Education &amp; Training http://www.wisebread.com/taxonomy/term/12010/all en-US How These 6 Assets Might Affect Student Financial Aid Eligibility http://www.wisebread.com/how-these-6-assets-might-affect-student-financial-aid-eligibility <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-these-6-assets-might-affect-student-financial-aid-eligibility" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_saving_for_education_0.jpg" alt="Woman saving for education" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Once your child reaches high school, figuring out how to pay for college starts to loom large in your mind. An important step in getting ready for the costs of college is filling out the FAFSA (Free Application for Federal Student Aid). This paperwork helps determine how much need-based financial aid your student qualifies for. And before you assume that you make too much money to get any such assistance, remember that families earning as much as $180,000 per year can qualify for some form of financial aid.</p> <p>Whether you have been diligently saving money in a 529 account since your (now 6-foot tall) baby was born, or you have only just now started thinking about college costs, you do need to understand exactly how your various assets might affect your student's financial aid eligibility. (See also: <a href="http://www.wisebread.com/5-reasons-why-every-student-should-fill-out-the-fafsa?ref=seealso" target="_blank">5 Reasons Why Every Student Should Fill Out the FAFSA</a>)</p> <p>Here's what you need to know about the asset and income calculations for need-based financial aid.</p> <h2>Understanding the expected family contribution (EFC)</h2> <p>To determine your student's financial aid package, the college financial aid office starts by determining the cost of attendance and the expected family contribution, or EFC. The EFC amount is calculated based upon the information you provide on the FAFSA.</p> <p>In general, assets and income held by the dependent college student count for more in the EFC formula, while parents' assets and income count for less &mdash; and some parental assets are not included in the calculation whatsoever.</p> <p>The formula for calculating EFC specifically counts the following assets and resources:</p> <ul> <li> <p>20 percent of the student's assets, which includes savings, investments, business interests, and real estate.</p> </li> <li> <p>2.6 to 5.64 percent of the parents' same types of assets (based on a sliding income scale).</p> </li> <li> <p>50 percent of student income above $6,570.</p> </li> <li> <p>22 to 47 percent of parent income above $25,040 (also based on the sliding scale).</p> </li> </ul> <p>The more money that is included in the EFC calculation, the lower the need-based financial aid offer will be. (See also: <a href="http://www.wisebread.com/the-10-most-common-financial-aid-mistakes-and-how-to-avoid-them?ref=seealso" target="_blank">The 10 Most Common Financial Aid Mistakes &mdash; And How To Avoid Them</a>)</p> <h2>How your assets are counted</h2> <p>Depending on what kind of assets you have, you may or may not have that money included in your student's EFC calculation. The following assets can affect financial aid offers:</p> <h3>1. Income</h3> <p>As of 2017, the FAFSA began requesting the <em>prior-prior</em> year's tax return from filers. This is called the &quot;base year.&quot;</p> <p>Before the change, families had to provide the prior year's tax return (that is, the immediate previous year) as their base year information. For instance, for the 2011&ndash;2012 school year, FAFSA filers had to provide their 2010 tax return, but filers filling out the FAFSA for the 2018&ndash;2019 school year will provide their 2016 tax return.</p> <p>There are a couple of reasons why this is an important change. First, it means that families are less crunched to complete their previous year's taxes and a FAFSA form in the same year. Secondly, it also means that families who are actively trying to make income-related plans to lower their EFC need to do such things no later than their child's freshman spring/sophomore fall year.</p> <p>What kinds of income-related plans? For instance, you might max out your retirement savings in the years leading up to the base year, because you are not asked to declare the value of tax-deferred retirement accounts (such as 401(k), 403(b), or IRA accounts) on the FAFSA. However, money that you contribute to your retirement account during the base year is still considered part of your income for the EFC calculation, even though it is pretax income that you have invested.</p> <p>Another important thing to remember about income is how your child's income is counted on the FAFSA. Fifty percent of the dependent student's income over $6,570 is counted in the EFC calculation, and financial gifts are also considered income. For example, if Grandma and Grandpa give your child $10,000 toward college in 2018, 50 percent of the amount over the threshold ($3,430) would have to be counted as income on the FAFSA filed for the 2020&ndash;2021 school year, and it could increase the EFC amount (and reduce the aid) by about $1,715.</p> <h3>2. 529 accounts and Coverdell ESAs</h3> <p>The good news about these accounts is that whether they are in your name or your child's, they are considered parental assets. That means no more than 5.64 percent of the assets in a 529 account or Coverdell ESA will be included in the EFC calculation. So if you have saved $25,000 in your daughter's 529 account, her aid would only be reduced by roughly $1,400.</p> <p>If other relatives &mdash; such as grandparents &mdash; have been saving money for your child in a 529 or Coverdell account under their own names, their gift can come with some expensive (and unanticipated) strings attached. That's because such assets are not counted at all on the FAFSA form, but when the money is withdrawn to pay for educational expenses, you must claim the amount withdrawn as untaxed income to the student. Since 50 percent of student income is counted in the EFC calculations, this situation can reduce aid by half the amount of the withdrawal. (See also: <a href="http://www.wisebread.com/5-smart-places-to-stash-your-kids-college-savings?ref=seealso" target="_blank">5 Smart Places to Stash Your Kid's College Savings</a>)</p> <h3>3. Retirement accounts</h3> <p>As mentioned above, the value of parental retirement accounts are not included in EFC calculations. However, the money that you contribute to your retirement account during years you fill out the FAFSA is included as parental income, even though you don't actually get to bring that money home with you. Some parents front load their retirement contributions in the years leading up to their child's base year just in case they need to reduce their retirement savings during the college years.</p> <p>In addition, parents need to know that withdrawals from Roth IRA accounts are penalty-free if they are used for qualified college expenses. However, this distribution will count as parental income on the FAFSA for the year of the distribution and potentially reduce financial aid by as much as 47 percent of the amount withdrawn.</p> <p>One way to circumvent this problem is to wait to take a Roth IRA distribution until your child has reached at least the spring semester of his or her sophomore year, since it will be after the final year of income you will need to report on a FAFSA. (Remember, since the FAFSA is based upon the prior-prior year's tax returns, you will not need to provide income information for the last two years of your child's four years in college.)</p> <h3>4. Home equity</h3> <p>The FAFSA does not consider the amount of equity in your home when calculating the EFC &mdash; although the CSS PROFILE, which is the form required by many private colleges and universities for determining financial aid eligibility, does request this information. This means that federal financial aid does not need to know how much equity you have in your home, but many private institutions will consider it when evaluating your financial aid needs.</p> <p>Since home equity is not part of the EFC calculation, some families with large non-retirement savings may consider paying down (or paying off) their mortgage in the years before the base year. This will reduce your expected family contribution, but it could hurt you if Junior or Sis decide to go to a private college or university instead of InState U.</p> <h3>5. UGMA or UTMA accounts</h3> <p>These sorts of custodial accounts are in your child's name, which means that 20 percent of any assets in these accounts are counted toward the EFC. In addition, any interest, dividends, or capital gains earned from these types of accounts (or any accounts in your child's name) are counted as income for your child &mdash; which means that 50 percent of that money is counted toward the EFC.</p> <p>Parents who opened a UGMA (Uniform Gift to Minors Act) or UTMA (Uniform Transfer to Minors Act) account for their child's education would probably be better served by rolling the assets over into a 529 account so that less of the money will be considered part of the EFC.</p> <h3>6. Taxable investment accounts</h3> <p>If you have additional investments on top of your tax-advantaged retirement accounts, these will also need to be claimed on the FAFSA form. These accounts are counted as assets, meaning up to 5.64 percent of their value will be counted in the EFC calculation. However, any dividends and capital gains earned are counted as income, and any distributions you take from these sorts of accounts are also counted as income.</p> <p>If you need to take distributions from taxable investment accounts to help pay for your child's education, you will also want to wait to do this until at least the spring semester of his or her sophomore year, to keep the distribution from dinging you on the FAFSA.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-these-6-assets-might-affect-student-financial-aid-eligibility&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520These%25206%2520Assets%2520Might%2520Affect%2520Student%2520Financial%2520Aid%2520Eligibility.jpg&amp;description=How%20These%206%20Assets%20Might%20Affect%20Student%20Financial%20Aid%20Eligibility"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20These%206%20Assets%20Might%20Affect%20Student%20Financial%20Aid%20Eligibility.jpg" alt="How These 6 Assets Might Affect Student Financial Aid Eligibility" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/how-these-6-assets-might-affect-student-financial-aid-eligibility">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-10-most-common-financial-aid-mistakes-and-how-to-avoid-them">The 10 Most Common Financial Aid Mistakes — And How To Avoid Them</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/css-is-one-source-of-college-financial-aid-you-cant-afford-to-overlook">CSS Is One Source of College Financial Aid You Can&#039;t Afford to Overlook</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/does-your-net-worth-even-matter">Does Your Net Worth Even Matter?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-9-best-state-529-college-savings-plans">The 9 Best State 529 College Savings Plans</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-late-starters-can-save-for-their-kids-education">Here&#039;s How Late Starters Can Save for Their Kids&#039; Education</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Education & Training 529 plans application assets college savings colleges Coverdell ESA FAFSA financial aid income investments retirement accounts Thu, 14 Jun 2018 08:30:36 +0000 Emily Guy Birken 2147656 at http://www.wisebread.com 6 Ways New College Grads Can Build Credit http://www.wisebread.com/6-ways-new-college-grads-can-build-credit <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/6-ways-new-college-grads-can-build-credit" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/cheerful_graduates_are_posing_for_selfie_shot.jpg" alt="Cheerful graduates are posing for selfie shot" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Your credit might be the last thing on your mind after you graduate. After all, there's so much excitement going on with finding a new job and a new place to live, and launching yourself into the full-fledged adult world.</p> <p>With all of this going on, it's no wonder that 46 percent of soon-to-be college graduates have never even seen their credit report, according to a 2016 Experian survey. But if you can take a second to plan ahead, you can help unlock your future financial goals more easily by building your credit now.</p> <p>Starting early is important because a good credit record takes some time to build. You'll want good credit when you go to apply for a credit card, car loan, or mortgage later on. And these days, it's not just lenders who look at your credit record, but also landlords, car insurance companies, and even some employers. (See also: <a href="http://www.wisebread.com/6-ways-life-is-better-with-good-credit?ref=seealso" target="_blank">6 Ways Life Is Better With Good Credit</a>)</p> <p>Luckily, building your credit isn't as hard as it sounds. Here are the six best things you can do now to start.</p> <h2>1. Apply for a credit card</h2> <p>This might sound counterintuitive, but using credit cards wisely is the fastest way to <a href="http://www.wisebread.com/how-to-get-your-first-credit-card-and-build-credit?ref=internal" target="_blank">start building credit</a>. FICO, the credit scoring model that most lenders use, weighs revolving credit such as credit cards heavier than installment loans such as your student loans.</p> <p>Perhaps you already have a student credit card that you've handled responsibly &mdash; if so, you're off to a good start. But if you have no credit history, you may need to become an <a href="http://www.wisebread.com/what-you-need-to-know-about-adding-another-user-to-your-credit-card?ref=internal" target="_blank">authorized user</a> on a parent's credit card. As long as your parent pays their bill on time and keeps their balances low, you'll benefit from their good habits. At the same time, you won't be contractually responsible for the debt on the credit card (your parent may have other ideas, though).</p> <p>Another option is to apply for a <a href="http://www.wisebread.com/the-5-best-secured-credit-cards?ref=internal" target="_blank">secured credit card</a>. A secured card charges you an upfront deposit, which is often about the same amount as your credit limit. That makes the card very low risk to lenders, and therefore fairly easy for credit newbies to qualify for. Keep your balances low and pay every bill on time, and you should be able to upgrade to a regular credit card in about six months.</p> <h2>2. Never miss a bill payment</h2> <p>Your payment history makes up a whopping 35 percent of your credit score. It's the single biggest factor that makes up your score. Even one late payment can <a href="http://www.wisebread.com/how-late-payments-affect-your-credit?ref=internal" target="_blank">drop your credit score</a>, and once it's on your report, it takes a full seven years to fall off. A late payment on your credit card made when you're 23 can haunt you until you're 30.</p> <p>That's why it's so important to not miss payments. One of the best ways to combat this is by putting all of your bills and credit cards on autopay. Once you do that, you don't even have to think about paying them. (See also: <a href="http://www.wisebread.com/the-5-things-with-the-biggest-impact-on-your-credit-score?ref=seealso" target="_blank">The 5 Things With the Biggest Impact on Your Credit Score</a>)</p> <h2>3. Pay down your student loans</h2> <p>The average college student graduated with over $39,000 of student loan debt in 2017. That's a tough pill to swallow, especially since you may not even have a job yet, and if you do, you may not be earning very much.</p> <p>But once you start earning money, <a href="http://www.wisebread.com/15-ways-to-pay-back-student-loans-faster?ref=internal" target="_blank">paying down your student loans</a> can boost your credit score. The more you pay off, the more of a benefit you'll see.