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For many students, one of the most exciting parts of heading off to college is living on their own for the first time. That might mean moving into a freshman dorm or an on-campus apartment or finding an off-campus living space.

Which is better? The answer will depend on your personal preferences, what year you are in school, your budget, and where you go to college. Here’s a closer look at the pros and cons of living on campus vs living off campus.

Pros of Living On Campus

Many students dream of the day they’ll pack their bags and begin a new life at college. And, for many, a major part of that fantasy involves living on campus. The reason is that living in a freshman dorm with hoards of other students the same age can be a lot of fun.

Living on campus also comes with some other advantages. Generally, arranging on-campus housing is relatively easy, especially for freshmen who may be more likely to get a spot, or may be required to live on campus. Unlike apartment hunting, which can be time consuming and challenging, living on campus can be a more straightforward arrangement and there are generally additional resources provided for students in on-campus housing.

For example, there is generally an RA (Resident Advisor/Assistant) that can answer any questions and help resolve conflicts with roommates. Plus RA’s may run programming for the floor, or dorm, to encourage community and help students meet each other.

Typically, students living in on-campus housing can also purchase a meal plan, which means they don’t need to find time to grocery shop or cook meals when they should be cramming for finals.

Living on campus also means students are conveniently close to all of the resources provided by their school. This not only makes it easier and faster to get to your classes, but also to access on-campus dining, gyms, the health center, libraries, and student recreation centers. Attending on-campus events and getting to a professor’s office hours can also be easier when you’re living on campus.


💡 Quick Tip: Make no payments on SoFi private student loans for six months after graduation.

Cons of Living On Campus

While very convenient and exciting in many ways, on campus housing has its downsides.

For one, dormitory living often involves small spaces and lack of privacy. You may need to share a bathroom with your entire hall. And you may end up living in close quarters with a roommate you don’t know or have much in common with. In addition, finding quiet time to focus on your studies can be a challenge in a dorm.

Another potential downside to living on campus is that you may not have access to a kitchen and will need to eat your meals according to the dining hall’s schedule.

Living on campus can also be more expensive than living off campus.

Recommended: 5 Ways to Start Preparing For College

Pros of Living Off Campus

While you may think that living on campus is the key to having a true college experience, there are actually some benefits associated with living off campus.

Some students may greatly appreciate having a bit of separation from their school life and their personal life, especially as they inch closer to graduation and they begin to plan their transition to the post-college era.

Another major benefit of living off campus is the potential to save some money on living expenses and to have some extra flexibility. Living off campus can be cheaper than living on campus, depending on factors like where the college is located and how close to campus the house is located. Living off campus may also allow you to spend less on food, since you will likely have access to a kitchen and full-size refrigerator.

Another potential advantage of off-campus housing is that you may be able to find a larger living space than you could get in a dorm. Plus, you may have a 12-month lease, which gives the option of staying on campus over the summer to study, get an internship, or find a summer job. (However, this could end up being a con if you are on the hook for a lease when you don’t actually need to be in town.)

Cons of Living Off Campus

While living off campus can provide more flexibility, it may involve having to commute to campus. In some cases, students may be able to find off campus housing within walking distance to school but often you will need to drive. This brings its own set of complications, such as traffic and parking (which on some campuses can be expensive and competitive). Owning and maintaining a car also adds to your college costs.

A commute may also make it less appealing to participate in on-campus events and take advantage of campus amenities like gyms, health centers, and libraries. Spending time with friends may also take more coordination than just walking down the hall.

When it comes to living in off-campus housing, many students may also not be prepared to take on the responsibilities of adult living. While each student’s living situation will vary depending on their specific housing arrangements, many can expect to cook more, clean more, and be more responsible for properly maintaining their off- campus housing. And if they’re having issues with their roommate, there is no RA to help them clear the air.

Keeping School Requirements In Mind

At the end of the day, there is no “best” choice for a college living arrangement. There are so many variables, including the school’s location, the student’s priorities and personality, and how much each option will cost.

One caveat is that some students may not have a choice about whether they live on campus or not. Some colleges and universities require their students to live on campus for a certain amount of years. This is a more common requirement for freshman students, as colleges want them to integrate into campus life and feel engaged and supported.

