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Student loan debt continues to rise, and for many Americans, it’s not a trivial amount. People with student loan debt owe, on average, more than $30,000.
But there are alternatives to accumulating huge college debt. As Becky Walen, Bell Bank senior wealth management advisor, tells us, some might be easier than you’d think.
If you want to help your kids or grandkids with their college expenses, start saving early and often. If you can save $50 a month over 18 years, that amounts to more than $10,000. And if you invest that money, it can accrue interest and build over time.
Be careful not to save more than you can comfortably set aside. Your retirement and emergency reserve funds need to take precedence over your kids’ college savings. You have less time to save for retirement than your kids have to pay off their student loans. But a little bit of saving goes a long way, and you don’t have to cover the entire cost of your child’s education. Any amount helps.
Make sure to complete a free application for student aid (FAFSA). Even if you know your child won’t qualify for need-based financial aid, other types of aid are available.
There’s a lot of scholarship and grant money available for students every year that’s left on the table, and not all grants and scholarships are athletic or merit-based. If your child is involved in a club, like 4-H, or has a specific interest, such as welding, look for scholarships related to those clubs and interests. Check with your high school guidance counselor or search online. There are a number of websites that list college scholarship opportunities.
More and more students are living at home while attending college. If that’s an option, your child can save as much as half of their college costs by omitting room and board fees.
Think about costs when considering where to go to school. While state schools are generally more affordable, if your student has their heart set on a private college, look into what financial packages might be available. Students could also take their general credits at a less expensive community college, and then transfer. And look into tuition reciprocity agreements that allow students from one state to attend college in a nearby state at a reduced cost.
Your student can also cut costs by avoiding credit cards. It can be too easy for students to spend money they don’t have – that spring break trip to Cancun could take years to pay off. Instead, teach them to budget their expenses. Bell’s CardValet app helps control spending by letting them set transaction controls for dollar amount limits, merchant categories and geographic locations.
Many students are opting to work their way through school. A part-time job can be geared toward students’ degrees, helping build their résumé and pay for some college costs. There are also non-traditional jobs that might offer a little more scheduling flexibility, such as tutoring other students or selling crafts on Etsy.
There are things your student can do in high school to help cut down on college costs. Advanced placement (AP) courses let students start earning college credits while in high school. College level examination program (CLEP) exams allow students to place out of introductory courses and earn college credit without taking the courses, depending on their scores and the university they attend. There are fees for both the CLEP and AP exams, but they are a lot less than college tuition.
If you do need to take out student loans, federal loans tend to offer more repayment flexibility than private loans. There are also loan forgiveness programs, depending on your repayment plan and where you work.
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