</p> <p>Bonus: If you pay extra on your student loans, you'll pay less interest overall and be free of the debt sooner. Then you can start funneling that student loan payment money to other things.</p> <h2>4. Avoid racking up credit card debt</h2> <p>Credit cards are useful tools for building credit &mdash; with one big caveat: Do <em>not</em> rack up a large amount of credit card debt if you can help it. Doing so can hurt your credit score. Your <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?ref=internal" target="_blank">credit utilization ratio</a> &mdash; the amount you owe versus the amount of available credit you have &mdash; makes up 30 percent of your FICO score. It's the second-most important factor in your score.</p> <p>This can be especially difficult, because again, you're facing a lot of demands on your money after you leave college and you may be earning the least amount you'll make during your entire career.</p> <p>One trick that can help is, before you make a purchase, ask yourself: &quot;Do I really need this thing?&quot; If you're tempted too often by your credit card, another solution is to <a href="http://www.wisebread.com/a-guaranteed-way-to-avoid-impulse-credit-card-purchases?ref=internal" target="_blank">freeze it in an ice block</a> in your freezer. That way you still have access to it if you really need it, but it'll take time (during which you can think) to unthaw the card to use. (See also: <a href="http://www.wisebread.com/7-effortless-ways-to-prevent-budget-busting-impulse-buys?ref=seealso" target="_blank">7 Effortless Ways to Prevent Budget-Busting Impulse Buys</a>)</p> <p>When you do use your credit card, aim to pay your credit card bill in full every month if you can. You'll avoid paying any interest that way, and it will keep your credit utilization ratio low. But that raises the question: If you already have the money to pay off all your purchases, why use a credit card at all?</p> <p>As stated above, using a credit card builds credit. In addition, <a href="http://www.wisebread.com/4-reasons-credit-is-safer-than-debit?ref=internal" target="_blank">credit cards give you protections</a> that debit cards don't provide. What's more, by using a rewards credit card &mdash; and paying it off promptly &mdash; you can also earn <a href="http://www.wisebread.com/5-best-cash-back-credit-cards?ref=internal" target="_blank">cash back</a> or <a href="http://www.wisebread.com/top-5-travel-reward-credit-cards?ref=internal" target="_blank">travel rewards</a>.</p> <h2>5. Check your credit report for mistakes</h2> <p>The Federal Trade Commission in 2012 released a study that said 25 percent of people identified errors on their credit report that might affect their credit scores. Today, with the never-ending wave of data breaches, it's especially important to stay on top of <a href="http://www.wisebread.com/how-to-read-a-credit-report?ref=internal" target="_blank">checking your credit report</a>.</p> <p>To make matters a little more confusing, you actually have <em>three</em> credit reports &mdash; one from each of the three credit bureaus: Equifax, Experian, and TransUnion.</p> <p>You can get a free copy of your credit report from each of the three agencies by visiting <a href="http://www.annualcreditreport.com" target="_blank">AnnualCreditReport.com</a>. You can only check each agency for free once per year, so one way to approach the task is check one agency every four months.</p> <h2>6. Avoid closing any student credit cards you may have</h2> <p>Once you leave your school, you might think it's time to cancel your student credit card if you have one. After all, you're not a student anymore, right?</p> <p>Surprisingly, it might be a better idea to <a href="http://www.wisebread.com/what-happens-to-a-student-credit-card-after-you-graduate?ref=internal" target="_blank">hang onto the student credit card</a>, or speak with your credit card company about having it converted into a non-student version. That way, you can keep your credit history open and growing with this particular card.</p> <p>The length of your credit history makes up 15 percent of your credit score. It's also one of the most difficult factors to change because all you can do is sit and wait while the average history on all of your accounts grows with each passing year.</p> <p>That's why it's a good idea to keep your student credit card open if possible. It'll give you a leap forward in growing this part of your credit profile.</p> <h2>You can do this</h2> <p>Building up your credit can seem like an intimidating topic at first. But trust us: If you've gone through college, you have the skills needed to learn how building your credit works. Now all you have to do is put these factors into practice and you'll be well on your way toward a healthy credit score.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F6-ways-new-college-grads-can-build-credit&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F6%2520Ways%2520New%2520College%2520Grads%2520Can%2520Build%2520Credit.jpg&amp;description=6%20Ways%20New%20College%20Grads%20Can%20Build%20Credit"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/6%20Ways%20New%20College%20Grads%20Can%20Build%20Credit.jpg" alt="6 Ways New College Grads Can Build Credit" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/lindsay-vansomeren">Lindsay VanSomeren</a> of <a href="http://www.wisebread.com/6-ways-new-college-grads-can-build-credit">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-happens-to-a-student-credit-card-after-you-graduate">What Happens to a Student Credit Card After You Graduate?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-5-best-credit-cards-for-college-students">The 5 Best Credit Cards for College Students</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/youre-denied-a-credit-card-due-to-too-many-hard-inquiries-now-what">You&#039;re Denied a Credit Card Due to Too Many Hard Inquiries. Now What?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/does-your-teenager-really-need-a-credit-card">Does Your Teenager Really Need a Credit Card?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-is-how-student-loan-interest-works">This Is How Student Loan Interest Works</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Banking Education & Training applying for a credit card building credit college grad college graduation credit card tips Thu, 31 May 2018 08:30:22 +0000 Lindsay VanSomeren 2144233 at http://www.wisebread.com Why Your IRA Shouldn't Double as an Education Savings Plan http://www.wisebread.com/why-your-ira-shouldnt-double-as-an-education-savings-plan <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-your-ira-shouldnt-double-as-an-education-savings-plan" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_education_coins_concept.jpg" alt="Woman Education coins concept" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>College and other education expenses can be some of the most burdensome costs you will ever face. Families may find themselves shelling out tens or even hundreds of thousands of dollars to universities, and many will spend even more on private elementary and secondary schools.</p> <p>Saving for these education expenses is increasingly crucial, with some people even turning to their individual retirement accounts to help. IRAs have nice tax advantages and have long been used as a possible vehicle for college savings. But is it a smart idea to use an IRA to pay for college?</p> <p>Using a retirement account for this purpose could be helpful, but has a number of drawbacks. Consider these reasons to avoid using an IRA for education expenses, if possible.</p> <h2>You can't borrow for retirement</h2> <p>Ideally, you want to save for both retirement and your child's education. But you should try to avoid letting education savings cannibalize your retirement savings. The last thing you want is to aggressively fund education accounts, only to find yourself unable to retire when you want to.</p> <p>Any money you spend on education now won't be available when you are older, and you are costing yourself potentially tens of thousands of dollars in future savings. Remember that your kids can always get loans to help pay for college, if necessary. But there's no way to borrow your way to a comfortable retirement. This is especially important these days when people have been known to live 20, 30, or even 40 years past retirement age. (See also: <a href="http://www.wisebread.com/how-to-keep-student-loans-from-wrecking-your-retirement?ref=seealso" target="_blank">How to Keep Student Loans From Wrecking Your Retirement</a>)</p> <h2>Retirement and college funds should be kept separate</h2> <p>You can save for retirement or you can save for college. But it's a bad idea to try and save for both in the same account. That's because you are operating with different time horizons in mind. If you are saving for your child's college tuition, you will likely need that money in about 18 years, at most. Retirement, on the other hand, might be 30 or 40 years away.</p> <p>This difference in timelines means that you will ideally be invested in different things. The college savings plan should contain more conservative investments than a retirement plan because you will likely need the money sooner.</p> <h2>There are other mechanisms to save for college</h2> <p>Using an IRA to save for college would be more acceptable if there weren't better options. Most states offer 529 college savings plans, which are designed to specifically save for education costs, and offer some great tax benefits to account holders.</p> <p>These plans allow you to place money in mutual funds and other investments, and money grows tax-free as long as it's used for educational purposes. In many cases, the contributions are also tax-deductible. Many states also offer the ability to lock in current college tuition costs today if you are willing to commit to specific universities. (See also: <a href="http://www.wisebread.com/5-smart-places-to-stash-your-kids-college-savings?ref=seealso" target="_blank">5 Smart Places to Stash Your Kid's College Savings</a>)</p> <h2>It's harder to get help from family and friends</h2> <p>With an IRA, the only person who can contribute to the account is you. But a 529 plan allows any person to open an account and name virtually anyone as the beneficiary. This means that grandparents can set up 529 plans for their grandchildren. Individuals can set up plans for the children of close friends. You can even set up a plan and name a complete stranger as a beneficiary. Using a 529 plan instead of an IRA allows a broader set of people to help out with a young person's education expenses if they choose to.</p> <h2>IRA distributions count as income for financial aid purposes</h2> <p>If you choose to make withdrawals from an IRA to pay for college, that money will be counted as income for financial aid purposes. This is not the case for 529 plans. Money in a 529 plan is generally considered an asset (but only about 5.6 percent of the total account balance), and assets don't count as much as income.</p> <p>Withdrawals from 529 plans are not recorded in the Free Application for Student Aid (FAFSA), so having money in these plans won't severely hurt your beneficiary's chance of receiving financial aid. Using an IRA to pay for college, however, could reduce the amount of financial aid your child receives.</p> <h2>Earnings from an IRA can't be withdrawn tax-free</h2> <p>Yes, you can withdraw money from an IRA to pay for qualified educational expenses. But it's only the contributions, not the gains, that can be taken out without being taxed before age 59&frac12;.</p> <p>For example, let's say you have placed $40,000 into a Roth IRA, and that money has grown to $100,000 over time. Only $40,000 can be removed without paying taxes. Any additional funds will be taxed as normal income.</p> <p>With 529 plans, there are no taxes on any withdrawals as long as funds are used to pay for education expenses.</p> <h2>IRAs have contribution limits</h2> <p>You are permitted to contribute $5,500 per year into an IRA, or $6,500 if you are over age 50. But 529 plans have no real contribution limit. At a certain point, you may have to report federal gift taxes if your contribution tops $15,000 in a year (and which will count against the giver's lifetime estate tax exclusion of $11.2 million). But you can avoid this by contributing up to $75,000 in a single year and spreading out the contributions over five years on your disclosure forms. (Many grandparents find this to be a great way to avoid estate taxes.)</p> <p>Some 529 plans do have limits on the total amount you can have in an account at one time. Read the fine print of each plan to determine how that might impact you.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fwhy-your-ira-shouldnt-double-as-an-education-savings-plan&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWhy%2520Your%2520IRA%2520Shouldn%2527t%2520Double%2520as%2520an%2520Education%2520Savings%2520Plan.jpg&amp;description=Why%20Your%20IRA%20Shouldn't%20Double%20as%20an%20Education%20Savings%20Plan"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Why%20Your%20IRA%20Shouldn%27t%20Double%20as%20an%20Education%20Savings%20Plan.jpg" alt="Why Your IRA Shouldn't Double as an Education Savings Plan" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/tim-lemke">Tim Lemke</a> of <a href="http://www.wisebread.com/why-your-ira-shouldnt-double-as-an-education-savings-plan">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-late-starters-can-save-for-their-kids-education">Here&#039;s How Late Starters Can Save for Their Kids&#039; Education</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-questions-to-ask-before-taking-out-student-loans">6 Questions to Ask Before Taking Out Student Loans</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-unique-ways-millennials-are-dealing-with-student-loan-debt">7 Unique Ways Millennials Are Dealing With Student Loan Debt</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-money-moves-to-make-the-moment-you-graduate">5 Money Moves to Make the Moment You Graduate</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-save-for-college-using-a-529-prepaid-tuition-plan">Should You Save for College Using a 529 Prepaid Tuition Plan?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Education & Training 529 accounts college education savings IRA qualified educational expenses retirement tuition Wed, 30 May 2018 08:30:24 +0000 Tim Lemke 2144052 at http://www.wisebread.com Is It Smart to Pay College Tuition With a Credit Card? http://www.wisebread.com/is-it-smart-to-pay-college-tuition-with-a-credit-card <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/is-it-smart-to-pay-college-tuition-with-a-credit-card" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/college_for_me_is_the_time_to_save.jpg" alt="College for me is the time to save" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>At first, the answer seems obvious: Using a credit card to pay your college tuition is a terrible idea. With the high rates that come with plastic, you could rack up thousands of dollars in interest by charging your tuition.</p> <p>But, there's another way to look at it: If you can pay off your credit card bill in full each month, using a card to pay your tuition could generate significant cash back rewards, airline miles, or free hotel stays.</p> <p>It all comes down to your discipline, the type of credit card, and what you can afford to charge. Here are a few things to consider before charging your tuition. (See also: <a href="http://www.wisebread.com/the-5-best-credit-cards-for-college-students?ref=seealso" target="_blank">The 5 Best Credit Cards for College Students</a>)</p> <h2>College isn't cheap</h2> <p>The cost of college isn't shrinking any time soon. CollegeBoard reports that the average yearly tuition for a public, four-year in-state college stood at $9,970 for 2017&ndash;2018, up 3.1 percent from the previous year. Private colleges averaged $25,620 for the same school year, an increase of 3.2 percent. Neither of those figures include the average $10,800 cost for room and board.</p> <p>If you're going to be charging tuition or room and board to a credit card, you should have the cash on hand to pay it off in a timely fashion &mdash; ideally, the first billing cycle. And that won't be a small amount. Otherwise, you put yourself at risk of falling deeply into credit card debt.