When you think of college, the expense of pursuing higher education might be the first thing that comes to mind. Often, federal and private student loans are the answer for many students. These loans are often easy to get approved for and help students finance their college education. In fact, a recent report shows that student loan debt now totals over $1.73 trillion dollars in the United States, with the average debt amount averaging $39,351 per each student borrower. Reports show that this amount is expected to rise as tuition costs increase at an average of 8% per year. As education continues to become more expensive, it’s ideal to consider alternative ways to help fund and/or offset the cost of a college education.
Here are a few ways you can fund a college education without completely relying on student loans.
1. Save with a college savings account
An effective way to save for college expenses is by utilizing a college savings account. Two types of savings accounts, Coverdell Education Savings and 529 Plans, both offer different advantages as you save for college costs. Utilizing the Coverdell Education Savings account allows you to use the funds for tuition, fees, room and board, books, supplies, and more. If you’re looking for a solution with tax benefits, consider the 529 Plan. You can open this plan regardless of what your income level is.
Learn more about saving for college by reading about the Best College Savings Plans.
2. Apply for grants or scholarships
Although you may have been actively saving for you or your child’s education, rising costs each year may have made it difficult to save for the full amount. Many states offer grant and scholarship options to help with education costs. Grants and scholarships share some of the same benefits, but they do differ in certain areas. Grants are usually based off needs, whereas scholarships are usually based off merit. For a full list of the grants and scholarships available in each state, visit the State Financial Aid Programs map provided by the National Association of Student Financial Aid Administers.
3. Consider a Federal Work-Study program
A Federal Work-Study program allows students with financial need to earn money for their education on or off campus. This option is available to undergraduates, graduates, and professional students enrolled as either part-time or full-time. This differs from a regular part-time or full-time job because you will be limited on the number of hours you can work. The total amount of funds earned during the program period cannot exceed your work-study award amount.
4. Seek out a part-time job
Another option to help with college costs is for students to work part-time jobs. In fact, places like Walmart and Target are currently offering free college tuition to their employees. Working a part-time job during college can do more than increase your cash flow. It can also help you manage your time and help you budget your money more efficiently as well as help you gain transferable skills.
Learn more about keeping college expenses down by reading College on a Budget.
There are many options available to help finance education costs. Consider attending a community or junior college first or taking college credits in high school that can be transferred to your college of choice. Education costs continue to rise, so it’s ideal to start saving as early as possible for these costs and consider all of your options to help offset the hefty price tag.
For more information on how our products or services can help you save for higher education, contact a trusted First Bank Wealth Management advisor.