If you don’t want to live on campus, despite there being a requirement to do so, it’s worth seeing if the school allows students to petition to live off campus. Allowances are sometimes made for students whose families live nearby or who have health issues or specific dietary requirements that can’t be met easily through on-campus dining options.

On the other end of the spectrum, some colleges only guarantee housing on-campus for a certain number of years, resulting in students living off campus at one time or another.

Some colleges and universities provide online resources and other information for students who are interested in living off campus. These resources can help students find housing and make the transition to off campus housing a bit easier.


💡 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.

Financing College Life

Regardless of where you live, you’ll need to figure out how to pay for it. Some students may be able to use the financial aid they receive to help pay for their room and board.

Scholarships may have restrictions on how they can be used, and room and board or rent may or may not be eligible expenses. Review the details of specific scholarships to understand what costs they can help fiance. Student loans can generally be used to pay for tuition as well as living expenses and housing.

There are two types of student loans that you may be able to tap — private and federal student loans.

Federal student loans may be subsidized by the government, which means interest won’t start to accrue until six months after you graduate, or they may be unsubsidized, which means interest begins accruing right away. Either way, you don’t have to start making payments until six months after graduation. Federal loans come with a fixed interest rate set by the Congress annually, and don’t require a credit check.

If federal student loans do not fully cover your costs, you may also want to explore getting a private student loan.
Private student loans are available through private lenders, including banks, credit unions, and online lenders. Rates and terms vary, depending on the lender. These loans do require a credit check and, generally, borrowers (or cosigners) who have strong credit qualify for the lowest rates.

Keep in mind, though, that private loans may not offer the borrower protections — like income-based repayment plans and Public Service Student Loan Forgiveness — that automatically come with federal student loans.

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.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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

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When you make the decision to continue your higher education beyond an undergraduate degree, you likely think about the payoff: Will the education, such as a Master’s degree in Business Administration (MBA), help you secure a well-paying job? Will you be able to quickly pay off your graduate loan?

If you’re wondering what you can do with an MBA, you’re not alone. While there are many different jobs for MBA graduates, the important thing is identifying which you’re interested in so you know you’ve got a promising career ahead of you on the other side of that MBA program.

What the MBA Prepares You For

Because an MBA exposes you to many different aspects of business, from finance to marketing to economics, it can help you qualify for a wide range of business-related MBA careers. Because you aren’t focused in a single niche, you can apply the leadership, accounting, and communication skills you have learned in your MBA program to your future career, no matter what industry it’s in.

Some prestigious MBA programs (that also come with a hefty price tag) may have an alumni network that can help you find a good job right after graduation. But even if you’ve opted for a more affordable MBA program, the simple fact of you possessing an MBA may be appealing to employers and could help you command a higher salary than you could have earned with just an undergraduate degree.


💡 Quick Tip: Private student loans offer fixed or variable interest rates. So you can get a loan that fits your budget.

The Current Job Market

Despite recent layoffs in a variety of industries, particularly in technology, there are still a lot of industries that are growing and even the ones doing the layoffs are still hiring MBAs. Finding a great job, however, may require using your networks to your best advantage. Human resource experts also advise MBA grads to highlight skills that are especially marketable today, including training in artificial intelligence, project management, business analytics, and supply chain management.

Recommended: Is Getting A Degree In Marketing Worth It?

The Best Jobs for MBA Grads

This leads us back to that question: What jobs can I get with an MBA?

The good news is, no matter what the economic climate and your particular skill set, there are typically many jobs for MBA graduates.

Jobs in Finance

If you aced your finance, statistics, and accounting courses, your future may lie in finance. For someone with an MBA, you’ve got several possibilities.

A financial advisor provides financial planning and advice for clients, and may specialize in certain niches, like estate planning or high net worth clients. Financial advisors may continue to pursue additional certifications or licenses. The median salary for financial advisors is approximately $94,170.

A financial analyst is attuned to the stock market and may make forecasts about the behavior or stocks and bonds for clients. The median salary for a financial analyst is around $81,730.

If you enjoy managing a business’ finances, becoming an accountant may be a good fit. You may be in charge of accounts receivable and payable, as well as filing taxes for a business. The median salary for an accountant is around $77,250.