</p> <h2>Very few people go this route</h2> <p>According to the 2017 edition of Sallie Mae's <em>How America Pays for College </em>report, just 3 percent of families used credit cards to help cover college tuition for their kids, while 4 percent of students used plastic to pay for some or all of their tuition. Parents charged an average $4,450 for tuition in 2017, while students charged an average $1,626.</p> <p>It's evident that paying for college with plastic is not the popular route. Why do so few students or parents turn to their credit cards? Most probably don't have the cash they'd need to pay off these cards in full each month in order to avoid interest charges. Others might not have a high enough credit limit on their cards to charge any more than a few thousand dollars at a time. Students may not have enough of a credit history yet to even be approved for a credit card. (See also: <a href="http://www.wisebread.com/4-important-ways-college-students-should-use-credit-cards?ref=seealso" target="_blank">4 Important Ways College Students Should Use Credit Cards</a>)</p> <h2>Don't chase rewards without a repayment plan</h2> <p>If you can afford to charge tuition and pay off your credit card bill each month, it might make sense to do so, especially if you have a credit card that provides cash back bonuses, rewards, or miles. Charging $10,000 in tuition, for example, could be a great way to earn fast cash or travel credit.</p> <p>Other cards might provide bonuses if you spend a certain amount of money during a set number of months. For instance, if you spend $5,000 during a three-month period, you might get a $200 cash back bonus. Charging your tuition can easily get you to that spending threshold. (See also: <a href="http://www.wisebread.com/5-smart-ways-to-meet-a-rewards-card-minimum-spending-requirement?ref=seealso" target="_blank">5 Smart Ways to Meet a Rewards Card Minimum Spending Requirement</a>)</p> <p>The key, again, is that you pay off your card's balance in full when the bill comes due. It's not unusual for credit cards to come with interest rates of 18 percent or higher. If you carry a balance, that interest rate will cause your debt to grow quickly, and no amount of cash back, bonuses, or miles is worth that financial pain.</p> <h2>Watch out for fees</h2> <p>There is another potential pitfall with credit cards depending on the school you attend. If your college or university allows you to charge tuition (some don't), many will charge an additional fee for credit card processing. You'll have to determine if the rewards, miles, or cash back bonuses you're after are enough to make up for the fee your university or college charges.</p> <p>According to a 2016 survey from CreditCards.com, 85 percent of the country's largest colleges allow credit cards for tuition payments. The survey found that 57 percent of schools charge fees for credit card payments, with the average fee being 2.62 percent.</p> <p>Say you charge $4,500 in tuition for your upcoming semester. If your school charged a fee of 2.62 percent, you'd pay about $118 extra for the privilege of using your card. If that $118 is higher than the cash back bonus or rewards points you'd generate from charging it, you're better off paying for your tuition in another way.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fis-it-smart-to-pay-college-tuition-with-a-credit-card&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FIs%2520It%2520Smart%2520to%2520Pay%2520College%2520Tuition%2520With%2520a%2520Credit%2520Card_.jpg&amp;description=Is%20It%20Smart%20to%20Pay%20College%20Tuition%20With%20a%20Credit%20Card%3F"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Is%20It%20Smart%20to%20Pay%20College%20Tuition%20With%20a%20Credit%20Card_.jpg" alt="Is It Smart to Pay College Tuition With a Credit Card?" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/is-it-smart-to-pay-college-tuition-with-a-credit-card">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-millennials-guide-to-avoiding-credit-card-debt">The Millennials Guide to Avoiding Credit Card Debt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/my-kid-got-accepted-to-an-expensive-private-college-now-what">My Kid Got Accepted to an Expensive Private College — Now What?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-encouraging-truth-about-how-americans-are-covering-the-cost-of-college">The Encouraging Truth About How Americans Are Covering the Cost of College</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-your-ira-shouldnt-double-as-an-education-savings-plan">Why Your IRA Shouldn&#039;t Double as an Education Savings Plan</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-is-how-student-loan-interest-works">This Is How Student Loan Interest Works</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Education & Training cash back charging college costs interest rates pros and cons rewards students tuition Tue, 29 May 2018 08:30:46 +0000 Dan Rafter 2143780 at http://www.wisebread.com 5 Questions to Ask Before Sending Your Child to Private School http://www.wisebread.com/5-questions-to-ask-before-sending-your-child-to-private-school <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-questions-to-ask-before-sending-your-child-to-private-school" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/pupils_in_science_lesson_studying_robotics.jpg" alt="Pupils In Science Lesson Studying Robotics" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Parents consider sending their children to private school over public school for several reasons, and while a private school setting might be best for your child's learning style, you need to evaluate the decision carefully before signing up. Here are five questions to ask yourself before deciding on private school for your child. (See also: <a href="http://www.wisebread.com/7-times-you-should-choose-private-school-over-public?ref=seealso" target="_blank">7 Times You Should Choose Private School Over Public</a>)</p> <h2>1. Can I afford it?</h2> <p>Before you even consider how great a certain school is, you have to know whether you can afford it or not. Will you have to get another job? Will sending your child to this school put unnecessary financial stress on your family? What will you sacrifice to send your child to private school?</p> <p>The national average private school tuition is about $10,302 per year, according to Private School Review, but of course this cost varies drastically depending on the area. For example, the average price of a private school in Iowa is almost $5,000, but over $16,000 in New York. Most private high schools cost more than private elementary schools, as well, so your cost will go up if you keep your child enrolled throughout their school life.</p> <p>Yes, this school might be an amazing opportunity for your child, but is the cost truly worth it? I'm not talking about just the sticker price of the school. You also have to weigh the cost of working longer hours and spending less time with your family in order to make it work. Really consider if you can afford the school and the sacrifices you might have to make along with it. (See also: <a href="http://www.wisebread.com/heres-how-late-starters-can-save-for-their-kids-education?ref=seealso" target="_blank">Here's How Late Starters Can Save for Their Kids' Education</a>)</p> <h2>2. What are the hidden costs?</h2> <p>Unfortunately, the costs of sending your child to a private school don't stop at the monthly tuition bill. There could be several other hidden costs as well, such as the cost of uniforms, expensive textbooks, fundraising fees, field trips, and other special events. Of course, don't forget about sports, elective classes, or after school activities. If the tuition bill is already tipping your budget into the negative, then the extra fees might be too much for your family to handle. (See also: <a href="http://www.wisebread.com/how-to-save-money-on-kids-activities?ref=seealso" target="_blank">How to Save Money on Kids' Activities</a>)</p> <h2>3. How does it compare to the other schools nearby?</h2> <p>There must be a reason why you're considering a private school rather than a public one, so make a list of those reasons. Is it because of safety? A particular sport your child plays? Is it because of your religion? Or perhaps because private schools tend to look better on college applications?</p> <p>Once you have those written down, find out all you can about the private school versus the public schools in your area. For example, if safety is a main priority for you, find out how the private school maintains a safer campus than the other schools. What safety protocols do they have in place? How many incidents have there been in the past five years?</p> <p>It's important to dig deeper into these issues because you might discover that behind the high price tag and fancy test scores, the private school you had your eye on isn't much safer or better at getting students accepted to top colleges than you thought. On the other hand, the private school you're interested in might have a huge lead over other schools in athletics or academics, which makes the tuition easier to justify.</p> <h2>4. What will this school do for my child?</h2> <p>No one knows your child better than you do, so evaluate potential schools for what they will offer your child. Don't get distracted by impressive stats the school might advertise, like having an unbeatable mathletes team or having the highest number of full college scholarships for basketball players. Make a list of your child's strengths and weaknesses and discover how the school can support both. For example, if your child is naturally talented in theater arts but struggles in math, will this school give him or her unique opportunities to act and learn more about theater? Does the school offer special classes or tutoring to strengthen math skills, or will they be thrown into an advanced math class and expected to stay afloat?</p> <h2>5. What is student life like?</h2> <p>School is more than just academics; it's the place where students learn to socialize and create strong friendships. A school that boasts high test scores, but has miserable students is not a healthy environment for anyone. When evaluating the school, ask how the school gets the students involved in their local community. Are the students encouraged to partake in activities that help others outside of the school?</p> <p>You also want to learn how much time is given for breaks and socializing and how often the teachers encourage group projects and working together in the classroom. Most importantly, how does the school deal with bullying and other social behavior issues?</p> <p>There is truly no right or wrong answer when it comes to choosing a private school or a public school for your child. You know your kid best, and you know what's the best for your family.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F5-questions-to-ask-before-sending-your-child-to-private-school&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F5%2520Questions%2520to%2520Ask%2520Before%2520Sending%2520Your%2520Child%2520to%2520Private%2520School.jpg&amp;description=5%20Questions%20to%20Ask%20Before%20Sending%20Your%20Child%20to%20Private%20School"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/5%20Questions%20to%20Ask%20Before%20Sending%20Your%20Child%20to%20Private%20School.jpg" alt="5 Questions to Ask Before Sending Your Child to Private School" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/ashley-eneriz">Ashley Eneriz</a> of <a href="http://www.wisebread.com/5-questions-to-ask-before-sending-your-child-to-private-school">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/are-private-schools-worth-the-money-they-demand">Are Private Schools Worth the Money They Demand?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/28-free-ways-to-entertain-your-kids-this-summer">28 Free Ways to Entertain Your Kids This Summer</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-money-lessons-your-kids-can-learn-while-they-travel">10 Money Lessons Your Kids Can Learn While They Travel</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-frugal-living-skills-you-should-be-teaching-your-children">7 Frugal Living Skills You Should Be Teaching Your Children</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-best-credit-cards-for-back-to-school-shopping">The Best Credit Cards for Back to School Shopping</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Education & Training Family affordable education costs of raising a child parenting tips private school school costs school tuition Thu, 24 May 2018 08:30:47 +0000 Ashley Eneriz 2142705 at http://www.wisebread.com What Happens to a Student Credit Card After You Graduate? http://www.wisebread.com/what-happens-to-a-student-credit-card-after-you-graduate <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-happens-to-a-student-credit-card-after-you-graduate" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_new_grad_925480576.jpg" alt="Woman smiling on graduation day" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Getting a <a href="http://www.wisebread.com/the-5-best-credit-cards-for-college-students?ref=internal" target="_blank">student credit card</a> while you're in college is a smart move. It can be a great tool to learn how to handle credit cards correctly without accidentally drowning yourself in tens of thousands of dollars' worth of debt.</p> <p>Moreover, credit cards allow you to get ahead of the curve by building your credit history before you even graduate. This single factor alone makes up about 15% of your entire credit score. It's also one of the hardest factors to manipulate, because if you want to increase your credit history, about all you can do is literally sit and wait for your score to improve.</p> <p>But what happens when you graduate, and you're no longer a student? You have a few options in this case. You may be able to upgrade your card to its non-student version, keep it open as-is, or close it. We'll walk you through each of the options to help you decide which is right for you.</p> <h2>Contact your credit card company</h2> <p>Each credit card issuer has different policies with these cards when you graduate. They may hide the language about what happens after you graduate in their terms and conditions, or, more commonly, they don't even publicize it at all. That's why the most important thing you can do is to call up your credit card issuer and let them know about how your situation has changed.</p> <p>Make sure to tell them when you graduated, along with any change of address. If you have a job already lined up with a definite salary, this also may give you more options.</p> <p>Generally, credit card issuers will give you two choices to continue using the card: You can keep the student credit card as-is, or upgrade the student credit card to its full-fledged, non-student version.</p> <h2>If your credit card is upgraded</h2> <p>If you are already earning a higher salary than you did as a student (even if it does seem small at first) and paid your bills on-time as a student, credit card companies might be more likely to upgrade you to the full-fledged credit card, along with a <a href="http://www.wisebread.com/4-questions-to-ask-before-getting-a-credit-increase?ref=internal" target="_blank">credit limit increase</a>.</p> <p>This can be a double-edged sword. On one hand, a credit limit increase may decrease your <a href="http://www.wisebread.com/this-one-ratio-is-the-key-to-a-good-credit-score?ref=internal" target="_blank">credit utilization ratio</a>, a measure of what portion of your available credit you're using. This single factor alone has an even bigger effect on your credit score than credit history. It accounts for 30% of your score. (See also: <a href="http://www.wisebread.com/the-5-things-with-the-biggest-impact-on-your-credit-score?ref=seealso" target="_blank">5 Factors With the Biggest Impact on Your Credit Score</a>)</p> <p>But people are often tempted to max out their credit card with their newfound credit line, and this can hurt your score. Don't let this happen to you; instead, it's still best to pay off your entire credit balance each month.