Tips for Saving for College and Managing Student Debt
Adapted from America Saves
By June most recent high school graduates know what college they are going to, but some of them may still not know how they are going to pay for it. College is a great investment for most students and those with a bachelor’s degree will earn $1 million more over their lifetime than those who only complete high school. But students are graduating with an average of $35,200 of debt, and the costs of attending college increase about 6% each year. So it's a good idea for both students and parents to plan ahead to help keep debt to a minimum.
1. Create a College Savings Plan
Just like savings for retirement, it’s good to save early and often. There are many ways out there to help you save, from a 529 account to Savings Bonds. Tip to find extra money to save: If you can save an extra $300 a year ($25 a month at 5% interest, compounded monthly for 18 years) you will have an extra $8,766.43 to put towards tuition bills.
2. Shop Around For Schools and Free Money
The Consumer Financial Protection Bureau created a tool to compare the costs of different colleges. Their tool will let you compare financial aid offers so you can see how all those numbers impact your payments down the road.
Apply for as many scholarships as you can. $500 here and $1,000 there can go a long way to helping pay for college. And, continue looking for scholarships even after you enter college, and keep applying each year. Need some inspiration? Check out the article “How I won $100,000+ in college scholarships” by Ramit Sethi.
3. Find Ways to Reduce Spending (or Earn Money) While in College
Consider living at home during college (if you can) and you can save nearly $40,000. You can still get a full college experience by joining clubs and being active on campus. Look for a job on campus or a paid internship to supplement your income and pay for expenses like food, books, and incidentals while in college. The more you can pay upfront the less your monthly loan payments will be when you graduate. Need more ways to save? We’ve got a list of 54 ways to save here.
America Saves, managed by the Consumer Federation of America (CFA), is a non-profit research-based social marketing campaign that seeks to motivate, support, and encourage low- to moderate-income households to save money and build wealth. Learn more at americasaves.org