What Is a CEF?

Closed-End funds, or CEFs, are a lesser-known type of investment fund that may benefit income investors who are looking to build a portfolio that provides both diversification and passive income. Similar to other funds such as index funds, mutual funds and exchange-traded funds (ETFs), CEFs pool together funds to purchase a basket of different types of assets, including stocks, bonds, and more. By investing in them individuals gain exposure to a variety of investments through a single portfolio asset.

Many retirees’ investment strategies include CEFs because of their high yields, which average 7.3%, according to BlackRock.

Recommended: Types of Investment Funds Explained

What Makes CEFs Unique?

The main difference between CEFs and other funds is that they are ‘closed,’ meaning that investors can’t buy into them at any time they want. Instead, CEFs hold an initial public offering (IPO), similar to a stock IPO, when investors can buy into them and then close sales once the offering ends.

It’s useful to evaluate CEFs based on their Net Asset Value (NAV), which is the sum of the assets in the fund’s portfolio. Brokerage firms post CEF Net asset values on a daily basis. The NAV differs from the CEF’s market price. CEF shares may sell for a discount to their market value, making it beneficial to buy them through the market rather than in their initial offering.

CEFs vs ETFs: How They Compare

CEF and ETF Similarities

•  Trade on exchanges during daily trading hours like stocks

•  Fund portfolios can be leveraged

•  Can offer capital gains and distributions to investors

•  Have fee schedules and expense ratios

•  Hold portfolios of investments that have a total value

•  Investors can trade shares like stocks using margins, shorting, and limit orders

•  Can focus on specific sectors or broad indexes

CEF and ETF Differences

•  ETFs usually track the performance of an index, whereas CEFs are actively managed

•  Investors are more likely to pay capital gains with CEFs than with ETFs

•  ETFs can’t issue debt or preferred shares, while CEFs can use these tools to create leverage

•  ETFs have features that ensure their share price doesn’t differ very much from their net asset value. In contrast, it’s common for a CEF’s net asset value and share price to be different.

Recommended: ETFs vs Index Funds

CEFs vs Mutual Funds: What’s the Difference?

CEF and Mutual Fund Similarities

•  Can pay out income and capital gains distributions to investors

•  Run by professional management teams

•  Have fee schedules and expense ratios

•  Have a net asset value and contain multiple investments

CEF and Mutual Fund Differences

•  Mutual funds issue and redeem shares daily, whereas CEFs trade on exchanges

•  CEFs can issue debt and preferred shares in order to leverage their net assets, which can increase the amount of their distributions as well as the fund’s volatility

Recommended: Mutual Funds vs ETFs

Types of CEFs

Like other types of funds, every CEF has a different investment strategy and asset size. Funds may hold millions of dollars in assets or billions. Each has its advantages and downsides.

The main issue with small CEFs is they generally don’t trade at high volumes. That means that if an investor holds a large position they can actually affect the price when they buy or sell.

CEF Distributions

CEFs pay out distributions on a regular basis. These are similar to dividend payments but have some key differences.

Since CEFs include both stocks and bonds, distributions can include bond interest payments, equity dividends, return of capital, and realized capital gains. The tax on the investment income from those earnings may differ between funds since they each have a different asset makeup.

CEF distributions can change over time, so a fund that has a very high payout may make cuts to it. So while an investor may choose a CEF with a high yield, it’s important to keep in mind that it could change over time.

One way to find a fund with an ideal yield is using the distribution-to-NAV ratio. CEFs are actively managed, and the managers need to earn money in order to pay out distributions. So by looking at the net asset value of the CEF compared to it’s distributions, investors can see whether a CEF will be able to maintain its current yield rate. If the NAV isn’t high enough to maintain a high distribution, the manager may cut the distributions.

One main benefit of CEFs is since they are actively managed, the managers can redistribute investments to maximize returns. However, like any asset, CEFs don’t always perform well. Some CEFs focus on a particular industry, and if that industry isn’t doing well the CEF may not perform well either. The success of a CEF also depends on the management team.

Recommended: How Often Are Dividends Paid?

How to Buy and Sell CEFs

It’s simple to buy and sell CEFs on major stock exchanges, and both beginning investors and those with more experience can participate in the CEF market. Investors can trade them during regular trading hours just like ETFs and stocks, although there are far fewer CEFs available on the market and they have much smaller trading volumes.

CEF Fees

One major downside of investing in CEFs is the high fees. The average annual CEF fee is 2.2%. However, the fees are taken out of the fund so investors may not notice them immediately. Proponents of CEFs claim that they have high fees because they have high quality managers who help the fund earn more money.

Fees can also include the cost of leverage, which is a tool CEFs use to make the fund more profitable. CEFs have more borrowing ability than individuals, so they can greatly benefit from using leverage, making the high fees worth it for investors. Of course, using leverage for investment also brings on additional risk.

It’s important for investors to consider whether paying high fees is worth it based on the performance of any particular CEF.

The Takeaway

CEFs are a type of investment fund that typically offers diversification and passive income. CEFs have several similarities to exchange-traded funds and mutual funds, but they are closed investments that typically have higher fees and smaller trading volumes.

If you’re interested in building a portfolio using other types of investments, a good place to start is by opening an account on the SoFi Invest® brokerage platform. You can use it to buy and sell stocks, ETFs, and even cryptocurrencies with just a few clicks on your phone. The platform offers both active and automated investing strategies.

Photo credit: iStock/ayagiz


SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
Exchange Traded Funds (ETFs): Investors should carefully consider the information contained in the prospectus, which contains the Fund’s investment objectives, risks, charges, expenses, and other relevant information. You may obtain a prospectus from the Fund company’s website or by email customer service at [email protected] Please read the prospectus carefully prior to investing. Shares of ETFs must be bought and sold at market price, which can vary significantly from the Fund’s net asset value (NAV). Investment returns are subject to market volatility and shares may be worth more or less their original value when redeemed. The diversification of an ETF will not protect against loss. An ETF may not achieve its stated investment objective. Rebalancing and other activities within the fund may be subject to tax consequences.
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Source: sofi.com

Preferred Stock vs. Common Stock

Preferred stock and common stock are two different classes of shares that publicly traded companies may issue.

It’s important to understand the difference between common stocks vs preferred stocks so that you can properly evaluate potential investments and determine whether they fit into your overall portfolio strategy.

What are Common Stocks?

Common stock is what people generally think of when they refer to a stock. All publicly traded companies issue common stock, which provides you a share in a company with the requisite voting rights in that company.

Common stocks may offer dividends if the company chooses and can also increase (or decrease) in value based on the stock price. If a stock increases in value from when you bought it, then you may be able to sell the stock for a profit.

But dividends are only paid out if the company decides to distribute earnings via dividends to shareholders. If the company goes bankrupt, common stockholders will be paid last, if at all, after creditors and preferred stockholders.

What are Preferred Stocks?