</p> <p>You may also be eligible for better rewards or lower interest rates if you're upgraded to the non-student version. But again, don't let this tempt you to run up a balance on your credit card. If earning rewards is your goal, it's best to only <a href="http://www.wisebread.com/top-seven-reasons-why-i-use-my-credit-card-for-everything?ref=internal" target="_blank">put your normal daily spending on your card</a> that you can afford to pay off in full at the end of each month.</p> <h2>If your credit card isn't upgraded</h2> <p>In this case, the credit card issuer might not close your card, but they may not upgrade it. Basically, you're stuck with your old college credit card.</p> <p>If you want a higher credit limit or want to earn better credit card rewards, you always have the option of applying for a full-fledged credit card.</p> <p>If you decide to go ahead and keep your student credit card open (a wise decision, which we'll discuss below), remember to make a purchase with it at least a couple of times per year and pay off the charge. Otherwise, your credit card may be <a href="http://www.wisebread.com/how-to-avoid-getting-your-credit-card-canceled?ref=internal" target="_blank">closed automatically for inactivity</a> without any input from you.</p> <p>Another way to automate this is by putting a recurring small charge on your student credit card &mdash; say, your Netflix or Spotify subscription &mdash; and setting it up on autopay so you don't even have to think about it.</p> <h2>A word about closing your student credit card</h2> <p>Regardless of what happens to your student credit card after you graduate, you always have the option of closing it. However, in most cases, this isn't the best option. Doing so will expunge at least part of the credit history you've worked so hard to create. Unless you have other credit cards, you'll basically be starting over from scratch during the exact period of your life when credit is most important to build.</p> <p>For example, if you plan on renting an apartment, getting an auto loan for a car to get to your new job, or even applying for some jobs, you'll need the best credit score possible. Lenders, landlords, and some employers check credit reports. Keeping your student credit card open &mdash; in whatever form that might be after you graduate &mdash; is often the best option unless you truly do want to simplify your life and are prepared to take a likely hit to your credit score.</p> <h2>Bottom line</h2> <p>Graduating from college is one of the most exciting &mdash; and terrifying &mdash; times in your life. Figuring out what to do with your student credit card after you graduate doesn't need to add to that stress.</p> <p>All you have to do is make a quick phone call to your credit card issuer and explain the situation. Then spend a few minutes thinking about your strategy &mdash; Do you want to close the card? Keep it? Apply for a new credit card? Make a decision and stick with it so you can move on with your life. After all, you've got more important and exciting things to focus on now.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fwhat-happens-to-a-student-credit-card-after-you-graduate&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWhat%2520Happens%2520to%2520a%2520Student%2520Credit%2520Card%2520After%2520You%2520Graduate_.jpg&amp;description=What%20Happens%20to%20a%20Student%20Credit%20Card%20After%20You%20Graduate%3F"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/What%20Happens%20to%20a%20Student%20Credit%20Card%20After%20You%20Graduate_.jpg" alt="What Happens to a Student Credit Card After You Graduate?" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/lindsay-vansomeren">Lindsay VanSomeren</a> of <a href="http://www.wisebread.com/what-happens-to-a-student-credit-card-after-you-graduate">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-things-to-consider-before-making-a-big-purchase-for-rewards-points">6 Things to Consider Before Making a Big Purchase for Rewards Points</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/2-minute-guide-how-to-use-balance-transfers-to-pay-off-credit-card-debt">2-Minute Guide: How to Use Balance Transfers to Pay Off Credit Card Debt</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/step-by-step-guide-to-doing-a-balance-transfer-on-credit-cards">Step-by-Step Guide to Doing a Balance Transfer on Credit Cards</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-best-0-balance-transfer-credit-cards">The Best 0% Balance Transfer Credit Cards</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt">The Fastest Way to Pay Off $10,000 in Credit Card Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Credit Cards Education & Training college graduate credit card debt credit card tips new grads student credit card student debt Wed, 23 May 2018 08:30:32 +0000 Lindsay VanSomeren 2141191 at http://www.wisebread.com 8 Questions to Ask on a College Tour http://www.wisebread.com/8-questions-to-ask-on-a-college-tour <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/8-questions-to-ask-on-a-college-tour" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/happy_young_man_with_books.jpg" alt="Happy young man with books" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>For three years as an undergraduate, I worked as a campus tour guide for prospective students interested in attending my college. It was one of my favorite jobs during my college career because it gave me a chance to show off what I loved about my school and field questions about the school itself and the college experience in general.</p> <p>However, it often seemed as if prospective college students and their parents didn't know what questions to ask. They would ask about what they could expect from financial aid or the possibility of landing a job post-graduation &mdash; but they often missed out on truly understanding how the school would fit with their college and career plans because they didn't think to ask follow-up questions.</p> <p>When you go on a campus visit, make sure you follow up on the typical questions with further ones that really dig deep into what costs, value, and experiences you can expect from any particular school.</p> <h2>The typical question: What is the employment rate post-graduation?</h2> <p>This common question is certainly a reasonable metric. You want to know if the school and its programs prepare a student for the working world after college. But this question assumes that everyone is going to school just to get a job.</p> <p>What if you are interested in majoring in music, or philosophy, or fine arts, or history, or &mdash; horror of horrors &mdash; English? Asking about the employment rate post-graduation for these sorts of programs is never going to sound as promising as the rates for nursing, engineering, and accounting programs.</p> <h3>The follow up: What is the student loan default rate?</h3> <p>The answer to this question can be far more illuminating than the employment rate question, because it can help you to see if the school is truly preparing you for a life of economic security. For instance, the Maryland Institute College of Art (MICA) boasts an incredibly low 2.2 percent default rate for undergraduates &mdash; whereas the national average default rate for student loan borrowers is 11.3 percent.</p> <p>There's a good reason why MICA brags about this rate. It tells prospective students that though they will be studying fine arts &mdash; which is a major that's not known for its high employment rates &mdash; they will learn plenty of applicable skills that will help them to land a job, even if it's in a different field.</p> <p>Many liberal arts schools like to say that they are teaching their students how to think critically, research, and write, which will be useful in any field post-graduation. Asking about the default rate can give you a better sense of whether or not the school in question really follows through on those promises. (See also: <a href="http://www.wisebread.com/what-really-happens-when-you-dont-pay-your-student-loans?ref=seealso" target="_blank">What Really Happens When You Don't Pay Your Student Loans</a>)</p> <h2>The typical question: How many students receive financial aid?</h2> <p>Prospective students want to know that there may be aid available to them if they choose a particular school. Many schools will tout just how large a percentage of students receive financial aid, which can help to alleviate fears that a particular school might be economically out of reach.</p> <p>But not all financial aid is created equal, and knowing that 70 percent of students at a particular school receive aid does not tell you everything you need to know.</p> <h3>The follow up: What is the ratio of outright aid to loans?</h3> <p>When you ask how many students receive financial aid, the school representative will tell you a number that includes any students who are taking loans from the school. What students and parents really need to know is how much financial aid is made up of scholarships and grants as compared to loans.</p> <p>If the ratio is tilted toward loans over outright aid, that can help you make a better financial comparison of the costs of different schools. The answer to this question can also help you to know which schools are truly committed to (and put money behind) the idea of helping students afford their education. (See also: <a href="http://www.wisebread.com/how-to-pay-for-college-when-you-didnt-get-a-scholarship?ref=seealso" target="_blank">How to Pay for College When You Didn't Get a Scholarship</a>)</p> <h2>The typical question: What is the average student loan debt of graduating students?</h2> <p>After hearing all of the horror stories of graduates with six-figure student loans, it's natural that prospective students would want to learn the average debt load of graduates from each school. This figure can help you to determine if the school appears to be within your financial reach. However, it doesn't necessarily tell the whole story.</p> <h3>The follow up: What kinds of financial literacy support are available to alumni?</h3> <p>Some schools have an unofficial, &quot;Here's your diploma, now get outta here&quot; vibe when it comes to helping their young alumni get on their feet. At these schools, all you can really expect in terms of financial literacy support is the federally-mandated student loan exit interview.</p> <p>However, many schools offer a great deal of support for recent graduates &mdash; particularly schools that know they are a little more expensive and do not have the endowment necessary to offer more outright aid.</p> <p>If the school you have your heart set on has a high average student loan debt amount, it is possible that the alumni office works extra hard to help new grads learn how to navigate their finances. Even if the school does not have a high average debt burden, it's worth asking about what kinds of financial literacy support a graduate can expect from the alumni office. It's important to remember that your relationship with the school does not end when you walk across the stage. (See also: <a href="http://www.wisebread.com/the-financial-basics-every-new-grad-should-know?ref=seealso" target="_blank">The Financial Basics Every New Grad Should Know</a>)</p> <h2>The typical question: Do I make too much to receive financial aid?</h2> <p>A common concern among families is the possibility that their income will disqualify their prospective student from need-based financial aid. It's a reasonable concern, and asking this question can help you to better understand the income requirements for financial aid eligibility &mdash; since income is the largest factor in receiving financial aid. However, income is not the only consideration for financial aid eligibility, and just asking this question might not give you all the answers you need.</p> <h3>The follow up: What other factors do you consider for financial aid eligibility?</h3> <p>It's important to remember that schools also consider a number of other factors, in addition to income, when determining who is eligible for need-based financial aid. These factors can include family size, whether or not other members of the family are also in school, number of assets, and even the parents' ages. Asking this question can help you figure out if there may be some financial aid available, even if your family income is relatively high. (See also: <a href="http://www.wisebread.com/12-surprising-ways-to-get-more-college-financial-aid?ref=seealso" target="_blank">12 Surprising Ways to Get More College Financial Aid</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F8-questions-to-ask-on-a-college-tour&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F8%2520Questions%2520to%2520Ask%2520on%2520a%2520College%2520Tour.jpg&amp;description=8%20Questions%20to%20Ask%20on%20a%20College%20Tour"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/8%20Questions%20to%20Ask%20on%20a%20College%20Tour.jpg" alt="8 Questions to Ask on a College Tour" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/8-questions-to-ask-on-a-college-tour">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/college-without-loans-where-to-find-scholarships">College Without Loans: Where to Find Scholarships</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-10-most-common-financial-aid-mistakes-and-how-to-avoid-them">The 10 Most Common Financial Aid Mistakes — And How To Avoid Them</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-things-you-need-to-know-about-deferring-student-loans">4 Things You Need to Know About Deferring Student Loans</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-to-do-when-you-cant-afford-your-childs-college-education">What to Do When You Can&#039;t Afford Your Child&#039;s College Education</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-money-moves-every-new-college-student-should-make">7 Money Moves Every New College Student Should Make</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Education & Training campus visits college tour employment rates financial aid financial literacy graduation questions student loans Tue, 22 May 2018 08:30:41 +0000 Emily Guy Birken 2131424 at http://www.wisebread.com This Is How Student Loan Interest Works http://www.wisebread.com/this-is-how-student-loan-interest-works <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/this-is-how-student-loan-interest-works" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/student_loan_debt.jpg" alt="Student Loan debt" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Student loans are a heavy financial burden for most borrowers, but the loan balance isn't the only major financial blow; the interest that accumulates is also difficult to stay on top of.</p> <p>Interest on a student loan is a major contributor to how big your monthly payment will be and how much your loan will <em>really </em>cost by the time you pay it off. Let's look at how student loan interest works and what you can do to get your loans paid off faster and for less money.</p> <h2>Factors that determine interest on your student loan</h2> <p>There are a few factors that determine how much you will pay in interest on your student loan: the interest rate, the amount you borrow, the loan term, and your payment plan.</p> <h3>Interest rate</h3> <p>When you take out a student loan, you'll need to pay back the amount you borrow, plus interest on the loan. Interest is charged as a percentage of the amount you owe. For example, a $10,000 loan at a 10 percent annual interest rate (compounded daily) will cost you $1,049 after a year. So after one year, you would need to pay back the $10,000 that you borrowed, plus $1,049 for interest.</p> <h3>Amount borrowed</h3> <p>We have seen that a $10,000 loan at a 10 percent annual interest rate costs $1,049 in interest after a year. Of course, most student loans are much bigger than $10,000 &mdash; what if you borrow more? If you borrow $20,000, the interest cost to carry this loan for a year would be $2,097. If you borrow $50,000, the interest after a year would be $5,243. The more you borrow, the more interest the loan carries.