Tips on Dealing with College Costs

One of the major categories of the Tri-Town Apple is Life Events and Higher Education is part of this category. As with much of the content here, we use readily available information published by the government, centered around the “mymoney.gov” web site. We strongly recommend you visit that site, not only for information on higher learning, but on just about all the major events and happenings that take place over a lifetime.

The cost of sending an offspring to college can be staggering. And the bill for several children attending an institution of higher learning can strain a family’s budget to the breaking point.

There’s no getting around it. Except the few who receive sizable scholarships, there will be large bills for tuition, room, board, books and fees. But that is not to say you are helpless in the face of this heavy hit on the family finances. There are strategies that can help. As with most significant parts of life, anticipation and early planning can make a big difference when the “rubber meets the road”, or in this case, “when the student hits the road” for school.

Today we’re looking at cost of borrowing for college and what can be done to minimize these expenses. We’re using a web article published by Federal Deposit Insurance Corporation (FDIC) under their FDIC Consumer News initiative. To read the entire article go here, and we encourage you to do that. The main points are summarized below.

Higher Education, Lower Debt: Ways to Minimize the Borrowing Costs for College

“The average annual cost of higher education has increased dramatically in the last decade. And with education debt continuing to rise along with the increase in costs, many people face a tough financial situation. FDIC Consumer News offers these tips to help students and their families …” (more)

Start saving early to reduce the amount you may need to borrow.

“In particular, Section 529 college investment plans, which are mostly offered by individual state governments, are a helpful tool for building a savings fund.” (more)

“U.S. Savings Bonds are another way to save for the future and, for qualified taxpayers, to benefit from a tax exclusion if the money is used for education expenses.”

“To learn about Savings Bonds, start at www.treasurydirect.gov/indiv/indiv.htm. For information about the tax exclusion, go towww.treasurydirect.gov/indiv/planning/plan_education.htm.” (more)

Find ways to cut costs. 

“High school students who take advanced courses or pass special college-level exams can earn college credits before they set foot on campus. “It’s never too early or too late to start saving on future tuition expenses and reduce the amount you’ll need to borrow for college,” said Denise Waters, an FDIC Consumer Affairs Specialist.” (more)

If you must take out a loan, understand the different options.

“Federal student loans usually have lower interest rates and more flexible repayment options than private loans from non-government lenders such as banks and credit unions. Under current law, all federal student loans are obtained through the Federal Direct Loan Program administered by the U.S. Department of Education. The easiest way to learn more about federal student loans, and to apply for a federal loan, as well as federal student aid and most state and college aid, is online at www.fafsa.gov.”  (more)

Choose the best repayment plan.

“For federal student loans, a monthly, fixed payment over a standard, 10-year term is the most cost-effective arrangement and minimizes the total amount of interest you’ll have to pay. However, there are alternatives… (more)

For more information for students and parents from the FDIC, the U.S. Department of Education and other government agencies — on topics ranging from money tips for young adults to saving for college — start at here.”

 

For some, this advice is probably well known, but that doesn’t make it any less valuable and a quick read will reinforce the good advice that it is. For those just starting to think about college costs, the FDIC article is a good place to start and there are many embedded links that will take you additional worthwhile information.

Remember, it’s not going to cost you anything to be well prepared!

We hope this information was helpful. Let us know. Leave a comment. We will respond!

 

Borrow 101

Borrowing can bring a family the home of their dreams, college diplomas from the schools of choice, a ski house in Vermont, or any of the many dreams and goals we all have. But borrowing can also be disastrous. It can take away, or make unreachable, those very same  dreams and goals.

Which path a person or family follows depends on how careful and disciplined they are about credit and its use. There are actions you can take to keep your credit sound and those dreams and goals within reach.

Tri-Town Apple will stay on point for good credit discipline and sound borrowing practices. This post, our second in the “Borrow Category” (see Important Information About Credit Reports (FTC)will cover some of the basics for sound credit management from MyMoney.gov. To view this site go here.

“Borrow

“Sometimes it’s necessary to borrow for major purchases like an education a car, a house, or maybe even to meet unexpected expenses. Your ability to get a loan generally depends on your credit history, and that depends largely on your track record at repaying what you’ve borrowed in the past and paying your bills on time.  So, be careful to keep your credit history strong.

“Actions You Can Take

  • Track your borrowing habits.
  • Pay your bills on time.
  • When you need to borrow, be sure to plan, understand and shop around for a loan with a low Annual Percentage Rate (APR).
  • Learn about credit and how to use it effectively.
  • Pay attention to your credit history, as reflected by your credit score and on your credit report.