Preferred stock also represents a share in a company but it has a few characteristics that make it similar to a bond. Preferred stocks, sometimes referred to as simply “preferreds” pay an annual dividend that companies determine in advance and pay ahead of dividends to other shareholders.

Those dividends are often a fixed amount but can be adjustable based on preset specifications. (Dividends on common stock vary based on the company’s finances.) That means preferred stockholders receive dividends whether the stock loses or gains value.

Preferred stockholders also get preferential treatment in the case of corporate bankruptcy or collapse. Preferred stock, however, does not generally come with voting rights, and the company can buy back preferred stock at a predefined price.

Convertible Preferred Stock

Convertible preferred stock may convert to common stock in a few scenarios: if the board of the company votes for conversion, if you decide to convert based on the stock price, or if at a predetermined price date. Private companies often issue early investors preferred, which converts to common stock if the company completes an initial public offering (IPO).

Recommended: Buying IPO Stocks: What You Need to Know

When companies have a lot of convertible preferred stock or convertible bonds it can impact the way that investors value them. In that case, investors may look at both the company’s earnings per share and their diluted earnings per share, which factors in the potential impact of what would happen if all their convertible securities were turned into common shares.

Why Companies Issue Preferred Stock

Companies may issue preferred stock for several reasons, including a desire to access more capital without taking on more debt or diluting existing voting rights. Companies may also consider preferred stock less risky, since they may have the option to call it at a later date.

Preferred Stock vs Common Stock: Benefits and Drawbacks

When looking at preferred vs common stock, both have benefits and drawbacks, and both can be good investments depending on your overall strategy.

Preferred Stocks Benefits

•  Higher Dividends. Preferred stock typically pays higher dividends than common stock because the company sets dividends when issuing the stock. However, if the company decides to issue a more significant dividend, the dividend on a common stock could go above the dividend on preferred stock.

•  Less Volatility. Given their guaranteed dividends, preferred stock may have less price volatility than common stocks, while remaining more volatile than a bond.

•  Preferred Stockholders Have Priority. One of the things that makes preferred stock slightly less risky is what happens in the case of a company becoming insolvent. If a company has to declare bankruptcy and pay creditors and bondholders, then preferred stockholders get paid before those who have common stock in the company.

Preferred Stock Drawbacks

•  Interest Rate Risk. Because preferred stocks have many similarities to bonds, their value correlates to interest rates. Thus, as interest rates rise, preferred stock becomes slightly less valuable because other investments may appear to be more valuable.

•  Limited Growth Potential. Although preferred stocks may have higher dividends than common, they may not have the same upside. Investors are more likely to see stock appreciation with common stock than with preferred stock. So, if investors are looking for a long-term strategy, they might be better off with common stock.

•  Potential for calls. Companies may be able to call or redeem convertible preferred stock, meaning you’d get paid for the value of the stock but would no longer own it. The stock may also convert to regular stock.

Common Stock Benefits

•  Voting Rights. The voting rights that come with common stock may not be especially valuable unless you own enough stock to have a significant percentage of voting rights, but some investors enjoy the opportunity to make their voices heard.

•  Appreciation. Common stocks are more likely to appreciate than preferred stocks. So, for investors wanting to capitalize on a company’s growth potential, purchasing common stocks can help them achieve this goal.

•  Availability. While every publicly traded company offers common stock, not every company offers preferred stock

Common Stock Drawbacks

•  Volatility. Common stock’s value can go up or down depending on the company. That means that common stock may have greater investment risk, with the potential for both greater gains and greater losses.

•  No Dividend Guarantee. Common stock does not guarantee a dividend, which means it won’t provide a set income, although some stocks do provide relatively reliable dividends.

When You Should Buy Preferred Stock vs Common Stock

When evaluating the difference between common and preferred stock, preferred stocks may appear to be a better deal, given their guaranteed dividends and preferred access to assets if the company goes bankrupt.

Whether or not investing in preferred stocks is suitable for your portfolio will depend on your investment goals and risk tolerance. For example, if you’re looking for a steady stream of income, a preferred stock might make a good addition to your portfolio since they have the potential to offer higher and consistent dividends.

On the other hand, if you’re looking for more of a long-term growth strategy to save for retirement, there might be better options since companies can call back their preferred stock and common stock may have more potential for gains.

As with any investments, there is no guarantee for either common stocks or preferred stock. Before you decide which is better for your investment mix, determine what role they will play in reaching your financial goals.

Common vs Preferred Stock: Getting Started Buying Stocks

Whether you’re buying preferred or common stocks, you can make the purchase via a broker licensed to trade on the exchanges, or using an online trading platform that allows you to make individual trades yourself or invest in a diversified fund made up of a mix of stocks, bonds, and other assets.

Whichever way you go, it’s often easier to access common stocks, but you can get exposure to both through ETFs (exchange-traded funds) as well. There are preferred stock ETFs, which offer the ability to buy a share of the ETF, granting a proportionate share of all the preferred stocks that make up that ETF.

Individual investors don’t have access to all preferreds. Participating preferred stock is a special type of preferred stock typically only available to private equity or venture capital firms making an investment in an early-stage company.

The Takeaway

If this all sounds a little complicated, then professional advice can also help you figure out how stocks—both preferred and common—can fit into a diversified portfolio that helps you achieve your financial goals.

The SoFi Invest® brokerage platform offers both active investing and automated investing, which means you can either pick and choose your own stocks or you can have an algorithm help set you up with an investment portfolio tailored to your risk tolerance and goals.

Still debating common vs. preferred stock? Get some one-on-one financial advice from SoFi Invest wealth advisors.


SoFi Invest®
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).

2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.

3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
IPOs: Investing early in IPO stock involves substantial risk of loss. The decision to invest should always be made as part of a comprehensive financial plan taking individual circumstances and risk appetites into account.
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Source: sofi.com

Brush Up on Your Money Smarts

What do you know about money?

Just enough to pay the bills? Are you puzzled at where all your money goes each month, or are you confident about the financial decisions you make?

Now’s a perfect time to reflect on your money knowledge — and build your financial literacy.

Financial literacy, by definition, is understanding essential financial concepts and having the knowledge and skills to use money in a positive and effective way.

We, at The Penny Hoarder, love a good challenge, so we created a fun quiz to help you brush up on your financial knowledge. And don’t worry — we’ll start with some helpful resources so you can ace this test.

6 Stories to Improve Your Financial Literacy

Check out the following articles to learn more about financial literacy and basic money concepts. Then test your knowledge with our financial literacy quiz.

Uncovering America’s Financial Literacy Problem

If you know enough about money to get by, you may be wondering what’s the big deal about financial literacy.

The Penny Hoarder conducted a survey of more than 1,500 adults in 2019 and found out that those who lacked financial literacy earned lower incomes and saved less money than those who grew up discussing money topics at home or in school.

Having a solid grasp on money concepts can have a real impact on your household’s financial bottom line.