</p> <h3>Loan term</h3> <p>The loan term is how long it will take you to pay back the loan. For example, you could borrow $50,000 and pay it back over 10 years. In this case, the term of the loan is 10 years. You can reduce your monthly payments by choosing a longer loan term, but you will end up paying more in interest.</p> <p>If you borrow $50,000 at a 10 percent annual interest rate, you would pay $660.75 per month and your total cost for interest over the life of the loan would be $29,290.44. Now, let's say you want lower monthly payments, so you go with a 20-year term instead of 10 years. Your monthly payment would be $482.51, but over the life of the loan you would pay a whopping $65,802.60 in interest &mdash; about $35,000 more!</p> <h3>Payment plan</h3> <p>Student loans have more flexibility in their payment schedules than other installment loans. The simplest plan is to make the same monthly payments over the entire term of the loan. However, since new college grads typically have a lower income just after graduation and earn a higher salary over time, you can select repayment plans that start off with smaller monthly payments that increase as your income increases.</p> <p>Variable repayment plans do make it easier to make payments on student loans, but the price to be paid for this flexibility is interest. Any payment plan that has smaller payments in the early years will cost more in interest over all. (See also: <a href="http://www.wisebread.com/6-questions-to-ask-before-taking-out-student-loans?ref=seealso" target="_blank">6 Questions to Ask Before Taking Out Student Loans</a>)</p> <h2>How much of your student loan payment goes to interest?</h2> <p>When you make your monthly student loan payment, at first, most of your payment will go toward paying interest. Only a small amount will go toward paying down the principal. Over time, eventually more of your payment will chip away at the principal until your loan is paid off in full.</p> <p>Here's an example of how a payment of $660.75 per month on a $50,000 student loan at 10 percent interest would be applied to interest and principal during a 10-year term.</p> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5170/amortization.jpg" alt="" /></p> <p>At first, you can see how the majority of the payment goes toward interest. But over time, as you continue to make payments, the balance of the loan decreases, thereby reducing the interest that accumulates and allowing more of your monthly payment to go to paying down the principal of the loan.</p> <p>Most student loans give you the option to apply extra payments toward the principal. If you can pay a little extra each month, you'll bring your balance down faster and save money on interest payments over the life of your loan. For example, if you could pay $40 more per month, your loan would be paid off in nine years instead of 10, and your total interest cost would be about $3,000 less. (See also: <a href="http://www.wisebread.com/what-really-happens-when-you-dont-pay-your-student-loans?ref=seealso" target="_blank">What Really Happens When You Don't Pay Your Student Loans</a>)</p> <h2>How to reduce your student loan interest</h2> <p>Once you understand how student loan interest works, you can put that knowledge to work. There are a few ways you can reduce the overall cost of your student loans.</p> <ul> <li> <p>Paying your loan off faster will reduce the cost of interest. Choose the shortest term you can afford, and make extra payments if possible.</p> </li> <li> <p>Borrowing more will increase your interest cost. Try to minimize living expenses while in school to keep your student loan balance as low as possible.</p> </li> </ul> <p>Select the student loan option with the lowest interest rate available. If your rate is still higher than you'd like, consider refinancing your student loan later to a lower interest rate. (See also: <a href="http://www.wisebread.com/15-ways-to-pay-back-student-loans-faster?ref=seealso" target="_blank">15 Ways to Pay Back Student Loans Faster</a>)</p> <p style="text-align: center;">&nbsp;</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fthis-is-how-student-loan-interest-works&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FThis%2520Is%2520How%2520Student%2520Loan%2520Interest%2520Works.jpg&amp;description=This%20Is%20How%20Student%20Loan%20Interest%20Works"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/This%20Is%20How%20Student%20Loan%20Interest%20Works.jpg" alt="This Is How Student Loan Interest Works" width="250" height="374" /></p> <p>&nbsp;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dr-penny-pincher">Dr Penny Pincher</a> of <a href="http://www.wisebread.com/this-is-how-student-loan-interest-works">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-unique-ways-millennials-are-dealing-with-student-loan-debt">7 Unique Ways Millennials Are Dealing With Student Loan Debt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-valuable-rights-you-might-lose-when-you-refinance-student-loans">8 Valuable Rights You Might Lose When You Refinance Student Loans</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-ignore-these-4-things-before-refinancing-your-student-loans">Don&#039;t Ignore These 4 Things Before Refinancing Your Student Loans</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-questions-to-ask-before-taking-out-student-loans">6 Questions to Ask Before Taking Out Student Loans</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-easy-ways-to-avoid-student-loan-debt">12 Easy Ways to Avoid Student Loan Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Banking Debt Management Education & Training amortization college extra payments interest rates loan terms principal refinancing repayment plans student loans tuition Wed, 09 May 2018 08:30:19 +0000 Dr Penny Pincher 2138310 at http://www.wisebread.com My Kid Got Accepted to an Expensive Private College — Now What? http://www.wisebread.com/my-kid-got-accepted-to-an-expensive-private-college-now-what <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/my-kid-got-accepted-to-an-expensive-private-college-now-what" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/coins_in_glass_jar_with_education_label.jpg" alt="Coins in glass jar with education label" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>My son recently got accepted into a college program that would cost about $45,000 per year for tuition, room, and board. This is exciting news &mdash; but also potentially expensive news. At what point does the cost of college outweigh the likely economic benefits?</p> <p>Of course, the value of college goes far beyond simply allowing someone to prepare for a higher paying job. College can help you discover your path in life, develop your mind, and open doors to experiences that are not available to most people. But how much is too much to pay for college, from a purely financial perspective?</p> <h2>College's cost in dollars and opportunity</h2> <p>The main costs of college are tuition, room, and board. The average total cost of attending an in-state public university is over $20,000 per year, and the average cost of private college is over $40,000 per year, according to the College Board.</p> <p>Opportunity cost is another cost of college that is easily overlooked. If you spend four years attending college full-time, you miss out on four years of full-time income that you could have earned instead. You also potentially delay starting to build investments and reaching financial independence.</p> <p>The most insidious cost of going to college is probably lifestyle inflation. Almost everyone tends to spend more as they make more. Even though college graduates will likely make more money than those who don't go to college, college grads will probably also <em>spend </em>a lot more on a more expensive lifestyle. Just because you make more money doesn't mean you'll end up having more money in your bank account or a higher net worth. (See also: <a href="http://www.wisebread.com/what-to-do-when-you-cant-afford-your-childs-college-education?ref=seealso" target="_blank">What to Do When You Can't Afford Your Child's College Education</a>)</p> <h2>College will boost future earnings by a lot</h2> <p>Even though the costs of attending college can be prohibitive, the benefits in terms of increased salary can easily add up to millions of dollars over a career. Let's say you are 18 years old and decide to start working full-time at an entry-level job that pays $20,000 per year. Your earnings over your career until age 65, with a 3 percent raise every year, would be $2,007,930.</p> <p>Now let's say instead of starting to work full-time at age 18, you attend college for four years. You start working full-time at age 22 with a starting salary of $45,000 per year, which is a reasonable expectation for a wide range of college majors. If you work until age 65, assuming a 3 percent raise each year, the earnings over your career would be $3,846,775.</p> <p>Taking into consideration that you delayed starting your career for five years to attend college, you would still earn over $1.8 million more over the course of your career from the benefit of your college education.</p> <p>Of course, expected starting salaries vary with college major. According to the National Association of Colleges and Employers, engineering majors are at the top of the pay scale and can expect to start at an average salary of around $65,000. Education majors have average starting salaries of around $35,000, and almost all other majors are somewhere between $35K and $65K. But no matter what you major in, your salary earnings potential over your career will likely get a big boost by going to college. (See also: <a href="http://www.wisebread.com/5-jobs-that-pay-over-50k-and-dont-require-a-bachelors-degree?ref=seealso" target="_blank">5 Jobs That Pay Over $50K and Don't Require a Bachelor's Degree</a>)</p> <h2>How much should you pay to go to college?</h2> <p>The return on investment of going to college can be quite favorable in terms of increased lifetime salary potential. As we saw in the example above, earning over $1.5 million more from a higher salary after going to college is a realistic expectation.</p> <p>The limit on how much you should pay for college is not constrained by the value of your higher salary with a college degree, since your increased earnings would probably far exceed the cost of going to college. Instead, the limit on college cost for most people is driven by how big of a student loan they can afford to pay back after graduating.</p> <p>Even though a college degree could boost your income by millions of dollars over your career, you'll need to start making student loan payments shortly after graduating. By estimating how much income you expect to earn after you graduate, you can figure out a ballpark figure for the maximum size student loan you can afford. (See also: <a href="http://www.wisebread.com/6-questions-to-ask-before-taking-out-student-loans?ref=seealso" target="_blank">6 Questions to Ask Before Taking Out Student Loans</a>)</p> <p>Here's how to calculate your maximum affordable student loan balance.</p> <ul> <li> <p>Estimate your starting salary based on your major. For example, $45,000.</p> </li> <li> <p>Divide your anticipated starting salary by 12 to get monthly pretax income. For example, $45,000 / 12 = $3,750.</p> </li> </ul> <ul> <li> <p>As a rule of thumb, use 10 percent of your pretax monthly income as your maximum affordable student loan payment. For example, $3,750 x 0.10 = $375 per month.</p> </li> </ul> <ul> <li> <p>Calculate the loan amount that a payment of $375 would support. For example, using the <a href="https://www.calcxml.com/calculators/loan-balance?skn=#results" target="_blank">loan balance calculator</a> from CalcXML, $375 per month would support a 10-year loan of $32,586 with 6.8 percent interest.</p> </li> <li> <p>Divide the loan amount by the number of years of college. For example, $32,586 / 4 = $8,146.50 per year.</p> </li> </ul> <p>The second to last step gives you an idea of the biggest student loan balance that you could afford to make payments on. The very last step gives you the biggest student loan amount that you should take each year.</p> <p>If you want a quicker way to estimate the maximum affordable student loan balance, take 75 percent of your anticipated starting salary. Using the same salary as in the previous example, $45,000 x 0.75 = $33,750. That would be your maximum affordable student loan balance.</p> <h2>But what if the numbers don't add up?</h2> <p>I started off by saying that my son was accepted into a program that costs $45,000 per year. Over four years, this would add up to $180,000. This greatly exceeds the maximum affordable student loan amount for a new college graduate. For an expected starting salary of $45,000, we calculated that the maximum affordable student loan balance is around $33,000. This wouldn't even cover one year of my son's program.</p> <p>Fortunately, there are some ways to reduce college expenses and bring the cost into an affordable range. My son was offered a big scholarship, which makes the sticker price a lot lower. Here are some other possibilities your child can pursue to help keep college costs affordable. (See also: <a href="http://www.wisebread.com/how-to-pay-for-college-when-you-didnt-get-a-scholarship?ref=seealso" target="_blank">How to Pay for College When You Didn't Get a Scholarship</a>)</p> <ul> <li> <p>Choose an in-state public university instead of more expensive private schools.</p> </li> <li> <p>Consider starting at community college for two years and transferring credits to a four-year institution later.</p> </li> <li> <p>Work summers or part-time to help pay some college expenses and reduce the burden of student loan debt.</p> </li> <li> <p>Consider going into a major that pays well to be able to afford a more expensive college program.</p> </li> <li> <p>Consider financing student loans for a longer repayment period to reduce the monthly payments. (You will be in debt longer, but could still come out ahead in the long run.)</p> </li> <li> <p>Consider military service before college, or an ROTC program at college. Benefits can cover college expenses.</p> </li> </ul> <p style="text-align: center;"> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fmy-kid-got-accepted-to-an-expensive-private-college-now-what&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FMy%2520Kid%2520Got%2520Accepted%2520to%2520an%2520Expensive%2520Private%2520College%2520%25E2%2580%2594%2520Now%2520What_.jpg&amp;description=My%20Kid%20Got%20Accepted%20to%20an%20Expensive%20Private%20College%20%E2%80%94%20Now%20What%3F"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/My%20Kid%20Got%20Accepted%20to%20an%20Expensive%20Private%20College%20%E2%80%94%20Now%20What_.jpg" alt="My Kid Got Accepted to an Expensive Private College &mdash; Now What?" width="250" height="374" /></p> <p>&nbsp;</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dr-penny-pincher">Dr Penny Pincher</a> of <a href="http://www.wisebread.com/my-kid-got-accepted-to-an-expensive-private-college-now-what">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-encouraging-truth-about-how-americans-are-covering-the-cost-of-college">The Encouraging Truth About How Americans Are Covering the Cost of College</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-it-smart-to-pay-college-tuition-with-a-credit-card">Is It Smart to Pay College Tuition With a Credit Card?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-questions-to-ask-before-taking-out-student-loans">6 Questions to Ask Before Taking Out Student Loans</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-keep-student-loans-from-wrecking-your-retirement">How to Keep Student Loans From Wrecking Your Retirement</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-unique-ways-millennials-are-dealing-with-student-loan-debt">7 Unique Ways Millennials Are Dealing With Student Loan Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Education & Training calculators career college costs income lifetime earnings student loans tuition Tue, 24 Apr 2018 08:30:10 +0000 Dr Penny Pincher 2130998 at http://www.wisebread.com How to Manage Student Loans On a Low Income http://www.wisebread.com/how-to-manage-student-loans-on-a-low-income <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-manage-student-loans-on-a-low-income" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_with_stack_pile_of_books_and_piggy_bank.jpg" alt="Woman with stack pile of books and piggy bank" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Student loans are a lifeline for college students without the means to foot the full bill for higher education. But the hardships begin when they graduate. For the Class of 2016, the average student loan borrower has more than $37,000 in student debt.