Money Tips for College Students
Going to college and paying for the experience and degree is something that many people strive for. There are many benefits to completing a degree and receiving a higher education, including a more advanced, marketable skills set, the opportunity for a higher, livable income, and the chance to be employed in a variety of different fields. Given these advantages and the promise of a bright future, many students and their parents are struggling to figure out how to afford a higher education. With the rising cost of college tuition, it is important that students and their parents plan ahead and start saving as early as possible in order to avoid student loan debt. Thankfully, for motivated individuals, there are ways to save for college and effectively manage college debt post-graduation.
Families that start saving early may be able to take advantage of state or federal savings programs that also include tax benefits. A 529 plan allows families to save for a college education pre-tax. A Roth IRA may also be an option for families interested in planning ahead of college expenses.
But saving for college doesn't stop with special plans and accounts, much of the burden lies on the shoulders of the student and can be made less with focus and skill while in high school. It's important for students to take advantage of the opportunities made available to them through excellence in academics and in sports. Academic and athletic scholarships are wonderful ways for students to reap further benefit from their skills and/or talents. Special interest scholarships are also readily available in areas of the arts. Students can turn their interests into funding for their future through hard work and dedication.
Federally funded grant programs, like the popular Pell grant, and subsidized loan programs, like the Stafford loan program are more affordable ways of loaning out college debt, rather than working with a private lender who may feature higher interest rates. When completing a FAFSA form, a student will also apply for that Pell grant. This grant does not need to be repaid, whereas a Stafford loan does.
Working while enrolled in college is a must for many students. Paying their way through college, some student choose to repay at least some of the principle of any college loan debt while still enrolled, before interest is applied after graduation. If possible, this option is a good way to build one's credit through repayment and minimize the amount of college debt that still needs to be paid off once one graduates. Work study programs may be available and are highly sought after, as they provide work experience, as well as income.
Once you graduate, having received scholarships, grants, and college funding, you may still be left with a considerable amount of college loan debt that must be repaid. That number of your monthly statement may seem daunting and nearly impossible, at times, to repay, but it can be done. It is important for graduating college seniors to sit down with their financial aid department to gain a better understanding of their financial commitment and responsibility. This is called an exit interview and is standard in most colleges and universities. During an exit interview, the student will be provided an overview of their debt, repayment options, and a ballpark number of what their estimated income should be in order to make the minimum payments required. The income estimation is important when looking for that first job after college because you'll have a better idea of what is needed income-wise in order to maintain a livable and financially responsible budget.
Many lenders are also willing to work with recent graduates to set them on a path to a healthy financial future. Graduated payment plans and income-based repayment plans may be available to graduates struggling to make their student loan payments. Speak with your lender to learn what programs may be available for you. Regardless of your financial situation or the repayment options you choose, it is important to stay on top of the debt. Not repaying is not an option, so working with your lender to find a reasonable repayment plan that works with your income and the terms of the loan.
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