

Even though some online classes and degree programs can be more affordable than their in-person counterparts, tuition costs may still come with sticker shock. Depending on the school and online program you’re looking to enroll in, however, you may have the following options to help fund your college education.

Paying à la Carte

Online courses are often designed to fit a working student’s schedule (though being employed certainly isn’t a requirement). In some cases, you may be able to pay for classes as you go. In others, the school may also offer a payment plan, allowing you to make monthly payments over time to cover the cost of your online degree.

Federal Loans

By filling out the Federal Application for Federal Student Aid (FAFSA), you will find out if you are eligible for federal student aid, including grants (which you don’t have to pay back) and loans (which you do).

With federal subsidized student loans, you won’t start accruing interest until six months after you graduate. With unsubsidized federal loans, interest begins to accrue as soon as the funds are dispersed (though you can defer making any payments until six months after you graduate). Federal student loans don’t require a credit check and come with a relatively low, fixed interest rate set by the government.

Private Loans

If there are still gaps in funding, you may also want to explore private student loans. These are available through private lenders, including banks, credit unions, and online lenders, and do require a credit check. If you don’t have much credit history or income, you will likely need a cosigner. Rates may be fixed or variable, and are set by the lender. Borrowers with excellent credit tend to qualify for the lowest rates.

A private student loan can cover up to 100% of the cost of school-certified attendance, both for in-person and online courses. Keep in mind, though, that federal student loans offer benefits, like income-based repayment plans and Public Service Loan Forgiveness, that are not guaranteed by private lenders.

The Takeaway

Online classes can have several advantages over in-person ones, saving you time and money and offering the convenience of studying whenever and wherever suits you. However, to succeed, you likely need to focus on minimizing distractions, managing your time wisely, and participating to get the most out of paying for your courses. Also look into options for paying for qualifying classes, such as federal and/or private student loans.

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

FAQ

How to do well in online classes?

Tactics for doing well in online classes include focusing on time management, avoiding distractions, and participating to boost engagement.

How hard is it to take online classes?

Online classes can require more focus, organization, and time management skills than in-person classes. You likely won’t have your professors talking in class about assignment due dates and upcoming tests. Also, distractions when watching classes must be minimized.

Are online classes easier than in-person ones?

It’s a myth that online classes are intrinsically easier than in-person ones. The level of difficulty can vary tremendously among both online and in-person classes. Also, online classes can demand greater focus, time management, and self-reliance to succeed.

About the author

Julia Califano

Julia Califano is an award-winning journalist who covers banking, small business, personal loans, student loans, and other money issues for SoFi. She has over 20 years of experience writing about personal finance and lifestyle topics. Read full bio.

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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.

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).

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.

SOISL-Q325-103

College planning is an exciting time for you and your child. But, as exciting as it may be, there is a lot of preparation involved.

So, whether your child is entering into their freshman year of high school or a few months away from graduation, there is no better time to start planning for college than the present.

From figuring out your financials to helping your child prepare for admission exams, this college planning checklist for parents can help streamline your child’s transition from high school to college.

Starting a Savings Plan

According to the Education Data Initiative, the average cost of college in the U.S. is $38,270 per year, including books, supplies, and daily living expenses. Indeed, the cost of going to college has more than doubled over the past two decades.

With this in mind, it’s wise to start saving for college. But, while many parents may have the best intention of helping their children pay for their college expenses, they often fail to prepare.

So, even if your child is just now entering high school, you can still start saving and preparing for college costs. It’s never too late to start setting money aside for your children’s education.

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

Paying Close Attention to Grades and Curriculum

Since grades and curriculum are crucial to getting an acceptance letter, you may want to keep close tabs on your student’s grades and study habits. From helping with studying to supporting homework expectations, getting involved with your kid’s coursework may help them perform better in school.

You may also want to encourage them to take Advanced Placement courses. Since AP courses allow you to tackle college-level material while your child is still in high school, your student may get ahead by taking some.

Recommended: ACT vs. SAT: Which Do Colleges Prefer?

Encouraging Involvement with the Community

While the top factors in admission decisions tend to be academics, the next most important factors typically include a student’s demonstrated interest and extracurricular activities.