</p> <p>Juggling student loan payments with other bills can sometimes seem impossible if you're making a low salary. Luckily, you do have options that can make your student loan payments easier to bear. Here's what you can do.</p> <h2>Federal vs. private student loans</h2> <p>There are two broad types of student loans: federal and private. Federal student loans are the easiest to deal with. That's because there are a number of programs designed to make your monthly payments more affordable.</p> <p>Private student loans are much less flexible because it's up to the individual lender to decide whether they want to help you or not. But as we'll see below, you still have options if you've got private student loans.</p> <h2>Repayment options for federal student loan borrowers</h2> <p>If you have federal student loans, you could be eligible for one of these <a href="https://studentloans.gov/myDirectLoan/ibrInstructions.action" target="_blank">income-driven repayment programs</a>:</p> <ul> <li> <p>Income-Based Repayment (IBR)</p> </li> <li> <p>Pay As You Earn (PAYE)</p> </li> <li> <p>Revised Pay As You Earn (REPAYE)</p> </li> <li> <p>Income-Contingent Repayment (ICR)</p> </li> </ul> <p>These programs all require some hassle to set up and maintain with your loan servicer. Once in place, however, your monthly student loan payments can be lowered to 10-20 percent of your discretionary income for 20-25 years, after which they are forgiven<strong>. </strong></p> <p>The difference is in how you qualify for them and the particular details of the program. Some programs have certain income requirements and loan type requirements (yep, they are limited to even certain types of federal loans). Each program works slightly differently as well, in terms of how much you have to pay and for how long.</p> <p>It sounds like a confusing web to navigate, and it is. But if you need your monthly student loan payment lowered for the long term and take the time to research the right <a href="http://www.wisebread.com/which-student-loan-repayment-plan-saves-you-the-most?ref=internal" target="_blank">federal student loan repayment program</a> for you, it can make a world of difference for your financial health.</p> <p>One important note: Refinancing is often touted as a cure-all for high student loan payments. While it can be beneficial in certain cases, you should think long and hard before you do this with federal loans. Refinancing the loans with private lenders (a different thing than <a href="http://www.wisebread.com/what-s-the-difference-between-student-loan-refinancing-and-consolidation?ref=internal" target="_blank">consolidating all of your federal loans</a> into one loan) means that you might get a lower payment, but you <a href="http://www.wisebread.com/8-valuable-rights-you-might-lose-when-you-refinance-student-loans?ref=internal" target="_blank">lose all the nice federal protections</a> outlined above.</p> <h2>Forbearance and deferment for federal student loan borrowers</h2> <p>If you're facing a temporary financial crisis such as a job loss, injury, or other economic hardship, it might make sense to ask for a temporary <a href="http://www.wisebread.com/what-is-student-loan-forbearance-anyway?ref=internal" target="_blank">forbearance</a> or <a href="http://www.wisebread.com/4-things-you-need-to-know-about-deferring-student-loans?ref=internal" target="_blank">deferment</a>. The programs can offer you up to a three-year break from making student loan payments.</p> <h2>Repayment options for private student loan borrowers</h2> <p>Unfortunately, private student loans are a bit like the Wild West. There are no federal rules requiring private lenders to work with you on a repayment plan. They're completely within their legal rights to continue charging you payments you can't afford, even if it puts you in financial jeopardy.</p> <p>Still, it doesn't hurt to call up your private student loan servicer to ask them for a break. &quot;If you're having a hard time making private loan payments, you can try reaching out and seeing if they'd agree to a modified payment schedule or forbearance, but the answer will probably be no,&quot; says Travis Hornsby, founder of Student Loan Planner, a financial coaching and consulting firm.</p> <p>After that, another option is to try to refinance your student loans with a different private lender for a lower rate. Keep in mind that many lenders require a minimum loan amount of $5,000 to refinance. You'll also need to prove that your income is high enough that you can make your new monthly payments, even though they're smaller than your current ones.</p> <p>In addition, you'll need a good credit score to qualify for interest rates that are low enough to make a refinance worthwhile. A FICO score below 640 is likely to disqualify you for a refinance.</p> <h2>Plan for what comes next</h2> <p>If you are granted student loan forbearance or deferment, use your time wisely. Plan on how to get your financial ship righted so that you <em>are</em> able to afford the monthly payments when they start back up.</p> <p>Refinancing can help lower your payments, but don't let that lull you into complacency. You should still make every effort you can to pay off the debt as soon as possible. <a href="http://www.wisebread.com/what-really-happens-when-you-dont-pay-your-student-loans?ref=internal" target="_blank">Defaulting on student loans</a> can do serious damage to your credit.</p> <p>Finally, if you sign up for an income-driven federal student loan repayment plan, make sure you know what the requirements are and that you follow them to a T. One filing slip-up can result in you being ineligible for the program.</p> <p>And if you expect a portion of your student loans to be forgiven at the end of the repayment term, remember this: The forgiven amount is considered <em>taxable income</em> by the IRS, meaning that you need to be saving for that bill, which could be considerable.</p> <h2>You can do this</h2> <p>Student loans are no fun to deal with. But you <em>can</em> get over them even if you have a low income by using the programs outlined above. It won't be easy, and it might not be quick, but thousands of people have done it before, and you can do it, too.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-to-manage-student-loans-on-a-low-income&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Manage%2520Student%2520Loans%2520On%2520a%2520Low%2520Income.jpg&amp;description=How%20to%20Manage%20Student%20Loans%20On%20a%20Low%20Income"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20to%20Manage%20Student%20Loans%20On%20a%20Low%20Income.jpg" alt="How to Manage Student Loans On a Low Income" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/lindsay-vansomeren">Lindsay VanSomeren</a> of <a href="http://www.wisebread.com/how-to-manage-student-loans-on-a-low-income">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-unique-ways-millennials-are-dealing-with-student-loan-debt">7 Unique Ways Millennials Are Dealing With Student Loan Debt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-is-how-student-loan-interest-works">This Is How Student Loan Interest Works</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-questions-to-ask-before-taking-out-student-loans">6 Questions to Ask Before Taking Out Student Loans</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-easy-ways-to-avoid-student-loan-debt">12 Easy Ways to Avoid Student Loan Debt</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-surprising-ways-to-pay-off-your-student-loans">8 Surprising Ways to Pay Off Your Student Loans</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management Education & Training college loans college students financial struggles low income student debt student loans Wed, 18 Apr 2018 08:30:06 +0000 Lindsay VanSomeren 2128966 at http://www.wisebread.com Here's How Late Starters Can Save for Their Kids' Education http://www.wisebread.com/heres-how-late-starters-can-save-for-their-kids-education <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/heres-how-late-starters-can-save-for-their-kids-education" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/stick_with_word_saving_for_college_and_money_0.jpg" alt="Stick with word Saving for College and money" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>You've always planned to help your children save for their college educations. There's just one problem: Those kids are already in high school and you've not even managed to save enough money for a single semester.</p> <p>Don't panic. Saving for college can sneak up on parents who already have many other financial challenges like making monthly mortgage payments, building an emergency fund, and saving for retirement &mdash; not to mention the daily costs that come with raising children.</p> <p>Fortunately, there are still steps you can take to boost your college saving efforts late in the game. You'll just have to be realistic: It's challenging to pay for a child's college education when you only have three or four years to do it. Setting more realistic goals can help ease your stress.</p> <p>And whatever you do, don't forget to have a long talk with your children. Explain to them exactly what kind of financial support they can expect. You don't want to blindside them if they think you're going to be their tuition piggy bank.</p> <h2>1. Don't get discouraged</h2> <p>The first rule is the simplest: Don't give up just because you've gotten off to a late start. Even if your child is starting high school, you can still open a 529 college savings account and contribute money to it each month. Every state in the country offers one of these plans.</p> <p>These plans come with tax benefits that make them ideal for saving for higher education. The money you save in a 529 plan will grow on a tax-deferred basis. You can withdraw the money without paying any taxes, too, as long as you use the dollars for qualified higher-education costs. The definition of &quot;qualified expense&quot; is broad here. They include tuition, of course, but also fees, books, and supplies.</p> <p>You might not have much money to deposit into these accounts each month, but even saving $100 a month can add up. Sure, you might not be able to save enough to cover all of your child's college costs. But you can certainly make a dent in tuition payments, fees, and expenses.</p> <p>Your children might have to borrow more money, or save up their own dollars, to help cover the shortfall. But if you start saving now, you'll at least reduce their financial burden. (See also: <a href="http://www.wisebread.com/the-9-best-state-529-college-savings-plans?ref=seealso" target="_blank">The 9 Best State 529 College Savings Plans</a>)</p> <h2>2. Tap into Upromise</h2> <p>You can provide an extra boost to your savings through Sallie Mae's <a href="https://www.upromise.com/" target="_blank">Upromise</a> program. Parents and students who sign up receive extra money toward college when they shop at participating retailers. These retailers deposit a percentage of what parents and students spend into a savings account designated for a future college student.</p> <p>The program is free. And you can invite your other family members and friends to register their credit and debit cards, too. Then, when they shop at participating retailers, a percentage of their sales will also be funneled into your child's savings account. (See also: <a href="http://www.wisebread.com/what-to-do-when-you-cant-afford-your-childs-college-education?ref=seealso" target="_blank">What to Do When You Can't Afford Your Child's College Education</a>)</p> <h2>3. Work with your children on a savings budget</h2> <p>It's important to keep your children informed as to how much you've saved for their college educations and how much you can reasonably expect to save before they head off to university. You don't want your children surprised that you've only saved enough to pay for two years of college when they expected you to pay for four.</p> <p>Have real financial conversations with your children. Work with them to create a household budget to determine how much money you can save each month for college. Doing this will give your children a more realistic look at your finances, the challenge of saving for college, and insight into how much they themselves might have to borrow.</p> <p>The budget might even include any money your children can add to their own college savings fund. Remind your sons and daughters that every little bit adds up, and that you expect them to help provide college savings, too.</p> <p>Once you and your children have created a budget, stick to it. Don't be tempted to save more than you can reasonably afford, and don't skimp on the savings to take a vacation or buy an expensive flat-screen TV. (See also: <a href="http://www.wisebread.com/how-to-help-your-kid-build-their-first-budget?ref=seealso" target="_blank">How to Help Your Kid Build Their First Budget</a>)</p> <h2>4. Protect your retirement savings</h2> <p>It can be tempting to save for your children's college education at the expense of putting money away for your retirement. Don't fall into this financial trap. Your number one priority should still be to stow away money for your retirement years, even if this means that you can't save as much as you'd like for your kids' education.</p> <p>The formula is simple: Retirement first, college savings second. Remember, your children have options to help fund the cost of a college education. You don't have nearly as many for building your retirement savings. (See also: <a href="http://www.wisebread.com/how-to-keep-student-loans-from-wrecking-your-retirement?ref=seealso" target="_blank">How to Keep Student Loans From Wrecking Your Retirement</a>)</p> <h2>5. Explore other college options</h2> <p>Speaking of those other options, your children need to start exploring them. Perhaps they could attend community college for two years and then transfer to a more expensive four-year college as a junior. Or maybe your children could attend a less expensive public state university instead of that private school three states away. Both strategies could dramatically reduce the expense of a college education.</p> <p>Encourage your children to also hunt for scholarship and grant opportunities. Even smaller scholarships can help reduce the cost of education. (See also: <a href="http://www.wisebread.com/how-to-pay-for-college-when-you-didnt-get-a-scholarship?ref=seealso" target="_blank">How to Pay for College When You Didn't Get a Scholarship</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fheres-how-late-starters-can-save-for-their-kids-education&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHere%2527s%2520How%2520Late%2520Starters%2520Can%2520Save%2520for%2520Their%2520Kids%2527%2520Education.jpg&amp;description=Here's%20How%20Late%20Starters%20Can%20Save%20for%20Their%20Kids'%20Education"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Here%27s%20How%20Late%20Starters%20Can%20Save%20for%20Their%20Kids%27%20Education.jpg" alt="Here's How Late Starters Can Save for Their Kids' Education" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/heres-how-late-starters-can-save-for-their-kids-education">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-save-for-college-using-a-529-prepaid-tuition-plan">Should You Save for College Using a 529 Prepaid Tuition Plan?