If you have a little technical skill, a budget analyst might be a good fit. You’ll prepare financial reports, evaluate budgets, and help the business manage its finances. Median salary for a budget analyst falls around $79,940.

Recommended: 9 Top Online MBA Programs

Jobs in Marketing

If numbers aren’t your thing, but you love the idea of promoting a brand and connecting with its customers, a career in marketing could be up your alley.

A marketing manager is involved in overseeing marketing campaigns for a company. You may be involved in the strategy, and/or actual execution of tools like social media, content, and advertising. Median salary for marketing managers is around $135,030.

If you want to get more hands-on with digital marketing, consider applying to become a digital media strategist. This role taps into analytics and data to build marketing and ad campaigns to build relationships with customers. The average salary for a digital media strategist is approximately $62,947.

If you’re a born salesperson, being a sales manager may come naturally to you. They develop sales and promotions and oversee sales teams for a company. The median salary for sales managers is about $130,600.

Jobs in Management

If you’re highly organized and have leadership skills, a career in management might be a good fit, particularly if you also have technical skills.

Management consultants often work in technology fields, and help companies solve problems or facilitate transitions. The average salary for management consultants is around $99,655.

Or you could become an operations manager, who is in charge of making sure a company runs smoothly. This role could be involved in finance, supply chain, hiring, and overall strategy, and the median salary is roughly $97,970.

HR managers are also involved in the company’s operations, though from the human resources perspective. This role recruits, interviews, and hires employees, as well as onboards them and trains them. The average HR Manager salary is around $116,792.

If you like keeping projects running smoothly, you might make a great project manager. You’ll be involved in assigning tasks to team members, communicating with company leaders, and facilitating the success of a project. Average salaries fall around $87,129.

Another option is a product manager, who is involved in creating and marketing new products. The average salary for this role is $114,028.

Jobs in Technology

If your skill set lies in IT, there are several jobs to consider once you’ve graduated.

As IT manager, your role would be to manage and upkeep a business’ IT hardware and software, as well as build strategies and protocols for IT security. The median salary is around $159,010.

Business intelligence analysts assess business data and trends to find ways that a business can become more efficient and profitable. The average salary for a business intelligence analyst is around $87,267.

Recommended: Tips on How to Pay for MBA School

How to Stand Out from other MBAs

Now that you have a sense of your career options post-graduation, the question is how to get hired.

Start by networking. There likely are organizations in your community that cater to a general business audience, or even a specific niche, like IT professionals. Your university may have an organization to connect students with employers.

As you build relationships with people through these groups, you can put feelers out for potential jobs. Remember: Networking isn’t about what you can get out of it but rather what you can give. So contribute what you can and connect people when appropriate, and the favor may be returned.

Update your LinkedIn profile to reflect your education as well as any internships or organizations you have been involved with. It’s also a great place to search for jobs and connect with people who work at companies you’re interested in.

Finding a job will take time, so start early and have patience. Have a few versions of your cover letter that you can modify, and customize the letter you send specific to the job and company you’re applying with.

If you make it to the interview phase, send a handwritten thank you note to the person who interviewed you. This is not only polite, but might help you stand out, since few people send physical mail anymore.

After all your hard work, you will likely be rewarded with a career that allows you to utilize the knowledge you gleaned in your MBA program, and ideally offers a competitive salary that can help you repay any MBA loans you took out to finance your education.


💡 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.

The Takeaway

Getting your MBA can open doors for your career. MBA programs aim to teach students a broad range of skills that can help them thrive in a wide range of roles and industries, including tech, HR, marketing, and more.

MBA programs can be pricey. If federal aid, scholarships, and savings aren’t enough to fill the funding gap, private school loans could be one option to consider.

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

Keep in mind, though, that private loans may not offer the borrower protections — like income-based repayment plans and deferment or forbearance — that automatically come with federal 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.

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.

SoFi Private Student Loans
Please borrow responsibly. SoFi Private Student Loans are not a substitute for federal loans, grants, and work-study programs. You should exhaust all your federal student aid options before you consider any private loans, including ours. Read our FAQs. SoFi Private Student Loans are subject to program terms and restrictions, and applicants must meet SoFi’s eligibility and underwriting requirements. See SoFi.com/eligibility-criteria for more information. To view payment examples, click here. SoFi reserves the right to modify eligibility criteria at any time. This information is subject to change.

