Like many, I started college right after high school. And like many, I had no money saved for it.
My parents worked hard and did the best they could, but weren’t able to save money for my college education. Yet I knew I wanted to get a degree – and would somehow find the money for it.
Paying for my own college
For my first year, I attended a community college to save money (a great way to get those basic liberal arts education requirements!). Then I transferred to a university to complete my first degree in Psychology. After that, I completed a degree in Music at another university. I attended college for a total of 7 years (yes, I was soooo ready to be done!), but was proud to have 2 degrees to show for it.
After I graduated, I had a total of about $18,000 in loan debt.
Of course nowadays graduates finish college with much more debt – and that’s just with one degree!
Here are 5 ways I saved on my own college expenses and debt:
- Attended a local community college for my first year, as I mentioned above. You typically have to take liberal arts education classes for a 2-year or a 4-year degree anyway, so I figured I might as well do it cheaper than at a university. This was also great for me because I knew I wanted a 4-year degree, but I wasn’t yet sure what my major would be. Taking a variety of classes at my community college helped me discover what major I was interested in pursuing.
- Lived at home with my parents. Yeah, yeah, yeah, I know. Not glamorous. But the cost of living on your own is so insane – I couldn’t imagine paying for living expenses, in addition to tuition and other college expenses. My parents lived close enough to the colleges I chose to attend so living at home was convenient.
- Applied for (and got!) scholarships. While I didn’t apply for everything I could have -and should have – I did get some scholarships. Some were easier to get than others, but I had to put the time in. In other words – there are many scholarship opportunities out there, but you have to look for them and apply for them.
- Used all the financial aid I was eligible for. Of course, that started with any grants I was eligible for because of need. I also did work-study for several years (I worked in food service and at my college library – which I actually enjoyed). But even after all of that, I did have to take out loans.
- Didn’t use loans for living expenses. This is tough not to do. It’s so tempting!!!! If you’re eligible for it, you can get it – and why not, right? NO! I knew many college students who used loans to pay for clothes and pizza during college. If you do this you have to pay it back – with interest! I’m glad I avoided this temptation…though it was hard.
Now that I’m a parent, I think about what college is going to be like for my kids when they get to that point. And all I can think of is one word. EXPENSIVE. Even if you do the things I did to save money during college. I can barely imagine going to college myself now just because of the cost – so how will it be in 10-15 years?
The key is to start saving NOW.
529 College Plans
There are many ways parents can save for college, and one option in-particular that every parent should know about – 529 college savings plans.
529 college savings plans allow you to start saving after tax contributions which are then invested so they can grow. When it’s time to take the money out for college, the money is tax free, as long as it’s used for qualified expenses. Qualified expenses include tuition, room and board, books and fees.
So basically a 529 plan works like a ROTH IRA, except that the savings are used for college, not retirement.
I looked into why it’s called a 529. The name 529 comes from the federal tax code, section 529. Nearly every state has a 529 plan available, and they differ from state to state. And yay for us – Minnesota has a 529 plan – the Minnesota College Savings Plan.
The Minnesota College Savings Plan is super easy to get started with. Their website has a lot of information that’s helpful and easy to understand, such as “10 Reasons to Save with the Minnesota College Savings Plan.” There’s a lot of info that helps answer questions. For example, one thing I found out was – “Can your child can have a Minnesota College Savings Plan and go to college in another state?” The answer is yes, absolutely. (Not that I want to think about my kids moving away…but it’s helpful to know!)
How the Minnesota College Savings Plan Saves Money
One thing I really like about the Minnesota College Savings Plan is that it can really help you save on your child’s college expenses!
Here’s how – Instead of paying interest on college loans later, you’ll be putting money into savings that actually EARNS interest over time. And since interest rates for loans are generally higher than for investments, your actual cost of college over time can be much higher with loans vs. a 529 plan.
And with 5/29 coming up, now is the perfect time to check it out and sign up! It only takes 15 minutes – and $25 – to open an account and anyone can contribute to one – including grandparents and friends.
Just go to mnsaves.org and to sign up for your child and learn more.
Minnesota College Savings Plan is giving one lucky Twin Cities Frugal Mom reader a $300 scholarship towards a new or existing Minnesota College Savings Plan account! Everyone is eligible – whether you’re just learning about it now or have had a 529 account for your child for years!
Just fill out the Rafflecopter form below with your information by Thursday, June 22nd at 11:00pm. Please note that your phone number is required to enter and by entering, you may be contacted with further information about Minnesota College Savings Plan.
One winner will be randomly selected and contacted by phone or email. The winner will have 24 hours to respond or another winner will be selected. Good luck!
(Disclosure: This post is sponsored by Minnesota College Savings Plan. However, all opinions are 100% mine.)