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-encouraging-truth-about-how-americans-are-covering-the-cost-of-college">The Encouraging Truth About How Americans Are Covering the Cost of College</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-your-ira-shouldnt-double-as-an-education-savings-plan">Why Your IRA Shouldn&#039;t Double as an Education Savings Plan</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-questions-to-ask-before-taking-out-student-loans">6 Questions to Ask Before Taking Out Student Loans</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-saving-too-much-money-for-a-college-fund-is-a-bad-idea">Why Saving Too Much Money for a College Fund Is a Bad Idea</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Education & Training 529 plans budgeting children college education late starters retirement saving money scholarships tuition Wed, 04 Apr 2018 08:30:10 +0000 Dan Rafter 2125056 at http://www.wisebread.com 3 Ways Education Can Impact Your Creditworthiness http://www.wisebread.com/3-ways-education-can-impact-your-creditworthiness <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/3-ways-education-can-impact-your-creditworthiness" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/this_is_how_we_will_climb_ladders.jpg" alt="This is how we will climb ladders" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Many factors can impact your credit score, but is education one of them?</p> <p>In short, no. Education does not directly affect your credit score. Whether you have a Ph.D or are a high school dropout, credit reporting agencies couldn't care less. No matter your level of education, your credit score will remain unaffected.</p> <p>On the flip side, your credit score is<em> directly affected</em> by factors that may relate to you if you used student loans to fund your education. And your credit score is just one factor that constitutes your creditworthiness. What do we mean by creditworthiness? As defined by Investopedia, creditworthiness is &quot;a valuation performed by lenders that determines the possibility a borrower may default on his or her debt obligations. It considers factors such as repayment history and credit score.&quot;</p> <p>While your level of education may not directly affect your credit score, it can affect your creditworthiness. Here's how.</p> <h2>Debt-to-income ratio</h2> <p>If you borrowed money to finance your education, you could have a higher debt-to-income ratio. A high debt-to-income ratio means that you owe a high percentage of your income to debt. This can affect your creditworthiness.</p> <p>Student loan borrowers owe a significant chunk of change to their student loan lenders. It can be difficult to put a serious dent in these loans, especially while working an entry-level, likely lower-paying job as a recent college graduate.</p> <p>As your income increases, lenders face less concern over the amount of debt you carry. That's because as your earning power goes up, you are less likely to miss debt payments. (See also: <a href="http://www.wisebread.com/the-7-debt-payoffs-that-boost-your-credit-score-the-most?ref=seealso" target="_blank">The 7 Debt Payoffs That Boost Your Credit Score the Most</a>)</p> <h2>On-time payments</h2> <p>Failing to pay a student loan bill fully and on-time can drastically affect your creditworthiness.</p> <p>Lenders don't want to credit money to borrowers with a bad repayment history. Any lender wants to know that they will be repaid, on time and on their terms.</p> <p>On the other hand, paying back your student loans on schedule can help to increase your credit score and creditworthiness. Potential lenders viewing your repayment history like to see that you are a reliable borrower. (See also: <a href="http://www.wisebread.com/what-really-happens-when-you-dont-pay-your-student-loans?ref=seealso" target="_blank">What Really Happens When You Don't Pay Your Student Loans</a>)</p> <h2>Work experience</h2> <p>Your past work experience is a big determining factor of your creditworthiness, especially in relation to home loans. When applying for a mortgage, lenders will take a look at the last two years of your work history, among other considerations. They want to know that not only are you willing to pay back owed money, but that you are also financially able to pay it back. This is why a steady job history is important to potential lenders.</p> <p>While your level of education doesn't necessarily determine whether you'll have vast or limited career opportunities, you are more likely to have better career opportunities (and income opportunities) with at least a bachelor's degree.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F3-ways-education-can-impact-your-creditworthiness&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F3%2520Ways%2520Education%2520Can%2520Impact%2520Your%2520Creditworthiness.jpg&amp;description=3%20Ways%20Education%20Can%20Impact%20Your%20Creditworthiness"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/3%20Ways%20Education%20Can%20Impact%20Your%20Creditworthiness.jpg" alt="3 Ways Education Can Impact Your Creditworthiness" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/rachel-slifka">Rachel Slifka</a> of <a href="http://www.wisebread.com/3-ways-education-can-impact-your-creditworthiness">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-new-grads-can-protect-their-credit">How New Grads Can Protect Their Credit</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/you-missed-a-student-loan-payment-now-what">You Missed a Student Loan Payment. Now What?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-monthly-bills-that-wont-affect-your-credit-score">6 Monthly Bills That Won&#039;t Affect Your Credit Score</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-things-to-do-right-now-to-boost-your-600-credit-score">5 Things to Do Right Now to Boost Your 600 Credit Score</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-why-you-shouldnt-freak-out-if-you-miss-a-payment-due-date">Here&#039;s Why You Shouldn&#039;t Freak Out If You Miss a Payment Due Date</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Education & Training credit credit history creditworthiness debt to income ratio late payments student loans Fri, 23 Mar 2018 09:00:06 +0000 Rachel Slifka 2116586 at http://www.wisebread.com Want Financial Education in Schools? Follow the Example of One Kansas Teen http://www.wisebread.com/want-financial-education-in-schools-follow-the-example-of-one-kansas-teen <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/want-financial-education-in-schools-follow-the-example-of-one-kansas-teen" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/high_school_student_828456866.jpg" alt="High school student learning financial literacy" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>I&rsquo;m a native Kansan. I&rsquo;m a proud Jayhawks fan. My roots are deep there, and much of my family still lives there. I&rsquo;m going back home next month to celebrate my grandson becoming an Eagle Scout (the <a href="http://www.wisebread.com/is-student-loan-debt-as-bad-as-it-seems" target="_blank">same one</a> who got lost on his way to class the first day of college last fall).</p> <p>I say all this because I want to brag about something innovative that my home state has done for its students&nbsp;&mdash; and to use the example as a guide for what we all need to do to encourage the same action for financial education.</p> <p>Recently, spurred to action by a teenager who suffered cardiac arrest during a spelling bee, the Kansas Legislature passed a law requiring every high school student in the state to complete a cardiopulmonary resuscitation (CPR) course to graduate from high school.</p> <p>The American Heart Association reports that 350,000 people across the United States suffer cardiac arrest outside of a hospital each year. Only 46 percent of those victims receive CPR. Now, every high school graduate in Kansas will know how to perform CPR. That will unquestionably save lives over time.</p> <p>Emma Baker was the 13-year-old student who collapsed during a spelling bee. Her life was saved because a school administrator knew CPR and a person in the audience recognized her medical distress.</p> <p>That event drove a passion for her and her family to press for legislation to ensure that others in the future have someone there to perform CPR in the rare event that it&rsquo;s needed.</p> <p>We need to follow that example for financial education for our students across the country.</p> <p>Every single student in our schools will:</p> <ul> <li>Spend cash.<br /> &nbsp;</li> <li>Take out installment loans for major purchases.<br /> &nbsp;</li> <li>Swipe credit cards, or just point their phones at a reader to make a charge.<br /> &nbsp;</li> <li>Need to purchase insurance.<br /> &nbsp;</li> <li>Save for emergencies.<br /> &nbsp;</li> <li>And, we hope, invest for their retirement.</li> </ul> <p>Add to that the fact that there was more than $1.4 trillion in student loan debt in 2017 and more than $1 trillion in credit card debt in the United States, and it should be abundantly clear that understanding fundamental personal finance topics including credit, savings, and other basic financial concepts is a critical life skill every student needs.</p> <p>Everywhere I go, everyone I talk to wants to know why we don&rsquo;t include financial education in our schools&rsquo; curricula. The answer is simple. We don&rsquo;t make it clear to our school boards, administrators, and legislators that it&rsquo;s a priority for us as citizens and parents.</p> <p>We need to follow Ms. Baker&rsquo;s example. If we don&rsquo;t share our passion and make our voices heard, we can&rsquo;t bring change to our schools for our children. If our school boards, administrators, and legislators don&rsquo;t know that financial education is a priority for their constituents, they can&rsquo;t give it the attention it needs.</p> <h2>Financial Literacy Month</h2> <p>April is Financial Literacy Month. That would be a great time to speak with your school board members and legislators about the importance of requiring personal finance education in our classrooms.</p> <p>Another way to get involved is through the <a href="http://www.jumpstart.org/" target="_blank">Jump$tart Coalition for Personal Financial Literacy</a>. Experian was one of the founders of the organization more than 20 years ago. Today, Jump$tart has about 150 partners from the private sector, public sector, and academia. It&rsquo;s extraordinarily rare to find an organization where companies like Experian work together with government agencies like the Consumer Financial Protection Bureau, colleges and universities, and nonprofit foundations. In this case, it&rsquo;s because we all believe in the importance of personal finance education in the classroom.</p> <p>Jump$tart isn&rsquo;t an advocacy organization. It works to provide training, resources, and guidelines for effective classroom instruction. Jump$tart established <a href="http://www.jumpstart.org/national-standards" target="_blank">national standards</a> for financial education in grades K-12 and has built a clearinghouse of resources for teachers to use in their classes.</p> <p>There are Jump$tart <a href="http://www.jumpstart.org/state-coalitions" target="_blank">coalitions</a> in all 50 states, Puerto Rico, and Washington, D.C. Visit the website to learn more about what Jump$tart does and how you can volunteer to support financial education initiatives in your state.</p> <p><em>(Editor&rsquo;s note: Wise Bread is also a proud supporter of Jump$tart. Check out the recent TweetChat we co-hosted with Jump$start on the topic of <a href="http://www.wisebread.com/creating-a-financially-literate-future-for-your-kids-highlights-from-our-chat-with-jumptart" target="_blank">creating a financially literate future with our kids</a>.)</em></p> <h2>Credit tips for Financial Literacy Month</h2> <p>Throughout April, there will be financial education initiatives and events to encourage people of all ages to increase their financial knowledge. A piece of that knowledge is about credit and how to use it wisely. Here are a few credit tips in advance of Financial Literacy Month.</p> <ul> <li>Get your credit report at least once a year. It&rsquo;s free from each of the national credit reporting companies at <a href="http://www.annualcreditreport.com" target="_blank">www.annualcreditreport.com</a>. The first step to improving your credit is knowing what&rsquo;s in your credit report.<br /> &nbsp;</li> <li>Check your credit score when you get your report. You can purchase a score for a nominal fee, and you&rsquo;ll get the risk factors that go with the score. Use those factors to address the issues in your credit report to improve your credit score.<br /> &nbsp;</li> <li>The two most important factors for every credit score are your payment history and your credit utilization ratio. Pay your bills on time and keep your credit card balances low, and your scores will improve over time.<br /> &nbsp;</li> <li>Check your credit report and score several months before applying for a major loan or mortgage. Doing so will ensure you have time to address any issues with your credit history and take steps to improve your score if necessary.<br /> &nbsp;</li> <li>Join Experian&rsquo;s <a href="http://www.experian.com/blogs/news/about/creditchat/" target="_blank">#CreditChat</a> on Twitter and Periscope to learn more about personal finance and credit. We want you to be part of the conversation not only during financial literacy month, but all year long.</li> </ul> <p>Everywhere I go, parents and professionals tell me how important requiring financial education in our schools is and how concerned they are that it isn&rsquo;t.</p> <p>I&rsquo;m the wrong person to tell.</p> <p>Make your voice heard in your state. We want all our students across the country to graduate with fundamental personal financial skills.</p> <p>Have a talk with your legislators, school boards, and administrators. Only when they understand how important it is to all of us will financial education become a priority. Financial Literacy Month would be a good time to start that conversation.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fwant-financial-education-in-schools-follow-the-example-of-one-kansas-teen&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWant%2520Financial%2520Education%2520in%2520Schools_%2520Follow%2520the%2520Example%2520of%2520One%2520Kansas%2520Teen.jpg&amp;description=Want%20Financial%20Education%20in%20Schools%3F%20Follow%20the%20Example%20of%20One%20Kansas%20Teen"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Want%20Financial%20Education%20in%20Schools_%20Follow%20the%20Example%20of%20One%20Kansas%20Teen.jpg" alt="Want Financial Education in Schools? Follow the Example of One Kansas Teen" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/rod-griffin">Rod Griffin</a> of <a href="http://www.wisebread.com/want-financial-education-in-schools-follow-the-example-of-one-kansas-teen">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/tips-for-increasing-your-financial-literacy">Tips for Increasing Your Financial Literacy</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-places-teens-and-adults-can-learn-about-money">7 Places Teens (and Adults) Can Learn About Money</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/essential-money-lessons-for-recent-grads">Essential Money Lessons for Recent Grads</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-these-6-assets-might-affect-student-financial-aid-eligibility">How These 6 Assets Might Affect Student Financial Aid Eligibility</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-your-ira-shouldnt-double-as-an-education-savings-plan">Why Your IRA Shouldn&#039;t Double as an Education Savings Plan</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Education & Training cpr cpr training financial education financial health financial literacy healthy habits Wed, 21 Mar 2018 19:06:30 +0000 Rod Griffin 2121990 at http://www.wisebread.com What to Do If You Can't Pay Your Private Student Loan http://www.wisebread.com/what-to-do-if-you-cant-pay-your-private-student-loan <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/what-to-do-if-you-cant-pay-your-private-student-loan" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/they_have_bills_to_pay.jpg" alt="They have bills to pay" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>While your private student loan seemed like a good idea when you were pursuing a degree, now it might feel like an unbearable weight &mdash; especially if you didn't get the job or paycheck you were hoping for after graduation. If you are struggling to pay your student loans, know that you are not alone: American grads share over $1.48 trillion in student loan debt, with a delinquency rate of 11.2 percent.