How Much Should You Save for College?

How-Much-Should-You-Save-for-College

At the start of your senior year in high school, how you’ll pay for college may not be a high priority yet. It’s something you should be thinking about, though, as you consider different colleges and the costs associated with attending each one.

A national study, How America Pays for College 2015, shows that the average student contributes 11% to the total cost of his or her college education. That is money from the student’s income and savings, not student loans.

So, how much should you plan to save for college this year?

That answer depends on a multitude of different factors, but the easiest response is “as much as possible.”

If you want a more precise number, though, there are things you can do now to determine how much you want to save during the next 12 months.

Create a Budget

Use an in-school budget tool to start forming an idea of how much money you’ll need to live on each month. It’s OK to guess right now and try out different calculations. How much will you cover with grants, scholarship and student loans, and how much will you need to have on hand each month for your extra costs?

If you live on campus in a dorm during your freshman year at college, many of your expenses will be set and you’ll be left with a smaller number of variable categories. But if you’ll be living off campus, you will have to calculate additional costs like your portion of the monthly rent, gas and car maintenance, and how you will fill a refrigerator.

Figuring out how much you will need each month can help you set a goal for the amount you definitely want to save during your senior year.

Compare Costs

While you’re creating different in-school budget scenarios, be sure to consider the costs needed for different schools you’re considering. Less-expensive schools might seem like the way to save money, but many times those institutions also have less money to offer in terms of scholarships and grants compared to more-expensive colleges or universities.

Anticipate that you will need more spending money than you think to ensure you don’t greatly underestimate how much you will need to save.

Reduce Expenses

Is your budget a lot higher than you expected? Check out these ideas for ways to save on supplies. Will any of those options help reduce your monthly budget?

You can also consider options such as:

  • Living at home and attending a community college for your first year or two to meet your general education requirements.
  • Planning to work part-time during college to help you cover some monthly expenses.
  • Cutting back on entertainment or other non-necessities to reduce the amount needed for spending money each month.

It may seem like a daunting task, but the more you’re able to save for college today means less that you will have to borrow in the future.

By: Iowa Student Loan

6 Ways to Help Your Student Save

6-Tips-to-Help-Your-Student-Save

If you’re not independently wealthy, chances are you’ll be relying on a variety of sources to help your child pay for college: scholarships, loans, your own savings and earnings, and your student’s savings and earnings. How can you help your student maximize savings so you don’t end up draining your retirement resources to help them out?

1. Understand how much your student will need.

Many free online calculators provide estimated college expenses for a variety of college types for the year your student will enter college. Try different scenarios to understand the range of expected college expense.

2. Foster an environment of saving.

What do you do with your paycheck? If you expect your child to save 50% of earnings in a savings account, set an example by building your own savings. The same goes for discount shopping, clipping coupons and so on.

3. Encourage your student to reduce expenses.

If your child tends to spend a large portion of earnings and gift money on clothes, for example, work with him or her to find ways to dress in the same manner for less. Think creatively—garage sales, thrift shops and discount store sales can provide a wealth of bargains.

4. Explore interest-bearing accounts with your child. 

Leverage savings by depositing the money in an interest-bearing account. Spend some time researching options and discussing the risks and advantages to different account types. Make an appointment with a specialist at your own financial institution and attend with your student so you both learn your options.

5. Know the options to reduce college costs.

If you realize you and your child will not be able to save enough for college by the time he or she will be ready to enroll, consider how to reduce the overall cost of college. Will your student be able to live at home? Attend a less-expensive school, at least for part of his or her education? Work while attending college? Apply for more scholarships and grants? Graduate early?

6. Set goals and monitor progress.

Use what you’ve learned about college costs and financial products to set goals. Then, periodically check that your student is working toward those goals. You may consider a matching contribution or other reward for progress.

By: Iowa Student Loan

Tips to Study Smarter

Tips-to-Study-Smarter

You’ve probably heard how you have to study more and learn to manage your time better before heading to college. It’s easy to say “study smarter,” but how do you actually accomplish that? Try out some of these tips to up your studying game.

