Armchair Millionaire Community Bulletin: Cut Your Student Loan Payments Down to Size
Student loan consolidation can be an excellent financial move. But if itÂ’s right for you, donÂ’t hesitate--interest rates jump up on July 1, and no one knows when they may come back down again.
New York, NY (PRWEB) June 14, 2005
While thereÂ’s no doubt that college can represent a big chunk of parentsÂ’ expenses, thereÂ’s no reason for it to be an insurmountable obstacle. For most parents--and their kids--it takes a combination of savings and loans, supplemented by a dash of work-study jobs.
ItÂ’s useful to get some perspective on how others are managing it. Here are just two recent comments from parents in the Armchair Millionaire community:
“Our kids are 4 and 6, and we save money each month in a 529 plan. Our hope is that our kids will go to a school that we can pay for entirely, so they don't have the burden of loans as they start their adult life. We feel that it's a parent's job to send their kids into the world able to fully support themselves, and a four-year degree (or equivalent training) is necessary to achieve that. Like most things, some colleges are overpriced and some are worth it. The goal is to find the best value...” --Joanne
“We save in 529 accounts every month, a total of $600 for our three children, ages 11, 7 and 4. It's not enough to pay for all of their college expenses, but it's a good start. We're counting on not having financial aid available; if it is it will be a nice bonus. I hope our kids have to take out some loans and do some work study; we did, and we're harder working and more responsible for it.” --Meredith
To begin planning for how youÂ’ll pay for your kidsÂ’ college, you need to have a realistic understanding of just what it entails. My college myth busters will set you on the right path.
The Armchair MillionaireÂ’s College Myth Busters
ItÂ’s more affordable than you think. WeÂ’ve all read stories about colleges that cost upwards of 30 grand a year, but the fact is that most students pay far, far less. The College Board tells us that tuition for in-state residents at most two - and four-year public colleges is well under $5,000. In addition, 70 percent of full-time undergrads at four-year schools attend colleges where tuition and fees are less than $8,000 per year. When you account for financial aid, many students are paying far less.
ThereÂ’s more aid available than you think. While many people think that financial aid has gone the way of the dinosaur, there is actually a record amount now available, and most students do receive some sort of aid. The big change, however, is that more of that aid is in the form of low-interest loans, and not grants.
ItÂ’s easier to save than you think. If you put $100 a month into a tax-free Coverdell Education Savings Account beginning when your child is born and earn an average return of 8 percent per year, youÂ’ll have a bit over $48,000 on hand by the time he or she turns 18 and is ready to head out to college. ThatÂ’s more than enough to take the sting out of those tuition bills. And saving for college wonÂ’t generally hurt your chances for financial aid, since aid packages are based much more on income than on assets.
ItÂ’s worth more than you think. College drop-outs like Bill Gates aside, a college degree will pay for itself many times over. The Census Bureau reports that four-year college grads on average earn more than $1 million more than people with no college degree. That represents quite a return on that investment in tuition.
The Bottom Line: ItÂ’s true that college can be expensive. ItÂ’s also true that there are many ways to make it affordable. By know what youÂ’re up against, youÂ’ll be able to chart a course that will put college within reach.
The Armchair Millionaire Weekly Survey: How do you give back to your community? Log on to www. armchairmillionaire. com and let us know.
Lewis Schiff founded the Armchair Millionaire Web site in 1997. His first book, The Armchair Millionaire, was published in 2001. Schiff's newest report, "How to Know When You Are Rich," is now available at www. armchairmillionaire. com.
Contact Information:
Lewis Schiff
Armchair Millionaire
877-833-2823
Http://www. armchairmillionaire. com (http://www. armchairmillionaire. com)
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