How Do You Save For College?
Student loan debt is worse than it’s ever been before. Even adjusting for inflation, a college education has gotten exponentially more costly over the past few decades. While the average wage has increased by more than half, the cost of tuition has more than doubled. If you want to go to college, or if your child wants to go, the idea of crushing student loan debt might be giving you second thoughts. Loans can be a great option for paying for college, but you’ll need to be strategic about them. Take a look at the following list. You’ll find several options for balancing student loan debt and saving for a college education.
Apply for Scholarships
First, research your scholarship options. You can find government-funded options, private scholarships, and even school-specific scholarships. No matter the source, any amount of money that you don’t have to pay back can help you get that much closer to graduating without debt. Applying for scholarships can get overwhelming, so start your research early if possible. Some students set aside a small portion of time every night for scholarship applications. This way, they can work toward the funding that they need without getting overwhelmed with too much information.
Second, 529 plans are an option if you’re saving money for a child or grandchild’s college education. A 529 plan is essentially a tax-free savings account dedicated specifically to future college expenses. The more time you have to save, the more a 529 plan will help. You can even start a plan for your baby or young child. With a regular 529 plan, you use funds for any qualified college expense. These expenses include tuition, room and board, school supplies, and books.
Another variation is called the 529 prepaid plan. The funds from a prepaid plan can only be used for tuition and school fees. However, prepaid plans do give you an advantage. They let you pay ahead for future college costs at the current rate. Let’s say, for example, that you have a five-year-old child. If you choose a prepaid plan, you can pay for the classes that your child will take in thirteen years, but you’ll pay the same rate that current college students are paying for their classes today, no matter how much the cost of education has increased by the time your child goes to college.
Each US state has its own rules and regulations for 529 plans, so look into your state’s options before you commit to anything.
Seek Loans With Low Interest Rates
Finally, when you look for loans, pay attention to interest rates. Skyrocketing interest rates are a major part of the current student loan crisis. If you take out student loans, start with community banks and credit unions. Unlike major banks, community banks and credit unions put their clients first, which means that they generally offer better interest rates. Since they are nonprofit organizations, credit unions often have especially good interest rates.
Explore All of Your Options
When saving for college, take some time to look at all your options. It often helps to compare your options side-by-side, and that’s where Bundlefi comes in. We can connect you to the loan and savings options that will help you save for college. Take a look at Bundlefi now to get started.