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Give the Next Generation the Gift of Financial Literacy

If you’re a parent (or have nieces, nephews, grandchildren or other children in your life), take the time to teach your kiddos how to use money wisely. Here is our guide for teaching kids about money management.

Once they know those basics, level up the lessons and teach them how to build wealth. Use these clever tricks to get your kids excited about investing.

Be the Boss of Your Money

Stop letting money slip through your fingers. Tell it what to do… with a budget.

A budget is your blueprint for how you want to use your hard-earned cash. Here’s a step-by-step guide to budgeting your money.

Become a Super Saver

Putting aside some of your income is great, but knowing how to accelerate your savings growth is even better.

Money that earns compound interest will result in more savings than just stashing cash under a mattress. But what is compound interest and how does it work? We explain.

Get a Handle on Your Credit Score

Your credit score is like a grade for how responsible you are when borrowing money. This score comes into play when you apply for a credit card, get car insurance and buy or rent a home — so it’s pretty important.

So how do you build up to a great credit score? These five factors are what matters when it comes to your credit.

Test Your Money Knowledge With Our Financial Literacy Quiz

1. True or false:

Learning financial literacy from an early age generally leads to earning more and saving more as an adult.

2. Children can learn about money management by:

A. Using money jars for spending, saving and giving.

B. Having an allowance.

C. Comparing the prices of items in the toy aisle.

D. All of the above.

3. Which of the following is an example of a budgeting method?

A. The 50/30/20 method.

B. The snowball effect.

C. The even-odd method.

D. The hexagon method.

4. Having a budget can help you with all of the following except:

A. Reducing frivolous spending.

B. Paying bills on time.

C. Negotiating your salary.

D. Reaching your financial goals.

5. True or false:

Personal finance is a required course at 87% of high schools nationwide.

6. Credit scores range from:

A. 0 to 100

B. 300 to 850

C. 200 to 600

D. A to F

7. When it comes to your credit score, this is the factor that matters most:

A. How much credit you qualify for.

B. The number of credit cards you have.

C. Making your debt payments on time.

D. Having a diverse mix of credit accounts.

8. Compound interest is:

A. Interest on interest.

B. What you get when you multiply the principal amount by the interest rate.

C. When your interest rate changes throughout the duration of the loan term.

D. Another term for simple interest.

9. This investment vehicle uses pre-tax dollars to grow your money:

A. Roth IRA

B. 401(k)

C. 407(b)

D. 529 plan

10. A fractional share:

A. Pays dividends 50% less often than whole shares.

B. Is only for minors who want to start investing.

C. Requires you to diversify the money you invest.

D. Makes it easy to invest small amounts of money.

Answer key:

(1) True (2) D (3) A (4) C (5) False (6) B (7) C (8) A (9) B (10) D

You’ve got 8-10 correct answers: You know your stuff! Hopefully you’re applying that financial knowhow in real life to build wealth. Join The Penny Hoarder Community to share your best money tips with others.

You’ve got 4-7 correct answers: You’re growing your money knowledge. Try to hone in on what stumps you the most. Credit and investing can be tricky. If you’ve got a personal money dilemma bothering you, send your questions to Dear Penny — our financial advice columnist — for some wise feedback.

You’ve got 0-3 correct answers: You’re in need of a financial literacy boost. Fortunately, The Penny Hoarder has tons of articles covering a variety of personal finance topics. Follow our social media pages (you can find us on Facebook, Twitter and Instagram) for frequently shared articles and money tips.

Nicole Dow is a senior writer at The Penny Hoarder.

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Source: thepennyhoarder.com

What Is Expected Family Contribution (EFC)?

Expected family contribution (EFC) is a calculation based on information provided on the Free Application for Federal Student Aid (FAFSA®) to estimate how much a student and their family are able to pay out of pocket towards college expenses. The resulting figure is used by colleges and the government to determine how much need-based financial aid students qualify for.

EFC meaning is sometimes mistaken as the dollar amount that a student and their family will pay for college. However, the amount families end up paying could be significantly more or less than the EFC depending on the cost of attendance and scholarships.

Here’s what aspiring college students need to know about EFC and how it affects their potential aid.

Expected Family Contribution as Part of the Picture

The expected family contribution is an estimate of how much money a family can contribute toward a student’s college education.

need-based aid you can get.

Your offer of financial aid may change from year to year.

Need help paying for college?
SoFi is here to help.

How Your EFC Is Calculated

There are two main options for calculating EFC depending on which schools you apply to. The federal methodology utilizes financial information from the FAFSA to quantify an applicant’s EFC. Meanwhile, a growing list of colleges uses the College Board’s College Scholarship Service (CSS) profile in addition to FAFSA to assess what students and families can afford to pay.

Calculating EFC With FAFSA

This methodology to calculate EFC was established by the Higher Education Act of 1965. However, the formulas are adjusted every year to account for inflation.

Filling out the FAFSA provides the information needed to calculate the EFC. This includes taxed and untaxed income, investments, assets, benefits, household size, and enrollment status of family members.

If you’ve already completed the FAFSA, your EFC will be listed in the top right corner of the Student Aid Report, which outlines financial aid eligibility. Students can have their EFC recalculated on an annual basis by submitting the FAFSA each year they’re enrolled in college.

You can calculate EFC in advance to get an idea of how much federal financial aid you can expect. First, figuring out your dependency status will help determine what financial information is needed and which of the following EFC formulas apply to you.

•  Formula A: Dependent students
•  Formula B: Independent students without dependents other than a spouse
•  Formula C: Independent students with dependents other than a spouse (e.g., children)

The worksheet for these formulas is updated each year, and the 2020-2021 EFC formula worksheet is available online.

A dependent student is considered to have support from parents or guardians, so their parent’s financial information is included with the applicant in the EFC calculation. Whereas, independent students only provide individual financial information, or, if married, for their spouse as well.

Before completing the corresponding formula worksheet, there are some scenarios that can call for revising the EFC calculation.

If students or their families meet certain criteria, they can calculate EFC with simplified formula worksheets that exclude assets. For the 2021-2022 academic year, students who receive benefits from federal programs, such as the Supplemental Nutritional Assistance Program (SNAP), and report combined 2019 income of $49,999 or less can use the simplified formula. Having status as a dislocated worker and other tax information can substitute for the federal benefits requirement.

Students and families may receive an automatic zero EFC calculation if they meet lower income requirements. For the 2021-2022 academic year, the income threshold is $27,000 for parents of dependent students and independent students, and their spouses. Take note that independent students without dependents besides their spouse can’t qualify for an automatic zero EFC.

Calculating EFC With the CSS Profile

Around 200 colleges require students to provide supplemental financial information through the College Scholarship Service Profile. The 2021-2022 list of participating institutions is available online.

Colleges may customize their questions on the CSS Profile to capture more information to evaluate a student’s financial need. For instance, the CSS Profile may ask about home value and financial information from both households if a student’s parents are separated. The CSS Profile may also consider the regional cost of living and personal circumstances in its calculation of financial need.

