If you want to save a bundle on your college education here’s a powerful tip for you . . .
Borrow as little as possible to pay for it, because borrowing money is incredibly expensive
For every $5,000 that you avoid borrowing at 6%, for example, you save about $100 a month to repay your loan. But your monthly payment is only a small part of the story, as the following figures show.
The Real Cost of Borrowing $20,000 at 6% Interest
Let’s assume that you will be borrowing $20,000 to attend a public university in your state for one year. (You live in Ohio, for example, and will attend Ohio State.) If you borrow that money a 6% interest rate and take five years to pay it back, you’ll be paying back $23,199.60. So your cost of borrowing will be $3,199.00.
The Real Cost of Borrowing $50,000 at 6% Interest
Let’s run those same numbers, but assume that you will be borrowing $50,000 to attend a private college for one year. (You’re going to Princeton, for example.) If you borrow that money at a 6% interest rate and take five years to pay it back, you’ll be paying back $57,998.40. That means your cost of borrowing will be $7,998.40. (You’re also going to be paying back $966.64 every month, so you better hope that you have a high-paying job.)
Borrow a Little, Save a Lot
Those figures provide only a ballpark figure on how much money you can save by not taking a loan in the first place. Actually, the annual cost of attending a state school is higher than $20,000 these days, and the cost of attending an elite private institution is higher than $50,000.
But those statistics do show that borrowing is incredibly expensive. If you can avoid borrowing to pay for only one year of college, you will be paying yourself a bit financial reward. Later on when you’re thinking about starting a family or buying a home, you’ll have a lot more money to work with, and lower debt too.
One way to do it? Enroll in StraighterLine’s Freshman Year for $1,299 program. For that fee – which is a fraction of what you would pay for a year of college anywhere else – you can take up to 10 online courses that will earn you credit at top colleges and universities.
The less you borrow, the more you save. That’s a principle that can put financial power in your pocket.
Why Adult Learners Should File the FAFSA
You Can Control The Cost Of College
Four Ways to Save Money and Finish Your Degree Faster
How much will it really cost me to go back to college today?
Save Money on College Tip 10: Take Two Years of Courses at StraighterLine