Saving and Paying for College

It’s no secret that the cost of college is skyrocketing. Student loan debt is a growing problem, and college tuition is often out of reach for many families. Thankfully, there are a number of ways that you can save for college so that you or your children don’t have to take on an overwhelming amount of debt. There are also a variety of ways to pay for college that does not mean burdening your finances with student loan debts.

Students, parents, and even grandparents have felt the pressure of rising college tuition costs. Parents and grandparents are often used to co-sign and help carry the burden of student loans so that their family members have access to college. But, with a bit of planning, it is possible to save and pay for college without taking on an exorbitant amount of debt.

In this blog post, we’ll look at some strategies to help save and pay for college.

Here are some strategies for saving and paying for college:

1. Start early.

This tip is mainly for parents or family members. The earlier you start saving for college, the more time your money has to grow. If you start when a child is a baby, you could have over 18 years of compound interest working in your favor.

For adults who are starting or continuing college and paying for it, do your research. School loans may be the easiest option but there are many factors to consider. If it is possible, working to help pay for the tuition can keep your debt down. If you plan on returning to school, is it feasible to give yourself a year or two to save before returning to school?

2. Automate savings.

Schedule automatic transfers from your checking account to your savings account so you’re not tempted to spend the money instead. Many banks offer this service for free. Many payrolls allow for direct deposits into multiple accounts. Setting aside a portion of a paycheck solely into an account for savings can help keep savings consistent.

3. Invest in a 529 plan.

A 529 plan is a tax-advantaged savings plan designed specifically for educational expenses. The money in a 529 grows tax-deferred and can be withdrawn tax-free as long as it’s used for qualified higher education expenses like tuition, room and board, books and fees.

4. Encourage students in high school to get a head start with AP courses.

Advanced Placement courses offer high school students the opportunity to earn college credit by taking rigorous classes and passing exams. This can lead to significant savings on tuition and other expenses down the road.

There are numerous colleges today that offer alternative college credit, like work history credit. Some colleges accept lower-level college credits from online sites that may be cheaper than a four-year university which can save you hundreds of dollars on tuition and books.

5. Consider community college first.

Community college is often much cheaper than traditional four-year schools, and many students are able to transfer credits earned at community college toward a bachelor’s degree later on. Most community colleges work with four-year schools and have transfer agreements.

6. Work part-time or during the summer.

Getting a part-time job during high school or college can help offset some of the costs associated with higher education. Find jobs that may be in line with your major. Finding a paid internship or a job that can contribute to your experience can benefit you in multiple ways. The key thing to remember is a school loan will add to your total debt that can affect your other big decisions such as purchasing a car or home down the road.

7. Apply for scholarships and grants.

There are billions of dollars in scholarship money available each year. Researching and applying for scholarships can take some time and effort but it’s worth it if it means getting free money for college. Keep in mind that if you are awarded a grant or scholarship, there will be requirements that you must follow otherwise you may be required to pay the money back.

8. Look for employers that offer tuition reimbursement.

If you’re looking for a job, find out if prospective employers offer tuition reimbursement or other educational benefits. Many large companies have programs that allow employees to receive college credit for their work experience and training.
Your current employer may have incentives for you to obtain a degree, like higher pay, and may offer tuition reimbursement.

9. Shop around for loans.

If you need to take out student loans, compare rates from different lenders before picking one. Also, make sure you understand the difference between federal student loans and private student loans so you can make the best decision possible. Take into consideration how long it would take you to repay this loan. Does it make sense to take out a large student loan compared to your potential income?

Conclusion

The cost of college is high but there are ways to save without breaking the bank. By automating your savings, investing in a 529 plan, taking advantage of AP courses, considering community college, working part-time or during the summer, applying for scholarships and grants, setting up a budget, and shopping around for loans, you can make paying for college more manageable.