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.

SOIS0823039

Pairs trading is a market-neutral trading tactic that allows investors to use the historical performance of stocks to place long and short bets to make big profits.

Pairs trading was first used in the mid-1980s as a way of using technical and statistical analysis as a way to find potential profits. It remained the province of Wall Street professionals until the internet opened online trading and real-time financial information to the public. Before long, there were seasoned amateur investors using pairs trades to make money, while managing their risk exposure.

What Is Pairs Trading?

Pairs trading is a day trading strategy in which an investor takes a long position and a short position in two securities that have shown a high historical correlation, but which have fallen momentarily out of sync.

The correlation between the two securities refers to the degree that two securities move in relation to one other. More specifically, correlation is a statistical measurement that measures the relationship between the historical performance of two securities.

It’s usually expressed as something called a “correlation coefficient.” This measure falls between -1.0 and +1.0, with negative 1 indicating that two securities move in exactly opposite ways. A correlation coefficient of positive one indicates that the two securities move up and down at exactly the same times under the same conditions.

What Types of Assets Are Traded in Pairs?

Numerous types of financial assets can be traded in pairs, and the list includes stocks, commodities, options, funds, and even currencies. In one sense, the asset or security at the heart of the trade is somewhat irrelevant, as traders are looking to take advantage of the difference in value (and thus, a different investment position) between the two. Again, the whole goal is to try and beat the average stock market return.

Often, though, pairs trading is discussed in relation to stocks, as that may be the asset class that most trading discussions revolve around.

Pros and Cons of Pairs Trading

Pairs trading is something that most investors can take part in, assuming they know the risks of playing the market. That’s to say that there are pros and cons to pairs trading, and investors should review them before engaging in it.

Pros of Pairs Trading

The biggest pro to pairs trading is that there is the potential for profit, or at least bigger returns than investors may have otherwise generated by executing a different investing strategy. There’s also the potential to generate positive returns no matter what the overall market conditions are. Further, pairs trading may actually be a way to mitigate risk when investing in stocks, as there are only two trades involved, and in some ways, the mechanics of the trade setup can benefit the trader — but note that this is not to say that it’s a safe or risk-free strategy.

Cons of Pairs Trading

Cons of pairs trading include the possibility of the trading model failing due to faulty assumptions on the part of a trader — that is, historical correlation between two stocks may not mean that the correlation has continued. Traders should also know that pairs trading involves fast movements, and that there’s a chance trades may not execute at the desired time — this could stymie the strategy’s effectiveness. For traders, it may be worth looking at different stock exchanges and different investment platforms to get a sense of where the strategy may be the most effective.

It may also be helpful to understand the concept of stock volume in order to have a better chance of success with the strategy.

Pairs Trading Example

In a pairs trade, an investor will look for two separate securities that have a historically high correlation, but have fallen out of sync. If “stock Alpha” and “stock Beta” have historically risen and fallen in step, they’d have a very high correlation, maybe as high as positive of 0.95. But, for whatever reason, the two stocks have diverged, with Alpha racking up big gains, while Beta languished. That has knocked the short-term correlation coefficient between the two down to paltry 0.50.

This is the most common scenario for a pairs trade. In it, an investor will take a long position on stock Alpha, which has underperformed. At the same time, they’ll short stock Beta, which has outperformed. What they’re doing in a pairs trade is betting that the relationship between the two stocks will return to their historical norm, either by one security falling, the other one rising, or some combination of the two.

Pairs Trading Strategy: Market Neutral

Pairs trading is considered a “market-neutral” strategy. There are many of these strategies, which share a common aim to profit from both rising and falling security prices, while sidestepping the risks of the broader market.

Many hedge funds will employ market-neutral strategies, because they are paid based on their absolute returns. A common market-neutral trade may involve taking a 50% long and a 50% short position in one industry, sector or market. They usually do so to take advantage of pricing discrepancies within those areas. In addition to earning a return, their main goal is often to hedge out as much systematic risk as possible.