Encouraging your child to get involved in the community could potentially help them write a solid college application, and even help them decide what they want to do with the rest of their lives.

For example, if your child loves to run, they may want to try out for the track team to round out their classes or volunteer as a track coach for a youth team. Or, if they prefer journalism instead of sports, they may want to try writing for the school newspaper.

Not only will getting involved help with their college application, but it will also help sharpen their skills. So, don’t be afraid to encourage them to explore their passions and get involved with the school and/or local community. You might even want to get involved with them.

Planning for the SAT and ACT

Another key component to receiving acceptance letters from colleges and universities is having acceptable SAT and ACT scores. Some schools require the Scholastic Aptitude Test, known as the SAT, while others may require the American College Testing, known as the ACT. Some schools will accept either one, but it’s a good idea to check the preference of the schools your child will apply to.

To help your child prepare, you can encourage them to sign up for an after-school prep class or practice at home by using online resources such as Khan Academy’s free SAT practice program in partnership with The College Board.

Recommended: How to Help Your Child with SAT Practice

Researching Schools

One of the most important components of college planning for your child is helping them decide which university or college is the right fit. Fortunately, there are plenty of options available to help you find a school that will fit your child’s education and experience needs.

To get started in the decision-making process, you may first want to help your child decide what degree they would like to achieve. If they know they want to be an engineer, for example, you may want to focus on schools with good engineering programs.

It’s also wise to consider factors such as location and the type of college experience your child wants to have. For example, if they want to go to a school close to home and commute to save money, that desire will limit the search parameters.

Remember, while you may be the voice of reason, the ultimate decision is up to your child — the student. Simply help them evaluate all of the key factors in making an informed decision.

Scheduling College Visits

College visits can be a big help when it comes to finding the right fit. With this in mind, you may want to help your child plan a college visit well in advance of making a decision. The College Board recommends scheduling your visits during your child’s junior year in the spring if you have already researched schools.

For seniors, it may be best to schedule visits in the fall through the winter months. This may help seniors narrow down their options.

Since you want your child to get a feel of the college experience, you’ll want to make sure classes are in session. Therefore, it’s also wise to avoid visits during holidays or break weeks.


💡 Quick Tip: Would-be borrowers will want to understand the different types of student loans that are available: private student loans, Federal Direct Subsidized and Unsubsidized Loans, Direct PLUS Loans, and more.

Investigating Financial Aid Options

Even if you have saved for your child’s education, you may want or need to explore other funding options, which could include your child taking on some of the cost.

Completing a Free Application for Federal Student Aid (FAFSA®) is one of the first recommended steps to applying for student financial aid, whether that is in the form of grants, scholarships, federal loans, or work-study.

It’s recommended to complete the form as soon as possible because there are differing deadlines to be aware of, including for individual colleges as well as federal and state deadlines. The sooner you submit your FAFSA, generally, the better your chances of receiving aid will be.

Colleges and universities will use the information reported on the FAFSA to determine how much aid a student is eligible for. Even if your child has not applied to a school yet, they can list that school on the FAFSA, so encourage them to include their dream school as well as those they consider safety schools.

Comparing each financial aid award letter can help you and your child determine the financial obligation of attending each school. It is recommended to exhaust all federal aid options before considering a private loan, but if you are looking for supplemental funding for your child’s education, private student loans may be an option.

The Takeaway

College planning is a significant journey that requires careful preparation and support. By starting early, managing finances wisely, visiting campuses, organizing important documents, and providing emotional support, parents can help their children navigate this exciting transition with confidence and ease.

Parents and students can pay for college with cash savings, federal financial aid (including grants, scholarships, and 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.

FAQ

When should parents start planning for their child’s college journey?

Parents should start planning early, ideally during the child’s high school years, to ensure they are well-prepared for the entire college process, from applications to move-in day.

What are some important financial steps parents should take when planning for college?

Parents should create a budget, explore financial aid options like scholarships, grants, and student loans, and understand the costs associated with college to manage expenses effectively.

How can parents support their child’s emotional transition to college?

