Guest post by Katie Bryan, America Saves
As college students are beginning to see what costs really add up to and high school seniors start applying for their top universities, many are beginning to think about how to pay for the years of school ahead. We’ve heard the stats that the average debt students have upon graduation has skyrocketed to $35,200, according to a recent Fidelity survey, and that the costs of attending college increase 6 percent each year. Utah has the lowest student loan default rate in the country, and you too can be financially successful by implementing some of the tried-and-true ways to make sure you don’t get in over your head. College is still a great investment for most students, especially with some planning ahead of time to help keep debt to a minimum. It’s still true that those with a bachelor’s degree will earn $1 million more over their lifetime than those who only complete high school.
The challenge is to graduate with as little debt as possible. Here are three ways to help keep student 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.
Haven’t created a college savings plan yet? Pledge to Save with America Saves where you can sign up for text message tips and reminders to help you reach your goal of saving for college. Bank of American Fork’s online money manager is another great way to budget and keep your spending in check with alerts and messages, and quick access to current savings account information.
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. Many students also stop looking for scholarships once they enter college, but 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
• Live at Home – Living on campus can cost anywhere from $7,500 to $9,000 per year. 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.
• Get a Part-Time Job – 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.
If you’re wondering what the best options for saving are, come into a Bank of American Fork branch, call at 800-815-BANK or live chat with someone at www.bankaf.com.
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