Better Budgeting: How to Afford a College Education

How to Afford a College Education

Credit Wise (featured column)
by Jennifer Wallis

With recent news that student loan interest rates are set to double from 3.4% to 6.8%, many are left wondering if a college education is simply slipping further out of reach. With more than 38 million Americans owing nearly $1 trillion in student loan debt, there’s clearly reason for concern. However, by looking at the facts instead of just skimming the headlines, you’ll probably find that a college education is still a good investment. But, it’s important to plan carefully and borrow as little as possible.

Here’s How to Afford a College Education:

Don’t Panic

While it is true that interest rates are set to rise, that change only affects need-based Stafford loans made after August 2012. So, if you have loans made before that time or a different type of loan, you should not be affected. If you are affected, yes, this higher rate will cost you considerably more money. But, in comparison to other loan rates, it’s still pretty low.

Develop a Solid Plan

If your children haven’t started college yet, make sure to save as much as possible as early as possible. According to Mother Jones, the average price of a 4 year college in 2010 was $21,657.

Exhaust all options for free money

The folks in the financial aid office can be your best friends. Not only can they make sure that you’ve completed all of your financial aid applications correctly, they can also keep you apprised of any new opportunities that may arise. When students graduate, they may leave behind scholarships that you could snatch up.

Scour Your Community for Scholarships

Many local credit unions have scholarship programs and give away thousands of dollars every year. Some care dealerships have them, too. These local opportunities can really give you a boost when it comes to covering costs.

Borrow as Little as Possible

Once you exhaust all grants, scholarships, and savings, only then consider loans. Government loans still have a wider variety of repayment options than private ones and interest rates vary so it pays to do your homework on where to borrow.

Get Creative to Cover Costs

If attending a college closer to home in order to save on room and board is an option, it can save a great deal. Working part-time while in school can not only cover a lot of expenses but can also help to gain very valuable real-world work experience that can pay off after graduation.

Consider All of Your Options

Maybe college is still an option but you can’t afford the private school of your dreams. A less expensive school can still be a great choice. Costs vary greatly. You can still get a solid education and a meaningful degree with a lower price tag. If you decide against college entirely, trade schools can teach you a skill and help land a good-paying job, too.

According to Mother Jones, in 2010, the median income for young adults with bachelor’s degrees was still 50% higher than those of their counterparts with high school diplomas. According to the Bureau of Labor Statistics, the 2012 unemployment rate for those with a high school diploma was 8.3% but only 4.5% for those with a bachelor’s degree. So, a college education still pays off. You just don’t want to have so much student loan debt that you’re repaying that it takes decades to realize the value.

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Copyright © 2013 by Jennifer Wallis. All rights reserved.

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