Aside from buying a home, investing in a college education will probably be the most money you ever spend on a single thing in your lifetime. And while college can be expensive, the earnings boost you’ll see over your lifetime is worth it and probably essential for financial success in America these days.
A lot of students turn to loans to finance their college degree programs. You don’t have to go broke paying for college if you do your homework, though. Planning ahead, taking control of your personal finances, and going after all the financial aid you possibly can, will help put a degree in your hands without saddling you with crushing debt.
Saving for College
If you’re fortunate enough to have family help in paying for college, that’s great. And if you’re still planning ahead for school, you and your family should definitely look into financial tools that will help you get a return on money invested and minimize taxes to help build your college fund.
By far, one of the most effective savings tools for people planning for college is a 529 college savings plan, which has relatively high limits on yearly contributions and is exempt from state income tax in some cases. The account grows tax-free, and as long as you spend the money on higher education costs (tuition, books, housing and even some transportation expenses), you don’t have to pay capital gains or income taxes when the funds are withdrawn.
Living Wise Financially
Much of the cost of going to college isn’t tuition and fees; it’s your living expenses. Don’t take out debt to cover non-college spending! Making smart budget decisions and adjusting to a more frugal student lifestyle could substantially reduce the costs you have to cover in order to get through school:
- Housing: Sure, it would be nice to have your own dorm room or apartment. But you’re going to be roughing it, so why not save some cash in one of your biggest expenses—housing? If you can, live at home to eliminate your rental expenses altogether. If you can’t, get roommates.
- Transportation: Can you live without a car? If so, you could save a ton of money in your budget. Just look at the average costs (gas, financing, insurance, maintenance, registration, etc.) of owning a car. Get a bus pass. Better yet, get a bike!
- Miscellaneous stuff: Your smartphone’s data plan could be a burden your budget cannot bear while you’re in school, unless you can get on a family plan with your parents. Likewise, you might have to forego other luxuries, like the movies, eating out and other fun stuff, until you graduate and start cashing paychecks.
Looking Beyond Graduation
What will be the total cost of your degree? Will your eventual salary be enough to help you pay off any loans you take out in a reasonable amount of time? A lot of people graduate from really expensive Ivy League schools, and then complain that their degree in Anthropology doesn’t give them the job prospects or salary they need to keep up with their massive student loan payments. I can’t say I have much sympathy for them.
How will your budget change after college? What lifestyle are you expecting to have, say, five years after graduation? If you have loans to pay off, a car payment, a house payment and other life expenses, will your eventual salary be able to support you? These are all questions that should be answered sooner rather than later.
Working and Going to School
One option that a lot of students shy away from is a work/school mix. If you have to work while you go to school, earning your bachelor’s online could be a smart move. And with online courses like Strayer’s, you can build a school schedule that fits your work schedule, letting you fund many of your college costs without racking up student debt.
We’ve talked about ways to pay for college before, but it bears repeating that you should grab as much free money as you can to finance your education. And before you start taking on student debt, you should understand how it affects you, now and in the long term.
First off, get started early on scholarship and financial aid applications. Compile a large list of scholarships, grants and other financial awards that you qualify for. Fill out the FAFSA, which you do online, but you can get ready now with this worksheet. Know the deadlines for submissions and get your applications, essays and project in early. Don’t stop applying until you run out of time, and keep applying every semester for new awards. The more you apply for, the better chance you have of snagging some free money for school.
Understand how student loans work, and make sure you have a plan to pay them back. They can’t be discharged in bankruptcy, and there are different terms for different types of student loans out there. The best policy is to do your homework on other financial aid, like grants and scholarships, and avoid getting into debt altogether.
Author bio: Jennifer Cook writes on student life, going back to school and online learning technology for Strayer.edu. When she isn't writing, you can track her down in the library, trying to check out more books than her card allows.