Parents can support their child’s emotional transition by providing encouragement, being a listening ear, and helping them feel confident and excited about their new college life.

About the author

Ashley Kilroy

Ashley Kilroy is a seasoned personal finance writer with 15 years of experience simplifying complex concepts for individuals seeking financial security. Her expertise has shined through in well-known publications like Rolling Stone, Forbes, SmartAsset, and Money Talks News. Read full bio.

Recently, many colleges have changed their college admissions testing policies, making standardized tests like the SAT optional and placing more emphasis on other factors, such as GPA and essays. One reason for the shift is a growing concern that these tests tend to unfairly reward students with more wealth and access to test prep courses and tutors.

The SAT might be less popular as a requirement for admissions to some colleges, but these test scores have an impact beyond just getting into a school. Read on to learn how SAT requirements are changing, but why taking the SAT and submitting your score may still be helpful.

How SAT Requirements Are Changing

The number of colleges dropping SAT scores as a requirement for admission is growing. However, policies vary from school to school and from admission year to admission year, so students might want to double- and triple-check before assuming that their dream school doesn’t want to see their standardized test score.

A “test-optional” policy allows applicants to decide whether or not they want to submit their SAT or ACT scores to a college. This means that you can take the SAT (or ACT) and, based on how you do and how those scores compare to the average SAT score of admitted students, can decide whether or not you want to submit the score with your application.

Less commonly, colleges will have a “test-blind” or “test-free” policy. This means that even if a student submits SAT or ACT scores, the school will not consider them during the application process.

While some schools no longer require or consider their applicants’ SAT scores, others are making it easier to put your best foot forward with scores. Many colleges and universities, including the Common Application, now allow applicants to submit their SAT superscore.

An SAT superscore allows you to mix and match individual section scores from different test dates to come up with a “superscore” that is higher than the SAT score from a single sitting.

For some, this takes off some of the pressure of standardized testing. It means if a student feels off on one section, they can use a higher score from a previous test to get their best score possible.

Two other major recent changes to the SAT come from the College Board (which creates the test) itself: The SAT no longer contains the essay or subject tests. This means you no longer have the option to take — or submit — these tests.

How SAT Scores Still Matter

Colleges and universities might be changing their guidelines about requiring SAT scores, but standardized tests still matter not only in the admissions process but beyond.

Here are some reasons why the SAT and a student’s score still matter:

•  Avoiding the SAT could limit options. A student’s target school might not require an SAT score, but what about their safety or reach options? Bypassing the SAT test altogether could end up limiting a student in where they can apply to schools. With no test score at all, they may be limited to schools that don’t require an SAT score, potentially missing out on another great option for them. Forgoing the SAT test completely could mean dramatically cutting off a student’s options before the application process even begins.

•  Considered, but not required. Some schools no longer require SAT scores for applicants, but will still consider them if submitted. Sharing SAT scores can help give admissions officers a more comprehensive picture of the applicant. In addition, if the school is particularly competitive, a strong standardized test score could help a student stand out.

•  Scholarship eligibility. Some universities and nonprofits require an SAT score when applying for merit scholarships. Without an SAT score, applicants might be ineligible, losing out on an opportunity to get funding for education.

  Qualifying for and receiving a scholarship can lessen the need for federal or private student loans.

•  They’re just a piece of the puzzle. SAT scores aren’t the only thing college admission boards consider. They’ll also look at a student’s GPA, extracurriculars, essays, recommendations, and more. No applicant is just a number, and the SAT score is only one small part of a student’s profile. Often, the score serves only as a screening tool in the beginning and is considered less and less the further a student progresses in the admissions process.

•  Testing out of college courses. Applicants might not need SAT scores to apply to a school, but providing them might make them eligible to test out of core classes. In some schools, SAT scores might determine placement into, or out of 101 classes all students are required to take. Testing out of these courses could lead to graduating faster or spending less on higher education (which can lower or eliminate the need for private or federal student loans).

While students might not need an SAT score to get into their dream school, taking a standardized test could help them secure admission, scholarships, and entry into higher-level courses. It can be a valuable step for some in preparing for college.

