Amazing Kids! Magazine

Saving for College

By Fatima Yousuf, Money Smarts Editor and Contributing Writer

 

College: the word that parents love to talk about and kids dread thinking about. The word that is almost always associated with SATs and GREs and Subject Tests and grades and extracurriculars and so much more. The word that every kid tries to avoid as much as possible.

College, while it may seem intimidating and far away, is essential towards improving your economic status and hugely important towards ensuring that you can obtain a decent-paying job. Here are some of the benefits that a college diploma can provide:

  1. More Opportunities – Unlike a few decades ago, it is very hard to get a high-paying job with simply a high school diploma. People with a college education are statistically more likely to get a higher-paying job. This means that in order to get a higher-paying job that can allow for more comfort in life, it is likely you will need a college diploma.
  2. Academia – College students have the opportunity to read books and listen to the lectures by top experts in their fields. This stimulation encourages students to think, ask questions, and explore new ideas, an opportunity that is not only important towards one’s intellectual health but can also provide skills that are useful for many jobs.
  3. Connections – College professors and connections are vastly important towards business ventures, finding jobs, and much more. The more connections which are collected during your college career, the more options you will have when you begin your job search.

While college can provide many benefits, many families also don’t realize that federal financial aid and college-provided aid do not usually cover all the costs of tuition. This means that some of the cost of college is going to have to come out of your own pocket. To ensure that you can afford college, you may have to take out a student loan to cover additional costs. While many amazing kids certainly can aim to win scholarships that can ease the financial burden, the reality is that most kids will not be able to obtain a scholarship and thus will have to look towards loans.

While we discussed many aspects of taking loans in last month’s article, there are still a few additional concepts to cover. Because you will likely be very young when you take out the loan, it is probable that you will need a cosigner. A cosigner is an adult that can vouch that you are a responsible spender that can pay back the loan. It also means that if you are unable to pay back the loan, then the person who cosigned will have to do it for you. This is a big risk since, if you have a cosigner, you are not only responsible for your own financial responsibilities, but you are also responsible for the integrity of your cosigner.

One thing to consider when picking a cosigner is their credit history and score. The better your cosigner’s credit history is, the lower your loan’s interest rate will be and the less money you have to pay back! A credit history is a document provided by a credit firm which keeps track of all your spending habits and employment history. This gives the lender an idea of how responsible you and your cosigner are with your money and whether or not you will make your payments on time. A credit score is a number on a scale of 300 to 850 assigned to each person based on credit history. In order to take a loan, you or your cosigner generally should have a credit score of at least 700, although that will mostly depend on the institution you take your loan from.

Once you have a cosigner, you can apply for a loan either through your university’s financial aid office, or you can take a private loan. You can start paying back your loan after graduating or even while you are studying in college! While taking a loan certainly has some risks, the benefits of attending college far exceed the potential risks, so long as you are responsible with your money. And while you might be dreading the next time another adult yet again brings up college, this time, you can find some comfort in the fact that, wherever life’s journey takes you, you are at least financially prepared!

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