There are also market-neutral mutual funds, which can vary wildly in what they return investors, largely because there are so many market-neutral strategies, and ways to execute them. Interested investors may want to learn the fund’s particular approach to the strategy before jumping in.

How to Successfully Execute a Pairs Trade

For investors who are ready to incorporate pairs trading into their investment strategy, there are several steps they need to take in order to be successful.

Step One: Decide on Trading Criteria

The first step is to decide what securities to consider for the trade, and can be the most time-consuming in the entire process. This involves researching a vast array of possible investment pairs to find ones that have a historically high correlation coefficient but have since drifted apart. Then investors will want to build and test a model for those securities, using those results to arrive at the best possible buy-and-sell guidelines, as well as how long they intend to stay in a trade.

Step Two: Select Specific Securities

After the investor has settled on a process to select candidates for a pairs trade, it’s time to put that process into action and find securities that currently meet that criteria. Some investors may use manual research, while others prefer mathematical models. Regardless, investors need to think of how they want to use a pairs trade.

For investors who want to get in and out of a trade in a matter of hours or days, they’ll need to run their process to find possible trades on a regular basis. But investors whose trades will last for months won’t need to run their research as often.

Step Three: Execute the Trade

Once an investor has confirmed that a trade fits all their criteria, it’s time to execute the trade. With a pairs trade, there are small but important details to consider. For instance, most experienced pairs traders will execute the short side of the trade before making the long side.

Step Four: Manage the Trade

With the trade in place, the investor now has to wait and watch. This means sizing up the activity of the two securities in the trade to see if they’re approaching the criteria that would trigger one of the predetermined buy-and-sell rules. It also means watching the broader market, as well as any news that might have an impact on either security in the trade. Experienced traders will also constantly adjust the trade’s risk/return profile as markets shift and other news emerges.

Managing the trade is as important as setting it up. If a trader has a pairs trade they expect to last a month, but it reaches 50% of its profit objective in the first day after execution, what should they do? They may choose to close out of the trade that day, because the additional return isn’t worth the risk or the opportunity cost. But they also have other options. They might initiate a trailing stop loss level in the two positions as a way of locking in a portion of the profit. The decision isn’t easy, and may involve a host of other considerations.

Step Five: Close the Trade

The final step is to close the trade. But even this can come with questions and challenges, especially with trades that haven’t worked out, and whose predetermined durations are coming to an end. But it can also be the case with trades that have succeeded and are nearing their time limit. The urge to give a trade more time to turn around — or to do just a little better — has the potential to be the undoing of an otherwise successful trader.

That’s why experienced pairs traders often stress discipline as being as important as research, close monitoring and clear rules when it comes to earning consistent profits with the strategy.

History of Pairs Trading

Pairs trading is a somewhat higher-level trading strategy (though relatively simplistic at the same time), and it was actually first developed by technical analyst researchers at Morgan Stanley during the 1980s. Specifically, Nunzio Tartaglia led the charge, who ran the “quant” group at the firm.

It has since been adopted by traders and investors, big and small.

Investing With SoFi

Pairs trading is a trading strategy that involves the simultaneous purchase and sale of securities in anticipation of a price trend. The idea is that the two securities typically have shown a high historical correlation, but have fallen momentarily out of sync. The investor making the pairs trade is betting that the two stocks will return to their historical norm.

Pairs trading is merely one of many trading strategies, and like all others, it has its pros and cons. Prospective traders may benefit from a discussion with a financial professional before trying it out.

Ready to invest in your goals? It’s easy to get started when you open an investment account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).

FAQ

Is pairs trading still profitable?

Yes, pairs trading can be profitable, assuming a trader knows what they’re doing, and the risks involved with using the strategy. As always, there’s no guarantee that it will be profitable, however.

What are the risks of pairs trading?

Risks associated with a pairs trading strategy include the possibility of the trading model failing due to faulty assumptions on the part of a trader — that is, historical correlation between two stocks may not mean that the correlation has continued. Traders should also know that pairs trading involves fast movements, and that there’s a chance trades may not execute at the desired time.

How many pairs should a beginner trade?

It may be wise for a beginner to start with a single pair, until they get the gist or hang of the strategy.

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