More high school students save money for clothes than college students, survey finds, increasing need for student loans
Preparing for college is an exciting time in a high school student’s life, but many teenage consumers have favored saving money for clothes over saving for college, survey finds of Capital One conducted among more than 1,000 young people aged 12 to 18.
While about a third (36%) of respondents said they were saving for college, 42% said they were saving money to buy clothes. Gen Z consumers also save for a car (38%), computer or gaming system (36%) and future expenses (35%).
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Of those surveyed, nearly 80% said they would like to learn more about financial literacy in school.
Building a strong savings plan is an important part of paying for a college education. However, the skyrocketing tuition fees make it difficult for students to finance the costs of higher education without going into debt like student loans.
Read on to learn more about how rising students can prepare financially for the years to come, including by borrowing student loans. You can learn more about private student loans and compare offers from multiple student lenders at once on Credible.
How to prepare your finances for college
Budgeting and saving up front for college can be a good way to cut borrowing costs and pay less interest charges while you graduate. In reality, however, the cost of college is too high for most aspiring students to afford without borrowing money.
Here are some ways to prepare yourself for the financial obligation of higher education.
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1. Research the cost of colleges and their programs
The cost of college varies widely depending on the type of school you attend and the program of study you choose. Depending on the state you live in, it can be much cheaper to attend a publicly funded university than a private college.
You should also consider the cost of the degree in your field of study. A recent study from the Texas Policy Center found that some degrees are more likely to pay off in the form of higher earnings than others. For example, a computer science degree leaves graduates with student loan debt worth $ 23,000 and an average salary of $ 69,338. On the other hand, a performing arts degree costs $ 25,000 but results in much lower earnings at $ 22,781.
Contact the financial aid office of the schools you are considering applying for so that you can get a good idea of how much a degree will cost you between tuition, room and board and other expenses.
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2. Apply for federal student aid
Each year, the Department of Education grants more than $ 120 billion in federal student loans, grants and work-study programs. To apply for financial aid, you must complete the Free Application for Federal Student Aid (FAFSA).
You can complete the FAFSA by creating an account on the Federal Student Aid (FSA) website. The FSA also offers a comprehensive guide to completing the FAFSA, noting that most students can complete the application in under 30 minutes.
Often, federal student loans do not cover all of your education costs. The Department of Education sets federal student loan limits for undergraduates based on dependent status: $ 31,000 for dependent students and $ 57,500 for independent students, and that for the your entire undergraduate term.
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3. Consider Your Borrowing Options If Federal Loans Are Not Enough
When federal student loans do not cover the full cost of a college education, PLUS loans and private student loans can be a way to close the funding gap.
PLUS loans are federal student loans with a higher interest rate (6.228%), and can only be borrowed by parents and graduate students. PLUS loans are not an option for undergraduates who need to borrow money to pay for their college expenses, but cannot rely on their parents to take out a loan on their behalf.
Private student loans are issued by a private lender rather than the federal government. Interest rates are set based on the loan amount and repayment term, as well as the creditworthiness of the borrower. Since private student loan rates can vary from lender to lender, it’s important to shop around with multiple lenders to get the lowest possible rate for your situation.
You can browse student loan rates from real private lenders in the table below and visit Credible to see the rates suited to your needs without affecting your credit score.
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How To Save Money On Your Student Loan Debt
Over 45 million Americans already owe $ 1.7 trillion in student debt, which means many borrowers may be looking for ways to reduce their debt amounts.
If you’re a college graduate looking for a way to save money on your student loan debt, consider refinancing your private student loan. By setting a lower interest rate on your student loan debt, you may be able to lower your monthly payments, save money on interest, and even pay off debt faster.
Creditworthy borrowers who refinanced a shorter-term student loan using Credible have been able to save nearly $ 17,000 and pay off their loans 41 months faster, thanks to historically low interest rates. Use a student loan refinance calculator to see how much you can save on your college debt.
Whether or not you should refinance depends on the type of loans you have. Even though you can get a lower interest rate, refinancing your federal loans to a private loan makes you ineligible for federal relief such as income-tested repayment (IDR), administrative forbearance, and debt relief. student loan cancellation programs.
But if you have private student loan debt, you don’t risk losing these types of benefits by refinancing. Still not sure if refinancing is right for you? Contact a knowledgeable loan officer at Credible to learn more about student loan refinancing.
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