</p> <p>Private student loans add an extra layer of difficulty for borrowers. While federal student loans offer <a href="http://www.wisebread.com/which-student-loan-repayment-plan-saves-you-the-most?ref=internal" target="_blank">various repayment programs</a> to those struggling to make payments, private loans notoriously have less leeway.</p> <p>Not paying back your student loans is not an option. Not only can defaulting on your student loans hurt your credit score, but it can eventually lead to calls from collection agencies and having your wages garnished. Here are several options to consider instead when you are struggling with your private student loans. (See also: <a href="http://www.wisebread.com/what-really-happens-when-you-dont-pay-your-student-loans?ref=seealso" target="_blank">What Really Happens When You Don't Pay Your Student Loans</a>)</p> <h2>1. Refinance your loans</h2> <p>Are you paying a lot of interest for your student loan? Get quotes from <a href="http://www.wisebread.com/3-private-lenders-that-can-really-save-you-money-on-your-student-loans?ref=internal" target="_blank">private student loan lenders</a> to see if you can land a lower interest rate. Decreasing your interest rate by 1 percent might not save you a lot each month, but it can save you thousands over the life of your loan.</p> <p>If you are really in a pinch financially, and you have exhausted your options, you can refinance your student loans to a longer term. This can dramatically decrease your monthly payment, but it will mean that you are paying more overall over the life of the loan. Consider the long-term effects of refinancing your loan from a 10-year term to a 20-year term before finalizing that decision. (See also: <a href="http://www.wisebread.com/should-you-refinance-your-student-loan?ref=seealso" target="_blank">Should You Refinance Your Student Loan?</a>)</p> <h2>2. Increase your income</h2> <p>Earning more at work can help ease your budget woes. However, getting a bigger paycheck is easier said than done. For employees that have been on the job for a while, ask for a raise or look for opportunities for in-house promotions. Many companies like to hire current employees for higher positions because in the long run, it is more cost effective and timesaving for the company. Don't see a new job listing? Don't let that stop you from asking your employer. They might be too busy to post a new job listing. (See also: <a href="http://www.wisebread.com/how-to-negotiate-a-raise-out-of-the-blue?ref=seealso" target="_blank">How to Negotiate a Raise Out of the Blue</a>)</p> <h2>3. Look for jobs with student loan repayment perks</h2> <p>Many companies are starting to offer student loan repayment options as an employee benefit. Companies like Staples, Fidelity, and Aetna offer this perk, so it might be worth looking at job listings with these companies. (See also: <a href="http://www.wisebread.com/these-17-companies-will-help-you-repay-your-student-loan?ref=seealso" target="_blank">These 17 Companies Will Help You Repay Your Student Loan</a>)</p> <h2>4. Find a side gig</h2> <p>If you can't increase your income through your regular paycheck, try earning money on the side. There are many avenues for earning extra cash through a freelance or side gig; you just have to find the right fit for you and your schedule. Driving for Uber or Lyft, housesitting, or dog walking are all easy ways to earn extra income each month. For those with more specific experience, try freelance writing, social media managing, or virtual assisting. (See also: <a href="http://www.wisebread.com/14-best-side-jobs-for-fast-cash?ref=seealso" target="_blank">14 Best Side Jobs For Fast Cash</a>)</p> <h2>5. Sell unused items</h2> <p>You might have extra money taking up space in your closet or garage. Go on a decluttering mission this weekend and find everything you don't need or want anymore. Sell smaller, valuable items, like a name brand sweater, on eBay. Sell larger items on Craigslist or Offerup. For everything else, sell in a yard sale. People buy junk at yard sales, so don't be surprised if your old towels or comforter set fetch you a few bucks. (See also: <a href="http://www.wisebread.com/12-garage-sale-items-that-sell-like-hotcakes?ref=seealso" target="_blank">12 Garage Sale Items That Sell Like Hotcakes</a>)</p> <h2>6. Get real about your budget</h2> <p>If you can't find room in your budget for your student loan payments, it might be time to get a new budget. Take a hard look at what expenses can be cut. This can be a painful exercise, but if it means being able to stay current with your student loan bills, it is worth it.</p> <p>Cut the fun stuff from your budget first, like coffee runs and shopping trips. Downsize your cellphone and cellphone plan and cancel any monthly subscriptions. This includes magazines, Netflix, gym memberships, and anything else you can live without.</p> <p>If you still cannot afford your student loan payments after cutting out the fun stuff, it may be time to adjust your way of living altogether. As hard as it may be, consider ditching your car with a car payment for an older vehicle that can be bought with cash. Live with a roommate or move back home temporarily while you get ahead on your debt.</p> <p>Paying off private student loan debt is a huge chore and making the sacrifices to do it can seem impossible. However, it is better to live with your parents or a drive around town in a clunker than to be delinquent on your student loans. (See also: <a href="http://www.wisebread.com/5-ways-to-pay-off-your-student-debt-faster?ref=seealso" target="_blank">5 Ways to Pay Off Your Student Debt Faster</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fwhat-to-do-if-you-cant-pay-your-private-student-loan&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWhat%2520to%2520Do%2520If%2520You%2520Can%2527t%2520Pay%2520Your%2520Private%2520Student%2520Loan.jpg&amp;description=What%20to%20Do%20If%20You%20Can't%20Pay%20Your%20Private%20Student%20Loan"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/What%20to%20Do%20If%20You%20Can%27t%20Pay%20Your%20Private%20Student%20Loan.jpg" alt="What to Do If You Can't Pay Your Private Student Loan" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/ashley-eneriz">Ashley Eneriz</a> of <a href="http://www.wisebread.com/what-to-do-if-you-cant-pay-your-private-student-loan">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/this-is-how-student-loan-interest-works">This Is How Student Loan Interest Works</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-things-millennials-can-do-right-now-for-an-early-retirement">8 Things Millennials Can Do Right Now for an Early Retirement</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-sacrifices-that-will-supercharge-your-debt-payoff">8 Sacrifices That Will Supercharge Your Debt Payoff</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-to-travel-when-you-have-student-loans">6 Ways to Travel When You Have Student Loans</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-to-avoid-vacation-debt">6 Ways to Avoid Vacation Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management Education & Training budgeting extra income private student loans refinancing side gigs student loan repayment Mon, 19 Mar 2018 09:30:24 +0000 Ashley Eneriz 2114761 at http://www.wisebread.com How to Pay for College When You Didn't Get a Scholarship http://www.wisebread.com/how-to-pay-for-college-when-you-didnt-get-a-scholarship <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-pay-for-college-when-you-didnt-get-a-scholarship" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/graduation_student_with_money_in_his_hands.jpg" alt="Graduation student with money in his hands" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Before I enrolled in college, I attended several seminars and read several books and articles on the magic of paying for your degree with scholarships. It seemed that there were so many success stories out there, and with around $46 billion of grant and scholarship money awarded each year in the U.S., I figured I could at least snag half off my college bill.</p> <p>One year and over 100 applications later, I only won two local scholarships that totaled $2,500.</p> <p>Sound familiar? If you feel like you can't win the scholarship game, don't despair. There are still other ways to afford your degree.</p> <h2>1. Ask your employer</h2> <p>Your place of employment could have more to offer than a paycheck. Many companies offer tuition reimbursement and employee scholarships, but sometimes you have to ask. If your company does not currently offer any tuition benefits, and you're preparing to apply for college, it may be time to switch jobs to an employer that does.</p> <p>Once you graduate, also be sure to look for companies that offer tuition repayment as part of the benefits package. Many places, including UPS, Staples, and Aetna, offer this bonus to college students or grads. (See also: <a href="http://www.wisebread.com/these-17-companies-will-help-you-repay-your-student-loan?ref=seealso" target="_blank">These 17 Companies Will Help You Repay Your Student Loan</a>)</p> <h2>2. Don't forget about tax benefits</h2> <p>When it comes to tuition, every little bit helps. Tax credits shouldn't be overlooked. The American opportunity credit (AOC) offers student taxpayers or their parents a tax credit of up to $2,500 per tax year, for up to four years. Eligible students must be enrolled in a degree program or pursuing other credible secondary education. The AOC can either be claimed by a student, or a dependent student's parents &mdash; just not by both. And even better, the AOC was not affected by the new tax law.</p> <h2>3. Apply for financial aid</h2> <p>It is crucial to fill out the free application for federal student aid (FAFSA) each year, even if you think your parents make too much money. You never know what type of aid you will qualify for, and the application takes less than an hour to complete.</p> <p>Also, submitting the FAFSA makes you eligible for federal student loans, which have more lenient payback options than private loans. (See also: <a href="http://www.wisebread.com/5-reasons-why-every-student-should-fill-out-the-fafsa?ref=seealso" target="_blank">5 Reasons Why Every Student Should Fill Out the FAFSA</a>)</p> <h2>4. Turn to your local community college</h2> <p>A community college can help you fill the requirements for many general education classes at a fraction of the cost of private or even in-state universities. As long as the credits are transferrable, a university will accept community college transcripts.</p> <p>If you don't live near a community college, try taking online classes through one closest to you. Many times, you'll be able to complete the work of an online class flexibly, so you can turn in assignments late at night or early in the morning before physical classes are even in session. This could also give you more room in your schedule for a part-time job, which will help you stash even more dollars away for school. (See also: <a href="http://www.wisebread.com/6-ways-to-pay-less-money-for-a-college-degree?ref=seealso" target="_blank">6 Ways to Pay Less Money For A College Degree</a>)</p> <h2>5. Don't use education loans or savings for anything else</h2> <p>Just because you have to take out a student loan doesn't mean the money should be used to float your every expense throughout your college career. Use the money only for tuition and other school necessities, like books and course materials. Live frugally for the rest of your needs and expenses. This may mean you don't get to experience dorm life to the fullest, or type your essays on a brand-new laptop, but it will be worth the sacrifice if it means taking out a smaller loan.</p> <p>As a college student, I didn't have to take out student loans, but I also didn't have any money for anything else. I resorted to carpooling, living with my parents, eating homemade lunches, using the computer lab to type papers, working the 4 a.m. Starbucks shift, and borrowing textbooks from the library. It has been eight years since I graduated, and I don't regret going without because it means I don't have student loan debt. (See also: <a href="http://www.wisebread.com/8-money-saving-hacks-every-college-student-should-try?ref=seealso" target="_blank">8 Money-Saving Hacks Every College Student Should Try</a>)</p> <h2>6. Research on-campus job opportunities</h2> <p>An on-campus job can help you pay for college and give you a few nice perks. For example, many schools offer residential advisers free room and board, as well as discounts on meal plans. Working on-campus means that you are able to squeeze work shifts in between classes, maximizing your time to the fullest.</p> <p>I worked as a test proctor in college. My job was to sit in the room with nursing students and make sure no one cheated on their test. My advisers actually encouraged me to bring in my own course work and use the time to study while the test was going on. In a sense, I was paid to study, which I had to do anyway.</p> <h2>7. Pick the right student loan for you</h2> <p>Sometimes taking out a student loan to pay for college is unavoidable. If you have the choice, stick with federal to pay for your college degree rather than taking out private student loans. Many federal loans, like Direct Subsidized Loans, Direct Unsubsidized Loans, and the Federal Perkins loan, do not require you to start making loan payments until after graduation.</p> <p>Also, federal student loan repayment comes with a fixed rate and there are several repayment plans available for those who cannot afford their payments. Private school loans are funded by private lenders, and borrowers do not have the same flexibility that federal borrowers have. (See also: <a href="http://www.wisebread.com/6-questions-to-ask-before-taking-out-student-loans?ref=seealso" target="_blank">6 Questions to Ask Before Taking Out Student Loans</a>)</p> <p>There is no doubt about it; college is expensive. While winning several scholarships to pay for tuition is ideal, it is not a reality for everyone. Instead, wise financial decisions and the right student loan can help you afford your degree.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-to-pay-for-college-when-you-didnt-get-a-scholarship&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520to%2520Pay%2520for%2520College%2520When%2520You%2520Didnt%2520Get%2520a%2520Scholarship.jpg&amp;description=How%20to%20Pay%20for%20College%20When%20You%20Didnt%20Get%20a%20Scholarship"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20to%20Pay%20for%20College%20When%20You%20Didnt%20Get%20a%20Scholarship.jpg" alt="How to Pay for College When You Didn't Get a Scholarship" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/ashley-eneriz">Ashley Eneriz</a> of <a href="http://www.wisebread.com/how-to-pay-for-college-when-you-didnt-get-a-scholarship">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-to-do-when-you-cant-afford-your-childs-college-education">What to Do When You Can&#039;t Afford Your Child&#039;s College Education</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-questions-to-ask-before-taking-out-student-loans">6 Questions to Ask Before Taking Out Student Loans</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-encouraging-truth-about-how-americans-are-covering-the-cost-of-college">The Encouraging Truth About How Americans Are Covering the Cost of College</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-to-do-if-you-didnt-save-for-your-childs-college">What to Do If You Didn&#039;t Save for Your Child&#039;s College</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-great-sources-of-financial-aid-for-switching-careers">7 Great Sources of Financial Aid for Switching Careers</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Education & Training community college grants on-campus jobs scholarships student loans tax credits tuition reimbursement Wed, 14 Mar 2018 09:31:15 +0000 Ashley Eneriz 2114259 at http://www.wisebread.com