How to Save Money for Education Using FAFSA – As students prepare to head back to school and college, families are spending big bucks on back-to-school shopping. From 2007 to 2017, the cost of school supplies has increased by 88 percent and is projected to rise this coming school year, as well. College students are also burdened with student loans as they head back to school. According to the latest study from the COUNTRY Financial Security Index®, 35.3% of millennials are still living at home and relying on their parents to provide financial assistance.
I interviewed Doyle Williams, Executive Vice President, COUNTRY Financial for some savings tips to stay save money on education and avoid overspending.
How to Save Money for Education Using FAFSA
Lisa LaGrou of Oakland County Moms – What are some simple steps parents can take to start saving for college early on?
Doyle Williams, Executive Vice President, COUNTRY Financial – For starting early on, the key is just what you stated…start early. You know it’s a long road from diapers to diploma. And, use the value of the compounding interest to your advantage. So, the earlier you start, even if you start small, that will make a big difference. So, get started today. That would be my message. Get started as early as possible. That will go a long ways. There’s a lot of good saving vehicles. Just get some money accumulated and let it build.
Lisa LaGrou of Oakland County Moms – We have a financial advisor that we work with and we asked what we should do if we only had so much to put aside…save towards retirement, or save for college? She told us to save for retirement. So, what is your advice for those parents who don’t have enough to put away for their children’s college funds?
Doyle Williams, Executive Vice President, COUNTRY Financial – For kids that are kind of on their own, if you will, the key is to take a look at scholarships first – what can they qualify for, make sure they apply for everything they can – then, whatever summer work they can get to help defray, and then of course most students now have taken on some type of student debt. I think the last study I saw, 67% of college graduates (four-year degree) are graduating with some level of student debt. So, they shouldn’t feel bad; it’s very common today. But, as they think through that, they need to be smart about where they go for that college loan. And, the best place to start is completing that FASFA application (https://fafsa.ed.gov/). Get that completed so they’re eligible for federal subsidized loans. And those federally loans benefit the student in a number of ways, primarily because it has more flexible terms, and a fixed interest rate, and typically that fixed interest rate will be lower than what they’ll find in the private sector. If they exhaust those funds and they still need to go to the private sector, know that there’s a lot of good options out there. There are a lot of good private loan providers; they just need to be smart and ask questions about what is their interest rate, how high can it go (they’re probably going to be variable), what are the repayment terms, etc. So, just be a smart buyer. Finally, if the parents decide to co-sign on that loan, they need to go in with their eyes wide open. That is a legally binding document. If son or daughter is unable to pay, for whatever reason, the parent is going to be obligated to repay that loan. So make sure they don’t take on more than they can help with.
Lisa LaGrou of Oakland County Moms – Where can we go to find out more info about the government subsidized college funding you spoke about? Where can I find more info on How to Save Money for Education Using FAFSA?
Doyle Williams, Executive Vice President, COUNTRY Financial – There are a lot of good resources. The consumer protection agency has a good website, the FASFA website has a lot of good calculators to help students sort through the different loan options; they’ve got some comparison calculators, etc. And, at our website, TakeSimpleSteps.com, they will also find some help and learn more about what we’re talking about today.