  • Use a daily planner and block off time each day for studying and homework. Whether you have a test or assignment due the next day or not, use that time every day to study. Setting a routine now will make it easier next year in college when you have to do more work outside the classroom.
  • Review your class notes daily and fill in missing details. You might want to compare notes with a friend to see what each of you picked up on for clues about what is most important or to look for differences to make sure you didn’t miss anything. Don’t wait until the night before a test to look at your notes, they might make no sense weeks after you’ve written them down.
  • Set goals. If you’re reading a novel for English, figure out how many chapters you need to read per day to finish on time and aim for that goal each day. Set a goal to memorize 25 new Spanish words a day for weekly tests. Or, plan to concentrate on one math formula so that you understand not only the “how” but the “why” and can complete the formula with several different figures.
  • Study for 35-45 minutes and then take a break, no more than 10 minutes. Giving your brain and yourself a short break will give you time to digest what you have just reviewed or worked on. Plus, it will help you concentrate better when get back to work.
  • Try studying in different places. If the weather is nice, think about doing some reading outdoors. Need to really concentrate? Head to the library. If you want to be comfortable, find a good spot in your room; just make sure there are no distractions while you review your class notes. Studying in different places can help reduce boredom.
  • Do more with the material. Try turning headings into questions and answering them after each section. Or write down answers to focus questions instead of just skimming the questions before reading the sections. You might connect the topic to your own experiences, such as connecting a family vacation at Yellowstone National Park to President Woodrow Wilson creating the National Park Service in 1916, and writing a few notes for yourself. By engaging other areas of your brain, you may remember the material longer than the 30 minutes it takes you to read a chapter.
  • After tests, compare your notes with what was included in the exam. If your notes included information about what was asked, you’re on the right track. If your notes were lacking details that were covered in a number of questions, don’t be afraid to ask for help or advice from the teacher or a friend who is doing well in the class.
  • Try different study methods to find the one that works best for you. Some students thrive on reviewing flash cards while others need to reread entire chapters of their textbooks. Seeing which method works best for you now, while your workload is lighter, will pay off when you have to do more work on your own as a college student.

By: Iowa Student Loan

Interview Tips for On-Campus Jobs

Working on campus offers several benefits for college students from convenience to flexibility. In addition, you may gain valuable skills and contacts for your future career path. Use these tips to help you land the job.

Interview-InfographicDownload a PDF of this infographic.

Before Interview Day

  • Look at the department or office website to understand its mission and activities. Then, articulate how those are tied to your own goals and how you can help your employer.
  • Ask how long the interviewer expects the session to take and schedule appropriately. Plan to arrive early.
  • If you’re communicating with the interviewer, ask about the office dress code. If you’re unsure how to dress for your interview, err on the side of more business than casual, even if it means overdressing for your 8 a.m. class.
  • Know your availability. How many hours can you work during the week without affecting your studies? Do you have a regular activity or commitment that you’ll need to schedule around?
  • Ask potential references who aren’t related to you if you can give out their contact information.
  • Prepare your answers — with examples — to common interview questions, such as:
    • Name an accomplishment you’re proud of.
    • What previous jobs have you had and what did you do?
    • Tell me about an area you’d like to improve on.
  • Think of at least two questions to ask the interviewer.
  • If you’re nervous or haven’t had a job interview before, work with your campus’s career services to practice.

Day of the Interview

  • Have the interviewer’s contact information with you in case you’re unavoidably delayed.
  • Bring a copy of the resume and cover letter you submitted when you applied, as well as a transcript or other documentation that show your qualifications if the job is related to academic ability. Bring along your reference information as well.
  • Arrive five to 10 minutes before your scheduled interview time.
  • Silence or turn off your phone and put away earbuds and other electronics.
  • Dispose of any food, drinks or gum before you enter the office.
  • Introduce yourself and shake hands firmly.
  • Be friendly and relaxed (but still professional).
  • Show that you’re attentive by making eye contact with the interviewer, nodding and smiling as he or she describes situations or asks questions, and paraphrasing questions in your response.
  • Don’t feel like you need to rush every answer. Thinking for a few seconds can help you make sure you convey the impression you want to give. If you don’t understand a question, ask for clarification.
  • Before you leave, ask about the next steps and the timeline for those.
  • Thank the interviewer for his or her time and shake hands again.

After the Interview

  • Within 24 hours, send a more formal thank-you by email.
  • If you haven’t heard anything within a couple of days after the timeline you were given at the interview, follow up. Let the interviewer know that you are still interested in the job and offer to provide any additional information needed.

By: Iowa Student Loan

Fixed or Variable: Which is Best?

Fixed-or-Variable

When faced with the need to find funds to close the gap between college costs and available financial aid, many students and their families turn to private student loans. One of the first choices a family looking at a private loan needs to make may be choosing between a variable and a fixed interest rate. Which is best? The answer: it depends.