While completing the CSS Profile in addition to FAFSA adds work to the college application process, it’s also an opportunity to qualify for institution-level financial aid.

How EFC Affects Your Financial Aid Package

EFC is one of several factors that affect your financial aid eligibility. Additionally, enrollment status, your year in school, and a given school’s cost of attendance will influence the type and amount of financial aid you can receive.
Schools calculate financial need by subtracting EFC from the cost of attendance, as demonstrated by the following formula:
Financial Need = (Cost of Attendance) – (Expected Family Contribution)
The cost of attendance is an estimate of the overall cost for the academic year, and thus, accounts for tuition, living expenses, books and supplies, and miscellaneous costs. If the cost of attendance exceeds the expected family contribution, you may qualify for need-based financial aid.

Federal Need-Based Aid Available for Qualifying Students

Depending on other eligibility criteria, a financial aid package could include the following need-based federal student aid programs:

•  Federal Pell Grant: Student eligibility is determined by financial need and the funding amount can fluctuate each year. For the 2021-2022 academic year, the maximum award is $6,495 and students with an EFC of 5846 or less may qualify for a Pell Grant.

•  Federal Supplemental Educational Opportunity Grant (FSEOG): Participating schools receive a set amount of federal funding that is distributed to students based on financial need each year. Eligible students can receive between $100 and $4,000 a year based on funding availability and their overall financial aid package.

•  Direct Subsidized Loans: Undergraduate students with financial need may qualify for subsidized loans—a type of federal student loan that does not require interest payments as long as students study at least half-time. Students also receive a six-month grace period on interest payments after graduation and may qualify for a deferment based on income, health, continuing education, military service, and other factors.

•  Federal Work-Study: This program provides part-time employment for undergraduate and graduate students with financial needs at participating schools. The total work-study award depends on the level of need, the timing of application, and a school’s available funding.

Fill Out the FAFSA® Early?

A student may qualify for a specific amount of need-based aid but may not receive all of it. That’s because the amount a student receives depends on the available funding at their school.

Getting Financial Aid When Your Parents Make Too Much

While families with low EFCs can expect to receive more need-based financial aid, the total amount offered will vary by school. Knowing your EFC early on can allow plenty of time to research which schools offer considerable aid.

If you have a high EFC, honing your search on schools where you’re competing for merit-based scholarships could potentially help make college more affordable.

Looking Ahead: Student Aid Index

Starting in 2023, the EFC will be replaced with the Student Aid Index (SAI). The change from EFC to SAI was part of the FAFSA Simplification Act, which passed in December of 2020 as part of the Consolidated Appropriations Act, 2021.

The SAI makes some changes in how the estimated aid is determined, including:
•  Removing the number of family members in college as a determining factor.
•  Establishing a new minimum SAI (from $0 for EFC to -$1,500), to help students cover costs that may not be included in a university’s tuition.
•  Creating separate eligibility criteria to qualify for Federal Pell Grants.

However, the SAI will not come into effect until July 1, 2023. Until then, EFC will be used to help determine financial aid awards.

Bridging the Financial Gaps

Calculating your expected family contribution (EFC) is an important step for evaluating the cost of higher education. However, colleges are not required to meet 100% of a student’s financial needs.

To fill the gap, students can apply for scholarships and grants or take out student loans. If federal sources of aid, including federal student loans, aren’t enough to cover college costs, students may consider borrowing private student loans.

Private student loans lack the borrower protections offered by federal loans, so are generally borrowed after all other sources of aid have been exhausted. Students interested in borrowing private student loans may want to consider shopping around so they can find a loan with the best rate and terms for their personal situation. SoFi offers private student loan options for undergrads, graduate students, and parents.
Checking your rate will not affect your credit score.†

Make a SoFi private student loan part of your package of considerations.



SoFi Loan Products
SoFi loans are originated by SoFi Lending Corp. or an affiliate (dba SoFi), a lender licensed by the Department of Financial Protection and Innovation under the California Financing Law, license # 6054612; NMLS # 1121636 . For additional product-specific legal and licensing information, see SoFi.com/legal.

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 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. SoFi Lending Corp. and its lending products are not endorsed by or directly affiliated with any college or university unless otherwise disclosed.

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 or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third party trademarks referenced herein are property of their respective owners.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. A hard credit pull, which may impact your credit score, is required if you apply for a SoFi product after being pre-qualified.

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Source: sofi.com

How Much Are ATM Fees?

If seeing a “cash only” sign causes you to roll your eyes and heave a heavy sigh, it could be because you’ve developed a healthy aversion to ATM fees.

Depending on where you bank and what ATMs are nearby, you could end up paying much more than you need to when withdrawing your money. If the ATM is out of network, fees can run anywhere from $2.50 to $5 or more just for one transaction.

Fortunately, you can ​​save money on ATM fees if you plan ahead. Here’s a breakdown of how ATM fees are determined, along with ways to avoid getting stuck giving over cash to access your cash.

What Are ATM Fees?

Bank account holders typically pay no fees for using in-network ATMs. However, these machines may not always be conveniently located.

Indeed, more than half of ATMs today are owned and serviced by independent operators and their affiliates—not banks. If you use an out-of-network ATM, you could end up paying a fee to your bank, as well as a fee to the ATM operator.

The total cost of using an ATM that’s not part of your bank’s network now averages around $4.64, according to a recent Bankrate survey. In some cases, you could pay even more.

Here are some typical fees charged for using an ATM:

Non-Network Fee

This fee can be charged by your bank for using a non-branded or non-partner ATM. It’s kind of like going to a doctor that’s not on your insurance plan—you might be able to do it, but it could be more expensive.

On average, this charge accounts for about $1.50 of the total fee, according to Bankrate. The fee can apply to any type of transaction performed at an ATM, including withdrawals, transfers, and even balance inquiries. Typically, you won’t be told about such fees at any time during your ATM transaction.

ATM Surcharge

This one comes from the ATM owner, and is often labeled as a “convenience charge.” The average U.S. surcharge currently runs just over $3. However, surcharges can vary by state and venue, and you may encounter higher amounts in places where ATMs are in greater demand.

If you’re at an entertainment venue in a popular tourist destination, for instance, you could pay as much as $25.
When using an ATM that isn’t part of your bank’s network of machines, the machine usually notifies you about a fee charged by the bank or company that operates the ATM.

Foreign ATM Fees

Traveling overseas can come with even more watch-outs, such as foreign transaction fees on both purchases and ATM withdrawals.

Taking out money at a foreign ATM can incur a fee of around 1% to 3% of the transaction amount. Some financial institutions, however, have no foreign transaction fees, and can be worth looking at if you frequently travel overseas.

How to Steer Clear of ATM Fees

If having to pay money to access your money grinds your gears, there’s some good news—it is possible to avoid ATM fees or at least encounter them less frequently.