Another Number that Matters: Financing Your Tuition

A student’s SAT score isn’t the only number they’ll have to consider during the admissions process. Another important figure is the cost of tuition, and students will have to start thinking of how they can pay for their education.

On top of federal student loans and scholarships, students might consider private student loans. These are educational loans available through banks, credit unions, and online lenders. Unlike federal student loans, private loans typically don’t come with benefits like income-driven repayment plans and loan forgiveness options — which is why it’s best to apply for federal student loans first.

The Takeaway

While SAT scores are required by fewer colleges than in the past, it may still be worthwhile for students to take the test. The score could help a student’s application package when test scores are considered but not required. It also might contribute to a student securing a merit scholarship toward the cost of their education.
In addition to pursuing scholarships, many students pursue federal and private student loans to fund their college costs.

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.

FAQ

Do colleges really care about SAT scores?

It depends. Some colleges don’t consider the SAT at all, some have test-optional policies, and others do require it. Even in a test-optional setting, however, SAT scores can help contribute to a candidate’s application. Also, SAT scores may help applicants qualify for merit scholarships.

Why is the SAT not required anymore?

Some schools have decided that SAT scores are not as important an indicator of an applicant’s qualifications and likelihood to succeed in college as they did in the past. Test-optional colleges let students choose whether to submit SAT or ACT scores; if a student submits good test results, that could improve their profile. Test-free colleges do not consider scores at all.

Is 1200 a good SAT score?

A 1200 SAT score is usually considered a good score vs. the current average of 1040. , as it’s above the national average. It lands in the 76th percentile, which means you scored better than about three-quarters of those who took the test. It should help you qualify for admission to many schools, but it may not be high enough to qualify for the most selective universities.

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.

A naked (or uncovered) option is an option that is issued and sold without the seller owning the underlying asset or reserving the cash needed to meet the obligation of the option if exercised.

While an options writer (or seller) collects a premium upfront for naked options, they also assume the risk of the option being exercised. If exercised, they’re obligated to deliver the underlying securities at the strike price (in the case of a call option) or purchase the underlying securities at the strike price (in the case of a put).

But because a naked writer doesn’t hold the securities or cash to cover the option they wrote, they need to buy the underlying asset on the open market if the option moves into the money and is assigned, making them naked options. Given the extreme risk of naked options, they should only be used by investors with a very high tolerance for risk.

What Is a Naked Option?

When an investor buys an option, they’re buying the right (but not the obligation) to buy or sell a security at a specific price either on or before the option contract’s expiration. An option giving a buyer the right to purchase the underlying asset is known as a “call” option, while an option giving a buyer right to sell the underlying asset is known as a “put” option.

Investors pay a premium to purchase options, while those who sell, or write options, collect the premiums. Some writers hold the stock or the cash equivalent needed to fulfill the contract in case the option is exercised before or on the day it expires. The ones who don’t are sometimes called naked writers, because their options have no cover.

Writing naked options is extremely risky since losses can be substantial and even theoretically infinite in the case of writing naked calls. The maximum gain naked option writers may see, meanwhile, is the premium they receive upfront.

Despite the risks, some writers may consider selling naked options to try to collect the premium when the implied volatility of the underlying asset is low and they believe it’s likely to stay out of the money. In these situations, the goal is often to try to take advantage of stable conditions and reduced assignment risk, even if premiums are smaller, though there is still a high risk of seeing losses.

Some naked writers traders may be willing to risk writing naked options when they believe the anticipated volatility for the underlying asset is higher than it should be. Since volatility drives up options’ prices, they’re betting that they may receive a higher premium while the asset’s market price remains stable. This is an incredibly risky maneuver, however, since they stand to see massive losses if the asset sees bigger price swings and moves into the money.

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The Pros and Cons of Naked Options

Naked options offer writers the potential to profit from premiums received, but they come with a high risk of resulting in substantial losses. Here’s what to consider before using this advanced strategy.

Potential benefits of naked options

Premium income: Option writers collect premiums upfront, which can generate income if the contract expires worthless.

No capital tied up in the underlying asset: Because the writer doesn’t hold the underlying asset, their available capital may be invested elsewhere.