First, you should know that variable rates are typically lower than fixed rates. Why? Nobody can predict the future accurately. Because a bank is in the business of making money they must always consider the risk of lending money. One of those risks is called “interest rate risk” – the risk that in the future the bank will need to pay a higher interest rate to its lender for the money it has lent to you. A fixed rate loan, especially one with a long term like a mortgage or a student loan, offers a rate that anticipates higher future rates.

On the other hand, a variable rate loan is usually presented to the consumer as a base rate (such as Prime or LIBOR) plus a “margin”. This assures that the bank will always earn money because when the rate the bank pays to borrow money changes, the base rate will change in the same direction, but the bank will always have a consistent “margin” – that extra percentage they add on to the base. Banks love predictable cash flows – hence, the lower rate for variable rate loans. But, there is a risk to you – what if the base rate increases significantly over time? Your payments will increase to a level that may be higher than one you are able to afford.

So, in the end, the choice between a fixed and variable interest rate is a personal choice based mainly on the borrower’s long-term and short-term goals. What should you consider when weighing the decision between variable and fixed rate loans? Experts say that the answers to just a few questions can help make the decision easier.

Do you believe interest rates will increase significantly over time?

To answer that question you may need to do some research or consult with an expert, but, in general, if you imagine interest rates will increase beyond the offered fixed rate (and stay there) over the term of your loan (around 15 years if you include the time in school), you may want a fixed rate.

Do you imagine being able to pay off the loan faster than the repayment schedule assumes because of an expected windfall in the future or a very high-paying job?

In that case, a variable rate may work for you.

Do you like consistency so you can more easily create a budget?

A fixed rate is the one for you – you won’t see any gains when interest rates drop but you also won’t see any losses when they increase. And you will know exactly what your payment will be for all 120 months of your repayment term.

Do you want to start repaying your loan immediately (which is a good idea)?

Then a variable rate may be best for you as the monthly payments will generally start off lower than a fixed rate loan.

No matter which loan type you select you can choose either type for the next loan. If you follow the old saying of not putting all your eggs in one basket (what financial planners call “diversifying your risk”), you may want to consider taking out some fixed rate and some variable rate loans over the course of your college career.

By: Iowa Student Loan

Start Saving Today

Start-Saving-Today

Whether you’re planning on college next year or just starting your sophomore year in high school, you can take steps to save money today that will help you with college costs in the future.

Open a Savings Account

If you don’t have your own savings account, now is a great time to get one. Ask your parents for advice or visit with an account specialist at a local bank or credit union. You will need to deposit some money to open a savings account, but that amount can often be as low as $5.

Even if you don’t add to your initial deposit, as long as you haven’t taken it out, that amount will increase by the time you’re ready for college simply because of interest accrual. This is one time interest will work in your favor.

You can save more, though, if you deposit gift money you receive into your account. If you really want to give your account a boost, deposit all your gift money to earn interest on every penny. If that seems like too much, think about depositing half of any gift money you receive. That way you can still spend some, but you’ll also earn interest on a bit.

Save Your Change

If you use cash for all your spending money, saving your change can really add up over time.

Take a jar, glass bottle or even a cleaned-out laundry soap container and put any loose change you have every day into the container. Once your change gets heavy, or if you are tempted to spend it, deposit it into your savings account. You’ll probably be surprised at the amount of money you’ve accumulated in just “spare change.”

Have a Sale

Look around your room. Do you have some childhood toys collecting dust or video games you never play anymore? What about clothes you haven’t worn in more than a year hanging at the back of your closet?

If you have no need for the items and your parents are OK with it, think about having a garage sale or putting items on a website like eBay. Do some research before you sell anything to see what prices others are getting for items sold online. Then decide where to sell.

If you want to have a garage sale but don’t think you have enough to sell on your own, see if your friends would like to sell some of their stuff too. To keep track of where the money goes, use different colored price stickers to indicate whose item is being purchased. After the sale, proceeds can be easily divided up between the different color stickers.

Get a Job

The easiest way to save money is to earn money. If your grades and extracurricular activities allow, get a summer job or a part-time job during the school year. Look for places that are willing to work with your schedule and then be responsible for showing up on time. Working while going to school is a great way to learn how to balance different responsibilities.

Having a job also means earning a paycheck. This is another way to take advantage of a savings account. If you set aside some of the money you earn for your savings account on a regular basis, it will start earning interest as soon as you deposit it.