“Hints and Tips

  • Borrowing money is a way to purchase something now and pay for it over time. But, you usually pay “interest” when you borrow money. The longer you take to pay back the money you borrowed, the more you will pay in interest.
  • It pays to shop around to get the best deal on a loan. Compare loan terms from several lenders, and it’s okay to negotiate the terms.
  • When repaying a loan, it may be better to pay more than the minimum amount due each month, so you will have to pay less in interest over the life of the loan.
  • One of your most important aids when shopping for a loan is the APR – the Annual Percentage Rate. This is the total cost, including interest charges and fees, described as a yearly rate.
  • Paying your bills on time will help increase your credit score. Even if you fell into trouble with borrowing in the past, you can get on solid footing and rebuild your credit history by making regular payments as agreed.
  • You are entitled to a free copy of your credit report every 12 months from each of the three nationwide credit bureaus. Go to www.AnnualCreditReport.com or call toll free 1-877-322-8228 to order the free reports. Beware of imposter sites.”

Let Us Know

Tell us if this information is helpful Or let us know what would be more useful. Simply post a comment. We really would like to hear from you.


There’s a Tip Here for Everybody

Spend 101

The title of this post could also be Spend 101. It is a short list of basic practices that, if followed, will almost guarantee that you can meet your financial goals. There is nothing here that we haven’t heard before at one time, or another. But, even though we see this advice from time to time, it is an unusual person indeed that follows the list to the letter consistently.

Therefore the goal of this post is to get you to adapt one, just one, hint or tip that you are not currently using. Then maybe, in the future, you may start using another, and so on. But all that is in the future. For now, look at the list from MyMoney.gov/Spend, and pick just one new action to start using. Surely that can’t be too hard.

From MyMoney.gov on Spend

Spend

The fundamental concept of Spend is: make a budget or a plan for using your money wisely. It’s helpful to set short and long-term financial goals and manage your money to meet them.

Actions You Can Take

  • Live within your means.
  • Be a smart shopper, and compare prices and quality.
  • Track your spending habits and develop a budget or spending plan.
  • Plan for short-term and long-term financial goals.

Hints and Tips

  • A good way to take control of your spending is to set the maximum amounts you plan to spend each week or each month. Once you’ve set the maximum, stick with your plan.
  • It’s helpful to track your spending over a few weeks or months to get a handle on how you are using your dollars and cents. Look into using on-line systems or phone apps for keeping track of your spending – you will be amazed at what you’ll learn about your habits! (editor’s note: The Tri-Town Teachers Credit Union offers the use of MoneyDesktop Software free to members)
  • Be careful not to let a sale or discount coupon persuade you to purchase something you don’t really need and that isn’t in your spending plan.
  • When planning a big purchase, take time to comparison shop and check prices at a few different stores, by phone or online.

That’s it. Pick something you’re not doing, or not doing well, and make it part of your regular spending process. If you are going to increase your attention to budgeting, take a look at MoneyDesktop. You can learn more on the Tri-Town Teachers web site.

Was this helpful? What would you like to see? Give us a comment. We want to hear from you.

 

 

Save and Invest 101

Since this blog uses the content, and organization of the web site http://www.MyMoney.gov as a guide, and this is the first post under the category “Save and Invest”, it makes good sense to reprint here the Save and Invest  “cover page” from MyMoney.gov. Future “Save and Invest” posts will go into much of the good advice offered on that site, and other sources. (editor’s note: MyMoney.gov recommends opening a bank or credit union account. We favor the credit union choice.)

“Save and Invest

www.MyMoney.gov

“Saving is a key principle. People who make a habit of saving regularly, even saving small amounts, are well on their way to success.  It’s important to open a bank or credit union account so it will be simple and easy for you to save regularly.   Then, use your savings to plan for life events and to be ready for unplanned or emergency needs.

“Actions You Can Take

  • Start saving, form a savings habit, and pay yourself first!
  • Open and keep an account at a bank or credit union that meets your needs.
  • Track your savings and investments, and monitor what you own
  • Plan for short-term and long-term goals
  • Build up emergency savings for unexpected events
  • Consult with a qualified professional on investments and other key financial matters
  • Save for retirement, children’s education and other major items

“Hints and Tips

  • An easy way to save is to pay yourself first.  That means each pay period, before you are tempted to spend money, commit to putting some in a savings account. See if you can arrange with your bank to automatically transfer a certain amount from your paycheck or your checking account to savings every month.
  • People who keep track of their savings often end up saving more, because they have it on their minds. New phone apps are available to help people pass up purchases they don’t really need – you might want to try one!
  • If you are making investments, it’s good to consult with a qualified professional about your plans. Before you purchase investments, be sure to build an emergency savings fund to cover your needs for at least three months. Keep the savings in an insured bank or credit union account that you can access if you need it.
  • Many professionals call themselves “financial planners.”  Before you hire one, ask for a description of the services offered.  A good place to check the credentials of an investment adviser is your State’s consumer protection office, the State’s Attorney General’s office, or the issuing agency for any professional licenses or certifications.

“For more Federal information, guides and helpful tools about the MyMoney Five Save and Invest principle read more…

 

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