For many people, college is a monumental life stage. It’s where students meet life-long friends, establish their career paths and explore new interests and ambitions. Unfortunately, college can also be expensive — in 2020, Americans owed $1.6 trillion in federal student loans. Whether you’re a student paying for your own education or a parent supporting your child, it’s never too early to start saving for college. Here are some college fund tips to help you get through university with minimal debt.
Open An Education Savings Account
If you’re a parent interested in saving money for your child’s college fund, then one of the first things you should do is open an education savings account (ESA). With this account, you can invest $2,000 every year for your child’s college fund. It has a higher rate of return than a normal savings account, which means that money can quickly grow. Better yet, you don’t have to pay taxes on your withdrawals. However, there is usually an income limit for this plan.
If you don’t want to be restricted to a $2,000 per year deposit, you can try a 529 plan. Like ESAs, they can grow your money and don’t require taxes for withdrawals — moreover, they usually don’t come with an income or deposit limit. If you are considering a 529 plan, be sure to find a flexible one that lets you control the funds.
Take AP Classes
Saving for college isn’t just a job for parents — students can contribute as well. One thing every student should try is taking Advanced Placement (AP) classes during high school. If you score well on the AP exam, then your school may reward you with college credit. The more AP classes you excel in, the fewer college classes you’ll need to pay for! Since the average college class charges over $1,500, this can definitely save you money in the long run.
Apply for Scholarships
One of the best ways to raise money for a college fund is by applying for scholarships. You don’t have to be an academic prodigy to earn a scholarship — many organizations offer free money to students that excel in extracurriculars or athletics. Some groups also provide money to families with lower incomes levels. Here are some ways to find scholarships:
- Fill Out The FAFSA: The Free Application for Federal Student Aid (FAFSA) offers scholarships and grants to students that qualify for financial aid.
- Talk to College Financial Aid Offices: Many colleges have financial aid offices that provide both need-based and merit-based scholarships to accepted students. Try contacting the offices of colleges you’re applying to and seeing what your options are.
- Use A Scholarship Search Tool: There are plenty of search tools online that can help you find scholarships. Some popular options include CareerOneStop, Niche and Fastweb.
What makes scholarships great is that you don’t have to pay the money back. Say no to burdensome student loans and say yes to graduating college debt-free!