Think about setting a savings goal too. If you get paid every two weeks and are able to put away $40 each payday for two years, you can save more than $2,000 to put toward college expenses. If you don’t work during the school year, what about trying to save at least $250 a month during the summer? In two summers, your savings can increase $1,500.

However you accomplish it, any money you save now is money you won’t have to borrow (and pay back with interest) in the future.

By: Iowa Student Loan

Partnership Creates Greater Access to Financial Literacy Tools

ICAN_Plaque

Students and families now have the chance to gain even greater access to personalized college planning and financing information while visiting a few of the Iowa College Access Network’s (ICAN) locations.

ICAN, a Student Loan Coach contributor, recently teamed up with Iowa Student Loan to create mobile learning stations in three of its 11 office locations.

Providing statewide outreach, ICAN helps more than 500,000 students, parents and education professionals prepare for life after high school each year. An important aspect of that preparation includes financial planning for college.

For the past few years, ICAN has provided visitors instructions to Iowa Student Loan’s online smart borrowing resources and tools. These tools help families borrow less for college, and target majors that lead to jobs. Now, with the help of the learning stations, students and parents will be able to experience those tools while on-site at three ICAN locations, allowing for immediate discussion of personalized results and options with ICAN’s team of highly-qualified student success advisors.ICAN_Station

The tablet- and laptop-based stations have been set up at ICAN center locations in Hiawatha, Ankeny and Coralville. The stations provide the technology needed to access Iowa Student Loan’s suite of financial literacy tools — Student Loan Game PlanSM and ROCI Reality Check — in addition to other resources regarding college financing.

Student Loan Game Plan is an interactive educational resource demonstrating how student loan debt can affect a student’s financial future. It provides customizable results based on major interests and individual situations, and provides an action plan to help reduce the need to borrow for college. During the month of July 2015, 14 percent of users were able to reduce the amount of student loan debt they planned to incur by an average of $1,800 after using Student Loan Game Plan.

The ROCI Reality Check provides users with job prospects, earning potential and maximum suggested student loan debt loads based on a student’s chosen major, allowing them to see the potential return on college investment, or ROCI.

By: Iowa Student Loan

Getting a Jump on Interest

If you have some extra cash from earnings, gifts or your own savvy shopping skills, you may want to invest in your financial future by making an interest payment on your student loans.

Here’s an example situation:

Private student loan amount: $10,000

Interest rate: 7%

Repayment term: 10 years

Extra payment made: Beginning of first year of a four-year college career

Interest-Rate-Chart-1

Simple interest is calculated based on a $10,000 principal balance x interest rate x term of 54 months (48 months in-school + 6-month grace period). The total repayment amount includes interest accrual over the life of the loan and is based on making a single interest-only payment before the repayment period begins. Savings over the life of the loan is equal to the monthly reduction in payment amount multiplied by the 120 payments made over the life of the loan.

Now, let’s assume you need to take out $10,000 in private student loans at the same rate for each of four years, and you are able to make one-time payments each of those years.

Interest-Rate-Chart-2

Calculations are the same as above except interest accrues over 36 months + 6-month grace period for a loan taken out the second year of college, 24 months + 6-month grace period for a loan taken out the third year of college and 12 months + 6-month grace period for a loan taken out the fourth year of college.

The information above shows how making one-time interest-only payments can help reduce your student loan burden.

By: Iowa Student Loan

Parents: Register to Win a $1,500 College Savings Plan Deposit

Save-Now-Save-Later

A college savings account is a great way to set your future college student up for success by helping them to possibly reduce debt later in life.

Iowa Student Loan’s Save Now, Save Later: College Savings Plan Parent Giveaway is a great way to give that savings account a boost.

Now through Nov. 30, you can register to win one of 30 deposits of $1,500 to a College Savings Iowa© account. All you need to do is complete the one-time registration process, including completion of the cosigner version of Student Loan Game Plan, an online educational tool.

Enter now to win a $1,500 deposit

“(The program) is a great way to support Iowa’s youth who are approaching the college years,” said Michele Stiles, of Des Moines, a 2014 winner. “It helps parents plan and save ahead for college so that both parents and students are more financially prepared as students enter college.”

Eligible registrants are:

  • an Iowa resident;
  • and a parent or legal guardian of a high school student in Iowa (grades 9, 10, 11 or 12).

Winners will be selected in December, and notified in January 2016.

Read the full news release

By: Iowa Student Loan

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