Here are some strategies:

Scouting out ATMs in Advance

Finding out where your financial institution’s in-network ATMs are located in your area, or where you are traveling to, can save you money and hassle. These may be ATMs branded with the institution’s name and logo, or in a network of partner ATMs, such as Allpoint or Star . You can research this on your bank’s website or app.

Getting Extra Cash When You Go

Fees are typically charged per transaction, so one way to avoid charges is to withdraw more cash than you need whenever you go to the ATM, and then keeping it in a safe place. This can yield significant savings when you are traveling overseas, where surcharges can be significantly higher than domestic ATM fees. You may want to keep in mind, however, that there are usually some ATM withdrawal limits.

Asking for Cash Back at the Register

Many retailers and convenience stores offer cash back when you make a purchase using your debit card. This can be a convenient way to get cash without paying an ATM fee. It can be a good idea, however, to make sure that neither the retailer, nor your bank charges a cash-back fee.

Switching to a Different Bank

Not all banks charge out-of-network ATM fees. If you’re getting hit with fees, especially double fees, you may want to consider switching to an institution that has a larger ATM network, doesn’t charge ATM fees, and/or refunds ATM fees charged by machine providers.

Online banks often have generous policies regarding ATM fees. They typically don’t have their own ATM networks, but will partner with large networks, like Allpoint, and may refund some fees charged by out-of-network ATM providers.

Using a Peer-to-Peer Payment App

With a peer-to-peer (P2P) payment app, like Venmo, or a similar service offered by your financial institution, you can easily pay your friends without cash with just a few taps on your phone-–and avoid a trip to the ATM entirely.

The Takeaway

If you need cash and the nearest ATM is not in your bank’s network, you may end up paying a fee to your bank, plus a fee to the ATM provider, which can total around $5.

Fortunately, there are ways to avoid paying ATM fees. One is to always make sure you are taking money out of one of your banks branded ATMs or one of their partner networks.

Other options include asking for cash back when you make a purchase, using a peer-to-peer payment app, or switching to a bank that doesn’t charge ATM fees and even refunds fees charged by ATM providers.

Looking for Something Different?

Another easy way to avoid ATM fees, as well as many other annoying fees, is to open a SoFi Money® cash management account.

SoFi Money offers free ATMs at 55,000+ locations worldwide. Plus, users can make quick and easy (and free) P2P payments right through the SoFi app.

Ready to eliminate fees and earn interest? Get started with a SoFi Money account.


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.
SoFi Money®
SoFi Money is a cash management account, which is a brokerage product, offered by SoFi Securities LLC, member FINRA / SIPC .
Neither SoFi nor its affiliates is a bank. SoFi Money Debit Card issued by The Bancorp Bank.
SoFi has partnered with Allpoint to provide consumers with ATM access at any of the 55,000+ ATMs within the Allpoint network. Consumers will not be charged a fee when using an in-network ATM, however, third party fees incurred when using out-of-network ATMs are not subject to reimbursement. SoFi’s ATM policies are subject to change at our discretion at any time.

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Source: sofi.com

10 Cheap School Lunch Ideas That Are Kid-Approved

Sandwiches are great… until they get soggy in a lunchbox, or worse — crushed by a piece of fruit or a book.

If you or your little ones are dreading the thought of heading back to class this fall with simple sandwiches, it’s time to free yourself from old lunch-making habits.

No, we’re not going to recommend buying lunch every day, unless your school has a tasty (and also inexpensive) lunch program. It’s possible to make a delicious, relatively nutritious lunch for just a few dollars a day.

Try these 10 cheap lunch recipes — they each come in at around $5 a serving, and they offer enough variety to satisfy even the picky eaters in your house.

10 Cheap School Lunch Ideas

Get ready: These lunch ideas are going to make you hungry.

ham and cheese skewers
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1. Lunchbox Kebabs

Christina Hitchcock’s lunchbox kebabs are the perfect alternative to tired sandwiches, and the recipe she shares on her blog It’s a Keeper is super simple.

Choose your tiny scholar’s favorite sandwich fixings, like meat, cheese and veggies, and stick ‘em on short skewers inside a plastic container. The components will stay fresh, and you can include a small container of a dip — mustard would be my choice — for mealtime.

What You Need

  • Black Forest Ham
  • Cheddar Cheese Slices
  • Grape Tomatoes
  • Skewers
  • Yellow Mustard

2. Cool Apple Quesadillas

For the kid who can’t get enough cheese, but honestly needs a few more food groups in their day, these grilled-then-chilled quesadillas from Laura Fuentes of Momables are perfect.

They take a few minutes of prep, but they’re worth it. Although designed for a cold lunch, you do cook the quesadilla on the stove like you would at dinnertime. Gotta congeal that cheese.

Fuentes layers on thin-sliced apples and cheese slices, and grills them between eight-inch tortillas. There’s a ton of wiggle room here for ingredients — consider switching to a whole-wheat tortilla or switch up the cheese selection for a new flavor combo.

What You Need

  • Flour Tortillas
  • Cheese Slices
  • Granny Smith Apple

3. Polka-Dot Pizza Dippers

Your resident pizza fiend will ask for this easy, cheap lunch day after day. And that’s totally doable, because you can prep a whole batch in advance and freeze them until it’s time to pack a few pizza dippers.

Simply divide refrigerated biscuit dough as described in the recipe on Coupons.com’s The Good Stuff blog, and top with a dab of sauce and a slice of pepperoni. They bake up flaky, and you can season to taste.

What You Need

  • Refrigerated Biscuit Dough
  • Pizza Sauce
  • Pepperoni
banana and strawberry burritos
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4. No-Bake Banana Burritos

Here’s a wholesome lunch that requires zero cooking. Promise!

It’s a sweet twist on the typical PB&J: a PB&J banana burrito.

Smear peanut butter and jelly on a tortilla, roll up a (peeled, of course) banana in the center, and send it off to school. Banana burritos!

It’s easy to swap PB for another type of spread, like sunbutter, if your kids go to a peanut-free school.

Feeling pooped from a long day of parenting? Even smaller students can prepare this lunch on their own.

What You Need

  • Yellow Bananas
  • Peanut Butter
  • Strawberry Preserves
  • Flour Tortillas

5. The Ultimate Bento Box

If your kid is more of a grazer, stop worrying about packing a meal so much as packing a bunch of snacks they’ll be excited to eat at lunchtime. Choose a reusable container with sections to pack four to six different bite-size treats.

It’s also a great way to compromise with a kid who has a major sweet tooth but isn’t so much into vegetables: pack a sweet treat, sure, but surround it with enough healthier options that it’ll all even out.

What You Need

Nike, who runs the blog Choose to Thrive, likes to make her kids’ bento boxes look like Lunchables. But here’s what I’d put in my ideal box:

  • Cracker Rounds
  • Cheddar Cheese Slices
  • Green Pepper
  • Grape Tomatoes

The fresh ingredients for this box are more expensive, but remember this is one of the more customizable lunch options. You can substitute other components like a clementine, pretzel sticks, apple slices, a handful of almonds, a hard-boiled egg or even a few cookies.

