June 1, 2020 By Jeff Rose
Paying for College During Tough Times
Finding a way to pay for college isn’t always easy, and that’s especially true since college can be expensive. According to College Board figures, average tuition and fees for the 2019-2020 school year worked out to $10,440 for public, four-year schools nationwide, while tuition at a public, two-year schools or community colleges worked out to $3,730 per year.
These figures may not sound that bad, but you have to remember that tuition is charged every year your student is in school and that these numbers don’t include the cost of paying for room and board.
How to Pay for College During Tough Times
According to a recent College Ave Student Loans parent survey conducted by Barnes & Noble College Insights, the overwhelming majority (94%) say paying for college is stressful. During a financial downturn, paying for college can be even more stressful as its often more complicated. After all, it’s difficult to find a job when unemployment rates are high and wages are stagnant, and you may be facing other financial roadblocks as well.
If you want to help your child pay for school and earn a lucrative college degree, you’ll need to find a way to keep going. Consider these tips, all of which can help:
Apply for More Scholarships, and Grants and Federal Aid
Encouraging your child to apply for scholarships and grants is a smart move no matter which year of college he or she is currently completing, and don’t forget to check for federal work-study programs your student might qualify for depending on his or her area of study and school.
Also, make sure your family fills out a FAFSA form as the new school year approaches. While your family may not have qualified for a ton of aid in the past, it’s possible any changes to your financial situation could help your child qualify for more aid now.
Refinance Other Debts and Student Loans
If you have other debts at higher interest rates than you may be able to refinance at a lower rate, then you can also consider doing so to get a better deal. Consider refinancing your mortgage to a new loan with a lower APR or use the potential for lower rates to choose a new loan with a shorter repayment timeline.
You can also consider consolidating high-interest debts like credit card debt with a low-interest personal loan or a balance transfer credit card. If you’re able to secure a lower APR or a monthly payment you can more easily afford, you could be thanking yourself later.
Maybe you just graduated from college and you’re now trying to pay off your loans, or perhaps you already have student loans from an undergraduate degree but you’re heading back to school to complete a graduate program. Either way, refinancing your student loans can make a ton of sense. While you’ll give up federal protections like deferment, forbearance, and income-driven repayment plans if you refinance federal loans with a private lender, you have the potential to qualify for a much lower interest rate, a lower monthly payment, or both. Make sure to weigh the benefits and risks, and what works best for your family situation.
For example, College Ave offers variable rates for refinancing as low as 3.64%* as well as fixed rates that start at 4.64%*. Refinancing your student loans is also a lot easier than some people think. Most companies, including College Ave, let you fill out a loan application and complete the entire process online.
Pick Up a Side Hustle or Part-Time Work
When times are tough, it makes a lot of sense to look for ways to earn more money. It may be difficult to find a traditional job, but there are some side hustles almost anyone can do. For example, you could try to drive for Uber or Lyft, or you could sign up to deliver food with a grocery delivery app like Instacart or Shipt.
Most of us have at least a few subscription services set up to be paid automatically. They might include streaming services like Hulu or Netflix, or even subscription boxes that include monthly shipments of food or healthcare products.
Subscription services aren’t necessarily a waste of money if you use them, but it’s important to only pay for subscriptions you want and take advantage of. With that in mind, you should pore over your credit card bills and bank statements to see which subscriptions you’ve been paying for, and which ones you may want to cancel.
Reduce Food Spending
Food spending is one area of our lives where we have a lot of control, which means it’s an easy area to cut. This is especially true if you’re prone to dining out or getting takeout for the sake of convenience.
If you’re able to cut your food spending though, you could make a huge impact on your finances. With that in mind, you should try to learn how to make more meals at home so you can avoid takeout a least a few times per month. You can even set up a monthly “food budget” that limits how much you can spend on groceries and restaurants. With a food budget in place, you could splurge when you wanted to but also have a plan to stay within the limits you set.
Ask Your Child to Chip In
According to the same College Ave survey, 85% of parents of college students expect their child to help with college costs. If you are like 28% of parents in the survey, you may expect your child to work to help cover education expenses. Or, maybe your child can live at home and attend school, saving you hundreds on housing costs.
During a financial downturn, it is also a good time to reexamine your child’s plan for college. Does going to a closer community college or in-state school for one or two years and then transferring make sense financially and for your child’s education? Would your son or daughter benefit from a gap year? Make sure your college-bound student is part of the family’s financial discussion on what’s affordable, what’s a stretch, and how you expect them to contribute.
Of course, you can always use student loans to fill in the gaps as well, as doing so with a private lender like College Ave can help you secure some of the lowest interest rates out there today. You may also be able to choose among flexible repayment plans that will leave you with a monthly student loan payment you can actually afford.
The Bottom Line
When times are tough, all we can do is assess our finances and look for ways to get ahead. Sometimes that means finding ways to earn more money, but it can also mean looking for ways to spend less overall.
No matter what you do, don’t let the economy knock your child off track from his or her college goals. Your student’s degree will likely be worth it in the end, and that’s true even if it’s a tough road to get to where he or she wants to be.
Nothing worth fighting for is easy, so buckle down and stay the course.
*Rates as of 5/26/2020. Rates are subject to change. All rates shown include auto-pay discount. The 0.25% auto-pay interest rate reduction applies as long as the borrower or cosigner, if applicable, enrolls in auto-pay and authorizes our loan servicer to automatically deduct your monthly payments from a valid bank account via Automated Clearing House (“ACH”). The rate reduction applies for as long as the monthly payment amount is successfully deducted from the designated bank account and is suspended during periods of forbearance and certain deferments. Variable rates may increase after consummation. Lowest advertised rates require selection of full principal and interest payments with the shortest available loan term.
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