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Whether you’re looking to save money for your own education or if you’re thinking ahead to saving for your future children’s education, saving money for college is important. Besides, your bank account will thank you later for the work you put in up front.
Student Loans Exist. Why Should I Save Money for College?
Yes, you’re right, student loans do exist, and they can be a great option to supplement your college fund. But student loans have to be paid back, and their interest rates are…not small, that’s for sure. According to nerdwallet, the interest rate for federal student loans for undergraduates is 5.05% for the current 2018-2019 school year. For parent loans or graduate loans, those numbers go up to 7.60% and 6.60%, respectively. These numbers are also the minimum amounts – actual interest rates could be a lot higher than this.
You might be able to find an interest rate on a private student loan for less than that, but typically you need outstanding credit for that.
Here are some actual numbers: Let’s say you took out a $13,000 loan at this 5.05% interest rate with a term of 10 years. Your monthly payment would be $138.20, and you would pay $3,584 in interest. So over those 10 years, you would pay $16,584.
Obviously these numbers vary by person, college, and situation, but this can give you an idea. Nerdwallet has a calculator on their site that can give you an estimate based on your situation.
Okay, So I Don’t Want Lots of Loans. Now What?
Start saving money now. Whether you want to find an app that rounds up your debit card purchases and puts the extra change in savings or if you want to add a line item on your budget, it doesn’t matter. Just start putting money aside now.
If you’re looking for an easy way to make some extra money online, remember our services here at Checkout Saver. Whether you’re looking for cashback on online purchases or a way to earn some extra money through selling gift cards or one-time coupons, we have lots of options to help you generate some extra money. You can put that money directly into a college savings account, and your future self will thank you.
What About Saving While I’m in College?
There are some great ways to save money on little things while you’re in college.
- Find the cheapest places to purchase textbooks. (Hint: it’s probably not the official bookstore. Check places like Chegg and Amazon, or see if your book has a PDF available online.)
- Use your meal plan if you have it, or shop wisely at the grocery store. It might not be fun to go to the dining hall on Saturday instead of out to eat with your friends, but you (or maybe your parents) have already paid for that meal plan. If you definitely want to go out, don’t let that meal swipe go to waste. At least grab some fruit or something you can take to-go from the dining hall.
- Walk anywhere you can, or consider buying a secondhand bike. First of all, you need to be safe, so if that means getting an Uber when it’s late at night and you have a long walk ahead of you – put your safety first. But if it’s the middle of the day (yes, even if it’s raining), make an effort to walk where you need to go instead of paying for an Uber or other ride-share service. If you know you have long treks to work or class, consider purchasing a bike – either new or used. You won’t have to pay for the expensive car parking permit, and you’ll be able to get where you need to go more quickly.
If you end up taking out student loans, make sure you pay them off as soon as possible, even if that means starting to pay them off while you’re in school. The sooner you can be debt-free the better.
Do you have money-saving tips for college that we missed? Let us know in the comments below!
I definitely wished I had saved more before going to college. Now I am trying to pay off my loans while saving for my kids’ college expenses! I would definitely encourage everyone to work during college, even if it’s just 10-20 hours a week. I know extracurriculars and hanging out with friends is way more fun, but a part-time job helps so much for college expenses. Plus it builds your resume so you can get a job once you graduate!
Great points, Amanda! Good luck paying off the loans quickly, and that’s great you’re already saving for the kids! I consistently worked 3 jobs at the same time during college, which definitely helped pay down expenses. I should have taken advantage of scholarships more than I did though, and there are tax-advantaged accounts like a 529 Plan that can help plan for college. There is so much to learn about this topic, it’s no wonder so many students get burdened with debt – tough to learn all the advantages before you start higher education.