It’s also easy to adjust portion sizes based on your student’s appetite.

6. Waffle Sandwiches

Land O Lakes offers this cool recipe that asks you to put sandwich components inside a waffle maker to griddle up some goodness. I say: Let’s not work that hard.

To make an easier version of a waffle sandwich, toast up a frozen waffle, cut it in half, and layer on ham and cheese. Then, either microwave these magical sandwich sticks or grill in a pan for a few minutes.

If you’re a nice parent, add a small cup of maple syrup for dipping. If you don’t care about your child’s happiness (and want to stay on the school custodial staff’s good side), skip it. The frozen waffles are sweet enough on their own.

You can make a batch of these and freeze them so they’ll defrost for junior by lunchtime.

What You Need

  • Frozen Waffles
  • Maple Syrup
  • Black Forest Ham
  • Cheddar Cheese Slices
fruit and yogurt parfaits
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7. Yogurt Parfait

If a yogurt parfait seems like a treat best saved for a summer day, it’s time to rethink your school-lunch ways. You can whip together this nutritious combo of yogurt, fruit and granola in minutes, and you can prep a few at a time for several days worth of lunches.

What You Need

  • Vanilla Yogurt
  • Strawberries
  • Blackberries
  • Almond Butter Granola 

8. Easy Mac and Cheese Bites

Kids love macaroni and cheese, but this hot dish doesn’t keep well in a lunch box. Instead, bake up some mac and cheese bites that you can store in the freezer for a grab-and-go solution.

Pinterest is filled to the brim with “homemade” mac and cheese recipes for these bites, but let’s get real. This isn’t Sunday dinner. This is a Monday morning when you are bleary-eyed and someone is screaming like a banshee because she can’t find her other shoe.

So here’s a super simple recipe to try:

To make these zesty bites, simply prepare your favorite boxed mac and cheese as instructed. When you’re done, add some extras of your choice to the pot: finely chopped broccoli or spinach sneaks into this lunch pretty easily.

Mix well, pour it all into a mini muffin tin (you may want to grease the pan first), top with parmesan cheese, and bake at 350 degrees for 20-25 minutes. Adjust for your desired crispiness.

Freeze the batch and pull out a few at a time. Send a small container of ketchup to school for dipping.

This recipe makes about 12 in a mini-muffin pan — but you might have some left over for a snack!

What You Need

  • Macaroni and Cheese
  • 2% Milk
  • Grated Parmesan Cheese
  • Frozen Broccoli
  • Ketchup
ants on a log celery snack
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9. Ants on a Log

It’s time for some early-’90s nostalgia, because you probably forgot all about ants on a log, huh? It’s a severely underrated snack, but if you eat enough of them, it totally counts as lunch.

There are many variations on the traditional combo of celery, peanut butter and raisins, so use what your kids are most likely to chow down. Craisins! Cream Cheese! Go crazy.

What You Need

  • Celery
  • Peanut Butter
  • Raisins

10. Corn Dog Muffins

If you have a child who only ever wants to eat hot dogs, here’s a way to send them to school without lobbying the PTA to get a grill for the cafeteria.

Whip up some cornbread muffin mix, pour into that handy mini-muffin pan, plop a slice of hot dog into the center of each, and bake according to this simple recipe from One Sassy Momma. Freeze a zip bag of the fruits of your labor and grab a few for lunchbox duty.

If you’re feeling extra nice, include a small container of ketchup or mustard for dipping.

What You Need

  • Corn Muffin Mix
  • Hot Dogs
  • 2% Milk
  • Brown Eggs

Lisa Rowan is a former writer at The Penny Hoarder.

Source: thepennyhoarder.com

The Greeks in Options Trading

When it comes to trading options, learning to speak “Greek”—or, understanding the relationship between “the Greeks” and options—is incredibly important. That means studying up so that terms like delta, gamma, theta, and vega make sense when you’re navigating the markets.

Options Greeks may sound like a foreign language (and it is!), but to options traders, the Greeks are incredibly important to understanding how, or if, they’re making any money, since it can be so difficult to understand the true value of an option.

A Quick Look at Options

Before we go all Greek on you, let’s do a quick refresher on options.

“Options” is short for “options contracts,” which are a type of investment that traders buy and sell much like stocks and bonds. But options are derivatives—that is, they aren’t really assets in and of themselves. Instead, their value (or lack thereof) derives from another underlying asset, typically a specific stock.

Traders buy different types of options, when they think that stock prices will go up (a call) or down (a put). They also use options to hedge or offset investment risks on other assets in their portfolio.

In a nutshell, though, traders typically buy options through an investment broker. Those options give investors the option, but not the obligation, to buy or sell a security at a later date, and at a specific price. Investors can buy an option for a price, called a premium, and then buy or sell that option.

So, while an option itself is a derivative of another investment, it can gain or lose value, too. For example, if an investor were to buy a call option on Stock A—basically, a bet that Stock A’s share price will increase—the value of that call option would go up if Stock A’s price goes up.

But the opposite would be true if an investor purchased a put option on Stock A, betting that Stock A’s price would go down. Similar to shorting a stock, the investor would effectively lose their bet (and see the value of their option fall) if Stock A’s share price increased.

Recommended: How to Trade Options: A Beginner’s Guide

What Are Option Greeks?

The Greeks, as they relate to options, are different ways to measure an option’s position.
Options traders use these letters to describe their option positions and make their best guess as to what might happen next with those positions as they relate to the underlying stocks.

In short, the Greeks look at different factors that could impact the price of an option. Calculating the Greeks isn’t an exact science. Traders use a variety of formulas, usually by a mathematical model. Because of that, these measurements are usually all theoretical.

Here’s a look at the most common Greeks used by traders.

Delta

The delta Greek measures how much an option’s price will change if the underlying stock’s price changes. Specifically, it measures the option’s price change in relation to every $1 change in the underlying stock. It’s usually expressed as a decimal, like “0.50,” for example.

So, if an option has a delta of 0.50, in theory, that means that the option’s price will move $0.50 for every $1 move in the stock’s price. Another way to think of delta is that it gives an investor an idea as to the probability that they’ll make money from an option. If delta is 0.50, for example, that can equate to a 50% chance or so that an option will expire in the money—that an investor’s bet will have paid off.

Gamma

The second Greek, gamma, tracks the sensitivity of an option’s delta. If delta measures how an option’s price changes in relation to a stock’s price, then gamma measures how delta itself changes in relation to a change in the stock’s price.

Think of an option as a car going down the highway. The car’s speed would be its delta. The car’s acceleration would be its gamma, as acceleration is measuring the change in speed. Gamma is also typically expressed as a decimal. If we go back to our earlier example—that delta is 0.50—and delta changes to 0.6, then gamma would be 0.1.

Theta

Theta measures an option’s sensitivity to time. It gives investors a sense of how much an option’s price decreases the closer it gets to expiration.

