Summary: Why saving money for college may be the best way to lower the cost of a student loan.
Time to read: 1 minute, 45 seconds
Who this is for: Juniors, Seniors and Parents
It’s often far easier said than done, but one of the best ways to cut down the amount you’ll need to pay back in loans — is to borrow less money in the first place.
Scholarships and grants can help, but not everyone qualifies for them. That leaves the money that you or your family have put aside to help pay for your education – your savings.
It can be in bank accounts, investment accounts, or other kinds of opportunities that people use to put money away.
Yet if you or your family haven’t saved enough for college, that’s pretty normal. College is expensive and many families are planning to send more than one of their kids to college, so the money needs to stretch.
Some students are lucky enough to have family or friends who put aside money for their education a while ago. A good example would be a grandparent who started a 529 account for a grandchild’s future education on the day that child was born.
This kind of investment is often done through something called a 529 account. The money put into a 529 grows faster than the money in a regular savings account, because no taxes have to be paid on the earnings. And when the money is taken out, provided all the rules have been followed, no taxes have to be paid on that money, either.
Ask if someone in your family has set aside money for your education in a 529 account. If you’d like to learn more about it, just click here.
And if you are lucky enough to have family or friends who put aside money to help you, be extra sure to thank them! They could have used this money to buy themselves something nice, but they are giving it to you, instead.
Why saving money for college may be the best way to lower the cost of a student loan.