May appeal in low-volatility markets: While options writers often seek higher premiums during periods of elevated volatility, naked options may be attractive to some when implied volatility is low and premiums are relatively stable. This is because the price of the underlying asset may be less likely to see bigger price movements and move into the money. There is always the possibility, however, that the asset’s price could move against them.

Significant risks of naked options

Unlimited loss potential: For naked calls, a rising stock price can create uncapped losses if the writer must buy at market value. Naked puts can also lead to significant losses if the stock price falls sharply, obligating the writer to purchase shares at a strike price that is well above market value.

Margin requirements: Brokerages often require high levels of capital and may issue margin calls if the position moves against the writer.

Limited to experienced investors: Most brokerages restrict this strategy to individuals who meet strict approval criteria due to its complexity and risk.

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How to Use Naked Options

Because naked call writing comes with almost limitless risks, brokerage firms typically require investors to meet strict margin requirements and have enough experience with options trading to do it. Check the brokerage’s options agreement, which typically outlines the requirements for writing options. The high risks of writing naked options are why many brokerages apply higher maintenance margin requirements for option-writing traders.

Generally, to sell a naked call option, for example, an investor would tell their broker to “sell to open” a call position. This means the investor is initiating the short call position. The trade is considered to be “naked” only if they do not own the underlying asset. An investor would do this if they expected the stock to go down, or at least not go any higher than the volatility priced into the option contract price.

If the investor who writes a naked call is right, and the option stays “out of the money” (meaning the security’s price is below a call option’s strike price), then the investor will pocket a premium. But if they’re wrong, the losses can be theoretically unlimited.

This is why some investors, when they expect a stock to decline, may instead choose to purchase a put option and pay the premium. In that case, the worst-case scenario is that they lose the amount of the premium and no more.

How to Manage Naked Option Risk

Most investors who employ the naked options strategy will also use risk-control strategies given the high risk associated with naked options.

Perhaps the simplest way to hedge the risk of writing the option is to either buy the underlying security, or to buy an offsetting option that would create an option spread, which may help limit potential losses if the trade moves against the writer. This would change the position from being a naked option to a covered option.

Some investors may also use stop-loss orders or set price-based exit points to try to close out a position before assignment, though this requires monitoring and quick execution. These strategies aim to exit the option before it becomes in-the-money and is assigned. Other risk-mitigation strategies can involve derivative instruments and computer models, and may be too time-consuming for most investors.

Another important way that options writers try to manage their risk is by being conservative in setting the strike prices of the options. Consider an investor selling a put option with a $90 strike price when the stock is trading at $100 (for a premium of say $0.50). Setting the strike price further from where the current market is trading may help reduce their risk. That’s because the market would have to move dramatically for those options to be in the money at expiration.

💡 Quick Tip: All investments come with some degree of risk — and some are riskier than others. Before investing online, decide on your investment goals and how much risk you want to take.

The Takeaway

With naked options, the investor does not hold a position in the underlying asset. Because this is a risky move, brokerage firms typically restrict it to high-net-worth investors or experienced investors, and they also require a margin account. It’s crucial that investors fully understand the very high risk of seeing substantial losses prior to considering naked options strategies.

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FAQ

What is a naked option?

A naked option is a type of options contract where the seller does not hold the underlying asset, nor has sufficient cash reserved to fulfill the contract if exercised. This exposes the seller to potentially unlimited losses. Naked calls and puts are typically permitted only for experienced investors with high risk tolerance and margin approval.

What is an example of an uncovered option?

A common example of an uncovered, or naked, option is a call option sold by an investor who doesn’t own the underlying stock. If the stock price rises significantly and the option is exercised, the seller must buy shares at market price to deliver them, which can result in substantial losses.

Why are naked options risky?

Naked options are risky because the seller has no protection if the market moves against them. Without owning the underlying asset or an offsetting position, losses can be substantial or even technically unlimited in the case of naked call options if the stock price rises sharply.

Can anyone trade naked options?

No, not all investors can trade naked options. Many brokerages restrict this strategy to high-net-worth individuals or experienced traders who meet strict margin and approval requirements, due to the significant risk involved.