Similar to the “car on a highway” analogy, it may be useful to think of an option as an ice cube sitting on a countertop. The ice cube melts away—or, the option’s time value diminishes—and the melting becomes more rapid over time.

Theta is typically expressed as a negative dollar amount, and represents how much value an option loses each day as it approaches expiration.

Vega

Finally, vega is a measure of an option’s sensitivity to implied volatility.

Markets are volatile, and securities (and their derivatives) are subject to that volatility. Vega attempts to measure how much an option’s price will change as it relates to the underlying security’s volatility.

Volatility refers to the turbulence a security’s value experiences. We don’t know what level of volatility a security or option will experience in the future, however, so there’s a certain amount baked into the mix—that’s implied volatility. It’s the expected future level of volatility.

Changes in stock volatility can change an option’s value. That’s what vega is measuring—not volatility itself, but the option’s sensitivity to volatility changes.

And like delta and gamma, vega is expressed as a number, rather than a dollar figure.

Other Options Terminology to Know

The specific options (a call versus a put, for example) and the underlying stock’s performance determines whether an investor comes out ahead on their bet. That brings us to a few other key options terms that are important to know:

In the Money

A call option is “in the money” when the strike price is below the market price. A put option is “in the money” when the strike price is above the market price.

Out of the Money

A call option is “out of the money” when the strike price is above the market price. A put option is “out of the money” when the strike price is below the market price.

At the Money

The option’s strike price is the same as the stock’s price.

Recommended: Options Trading Terms You Need to Know

The Takeaway

There’s no getting around it: Options, and the Greeks, can get complicated, and may not be the best investment strategy for beginners. But experienced traders, or those willing to spend time to learn how to understand options, find them a valuable tool in creating an investment strategy.

If you feel more comfortable keeping things simple, however, the SoFi Invest® brokerage platform can be a great place to start. SoFi Invest lets you build your own portfolios with stocks, and ETFs, or to use an automated service that builds it for you.

Photo credit: iStock/photolas


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The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
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3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.

For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
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Source: sofi.com

Here’s What to Do Before Debt Collectors Start Calling

Debt happens.

Most Americans have some sort of debt — and not all of it is good debt, like a mortgage, car loan or student loans, which are considered good investments.

Credit card debt, medical debt, overdue bills and high interest loans are just a few of the types of bad debt that can wreak havoc on your life. They can destroy your credit, snowball into even more debt and, yep, have the debt collectors hounding you to pay up.

So while it’s likely you’ll come across one of these bad debts in your life, there are steps you can take to make sure they don’t get out of hand — and to keep the debt collectors at bay.

1. Get Rid of Dings on Your Credit Report and Raise Your Score

What does your credit score have to do with debt? Turns out — it can be a major factor in you getting out of debt quicker.

If you have a low score with a few dings on your report, you won’t get access to decent interest rates on your loans. That means you’ll be paying more in interest and less on the actual loan amount — taking you sometimes years longer to pay it off and thousands of dollars more. If it’s a mortgage, the cost of your poor credit score could mean tens of thousands of dollars gone to waste.

The good news? A free website called Credit Sesame makes it easy to put your credit score on track to reach your debt-free goals. We even talked to one guy, James Cooper, of Atlanta, who used Credit Sesame to raise his credit score nearly 300 points in six months.*** He says they showed him exactly what to do — he was even able to open his first credit card.

What could adding 300 points to your score mean for your goals? It could easily save you thousands of dollars over the life of a car loan or mortgage.

Within two minutes, Credit Sesame will give you access to your credit score, any debt-carrying accounts and a handful of personalized tips to improve your score. You’ll even be able to spot any errors holding you back (one in five reports have one).

Make sure your bad credit doesn’t give the debt collectors more ammo to use against you. Sign up for free (it only takes about 90 seconds) and see how much you could improve your score.

2. Stop Paying Your Credit Card Company Insane Interest Rates

If you have credit card debt, you know. The anxiety, the interest rates, the fear you’re never going to escape and the debt collectors will set up camp on your doorstep forever…

And the truth is, your credit card company doesn’t really care. It’s just getting rich by ripping you off with high interest rates — some up to 36%. But a website called AmOne wants to help.

If you owe your credit card companies $50,000 or less, AmOne will match you with a low-interest loan you can use to pay off every single one of your balances.

The benefit? You’ll be left with one bill to pay each month. And because personal loans have lower interest rates (AmOne rates start at 3.49% APR), you’ll get out of debt that much faster. Plus: No credit card payment this month.

You don’t need a perfect credit score to get a loan — and comparing your options won’t affect your score at all.  Plus, AmOne keeps your information confidential and secure, which is probably why after 20 years in business, it still has an A+ rating with the Better Business Bureau.

It takes less than a minute and just 10 questions to see what loans you qualify for — you don’t even need to enter your Social Security number. You do need to give AmOne a real phone number in order to qualify, but don’t worry — they won’t spam you with phone calls.

3. Lower Your Bills to Avoid Missed Payments

If your bills are lower, there’s less of a chance you’ll miss a payment due to lack of funds. And no missed payments means no debt collectors calling you every single day. But a lot of these money-sucking bills are ones you can’t cancel.

Take your car insurance bill, for example. When’s the last time you checked car insurance prices, anyway? You should shop your options every six months or so — it could save you some serious money and help you avoid missed payments.

A website called Insure.com makes it super easy to compare car insurance prices. All you have to do is enter your ZIP code and your age, and it’ll show you your options.

Using Insure.com, people have saved an average of $489 a year.

Yup. That could be $500 back in your pocket just for taking a few minutes to look at your options.

4. Try to Negotiate Your Payments and Get On a Payment Plan

If you went to the hospital without insurance or you haven’t met your deductible yet, doctors’ bills can be pretty steep.

Thankfully, doctors and hospitals can be willing to work with you. Some medical providers will offer a discount if you’re strapped for cash, and most are open to payment plans. So instead of $500 out of pocket today, you could be paying a little over $83 a month for the next six months.

While it doesn’t make the debt disappear (you are still liable for these payments), a payment plan makes paying off these debts more manageable and will keep the debt collectors off your back so long as you make each monthly payment.

Kari Faber is a staff writer at The Penny Hoarder.

***Like Cooper, 60% of Credit Sesame members see an increase in their credit score; 50% see at least a 10-point increase, and 20% see at least a 50-point increase after 180 days.

Credit Sesame does not guarantee any of these results, and some may even see a decrease in their credit score. Any score improvement is the result of many factors, including paying bills on time, keeping credit balances low, avoiding unnecessary inquiries, appropriate financial planning and developing better credit habits.

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Source: thepennyhoarder.com

Making Sense of the Rising Cost of Medical School

The costs of medical school are rising at an alarming rate. According to US News, in the past decade, the cost of attending medical school has risen 3% to 4% annually.

Thirty-five years ago, medical students graduated with an average of $32,000 in student loan debt . In 2019, the median medical school debt for graduates was $200,000 , according to the Association of American Medical Colleges (AAMC) with 73% of students graduating with debt.

The rising cost of medical school, plus the daunting number of years of education and training is making some prospective medical students ask: Is an MD really worth it? That’s ultimately up to you.

But it’s worth noting that while medical school has traditionally been a path to a lucrative career, the steep up-front costs might be starting to make the endgame look less appealing.

This can be particularly true for would-be doctors interested in working in relatively low-paying fields like general practice (as compared to say an anesthesiology).

While it might be relatively easy to pay down student loan debt for those entering a higher-paying specialties like orthopedics or anesthesiology, a doctor going into general practice might take years (even decades!) to pay off their student loans.

Related: 6 Strategies to Pay off Student Loans Quickly

To gain a better understanding of how much medical school actually costs, we’ll take a look at the costs of an MD, and some ways young doctors can get out of medical school debt faster after graduation.

How Much Does Medical School Cost?

The average medical school tuition varies depending on factors like on whether the student is attending a public or private university.

The average annual cost of in-state tuition, fees, and health insurance for the first year of medical school for a student at a public university was about $41,438 in the 2020 to 2021 academic year. At a private school, the average annual cost was about $61,490.

But that’s only the cost of tuition, fees, and insurance—there’s also living costs to consider which is why it’s also useful to consider the entire cost of attendance (COA).

Each school publishes the estimated costs of attendance for their program, which typically not only include tuition and fees, but also costs like room and board, textbooks and supplies, and travel.

The AAMC calculated that the median cost of attendance for four years of medical school amounted to around $250,222 for public medical schools and $330,180 for private medical schools. But these costs can vary a lot depending on whether you’re attending school in Kansas City or San Francisco.

Why Is Medical School More Expensive Than Ever?

The rising cost of medical school tuition is part of a larger trend. It is estimated that the cost of college tuition and fees at private nonprofit four-year institutions in America grew at a rate of just over 2% from the 2019-2020 to 2020-2021 school years.

So what is driving the price increase? In general, college tuition has increased dramatically in the past 30 years or so, while wages have grown at a much slower rate. But what’s behind the dramatic uptick in college prices? The potential answer is two-fold. One factor is the demand for a college education has also dramatically risen over the last three decades.

Another factor more pertinent to public universities: a decline in state funding. It’s been observed in multiple states that as the education budget gets stripped, tuition costs paid by students also rises. And while lawmakers likely understand such a correlation exists, as long as federal financial aid is so freely available for students, there is likely little incentive to digress from such cuts.

How Long Does Paying for Med School Take?

So why do med students often go into so much debt?

It’s partly because the grueling requirements of their programs don’t often allow for part-time work. As a result, many students apply for financial aid to cover their college price tag, which means they graduate with significant amounts of student loan debt.

So how long does it take to pay back the debt? A lot of this depends on the student and the career path they take and the payments they make. However, the relatively low salaries young doctors earn during their residencies don’t typically allow for much opportunity to pay back loans until their first position after residency.

Related: Smart Medical School Loan Repayment Strategies

Let’s say, hypothetically, a borrower has federal Direct Loans, such as Stafford, PLUS, or a Direct Consolidation Loan. And let’s also say you can prove you have partial financial hardship (PFH), and qualify for an income-driven repayment plan.

In that situation, the monthly repayment would be capped at 10% to 15% of the borrower’s monthly discretionary income, for a period of up to 25 years. And, after 25 years, whatever hasn’t been repaid is forgiven (although that amount may be taxable).

However, if after residency, the borrower in question gets a position with an income that removes them from the PFH tier, they could switch to the Standard Repayment Plan for federal student loans, and potentially pay off the loan more quickly.

Is It Possible to Shorten the Medical Debt Payment Timeline?

Here are some tips for those interested and able to shorten their repayment timeline, which can lower the amount of student loan interest paid over the life of the loan.

Repaying Loans During Residency

It is possible to start paying down medical school debt in residency. While some students may be tempted to put their loans in student loan forbearance in their residency years, doing so can add quite a bit in compounding interest to the bill.

Instead, consider an income-driven repayment plan to start paying back federal loans with an affordable payment. Another option is to look into SoFi’s medical residency refinance options to compare.

Making Extra Payments

Another tactic to help pay off student loans faster is via simple budgeting. After getting your first position post-residency, consider committing to living on a relatively tight budget for just a few more years. Putting as much salary toward extra student loan payments as possible, could potentially help cut time—and interest payments—off the repayment timeline.

Speeding Up Med School Debt Repayment With Refinancing Student Loans

Depending on a borrower’s personal financial profile and credit score, among other factors, it may be possible to secure a lower interest rate or a lower required monthly payment, depending on the terms you choose if you refinance. A lower monthly payment could help improve cash flow in the present or a lower interest could help reduce how much money is paid over the life of the loan. Keep in mind that lowering a monthly payment through refinancing generally is the result of extending the loan term, which can make the loan more expensive in the long run.

While refinancing could help borrowers save money over the life of the loan, it does mean giving up the benefits that come with federal student loans like income-driven repayment, deferment, forbearance, and student loan forgiveness specific to physicians.

But for borrowers who don’t foresee needing these services, refinancing might be a viable option.

The Takeaway

The cost of medical school has risen in the past 30 years, and so has the amount of debt med students take on to pursue a career as an MD. But a career in the medical field can potentially be both lucrative and rewarding, so for some, medical school can be worth the time, effort, and cost.

Borrowers who are repaying student loans from medical school may consider strategies like income-driven repayment plans, making overpayments, or student loan refinancing to help them tackle their student loan debt.

Wondering how much you could lower your monthly payments by refinancing your student loans? Check out SoFi and see your rate in minutes.


SoFi Student Loan Refinance
IF YOU ARE LOOKING TO REFINANCE FEDERAL STUDENT LOANS PLEASE BE AWARE OF RECENT LEGISLATIVE CHANGES THAT HAVE SUSPENDED ALL FEDERAL STUDENT LOAN PAYMENTS AND WAIVED INTEREST CHARGES ON FEDERALLY HELD LOANS UNTIL THE END OF SEPTEMBER DUE TO COVID-19. PLEASE CAREFULLY CONSIDER THESE CHANGES BEFORE REFINANCING FEDERALLY HELD LOANS WITH SOFI, SINCE IN DOING SO YOU WILL NO LONGER QUALIFY FOR THE FEDERAL LOAN PAYMENT SUSPENSION, INTEREST WAIVER, OR ANY OTHER CURRENT OR FUTURE BENEFITS APPLICABLE TO FEDERAL LOANS. CLICK HERE FOR MORE INFORMATION.
Notice: SoFi refinance loans are private loans and do not have the same repayment options that the federal loan program offers such as Income-Driven Repayment plans, including Income-Contingent Repayment or PAYE. SoFi always recommends that you consult a qualified financial advisor to discuss what is best for your unique situation.

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Source: sofi.com