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How to Save for College
The summer season can be a time of relaxation as students take a break from academics and parents enjoy the warmer weather. But for many, this season can also be one of financial stress as they anticipate their personal finances for the upcoming college semester.
When trying to save for a major expense like a college education, most people have the same thought:
“Where tf do I begin?”
We are taught that we are supposed to proactively save for these kinds of large expenses, but very rarely are we actually given the steps and information on how we can actually sucessfully and sustainably save for college.
As a result, many people feel so overwhelmed at the endeavor of saving for higher education that they end up putting it off for months, and then years…and then before they know it, it’s time to send a child to college and start making payments.
We believe that higher education is a privilege that works for the betterment of everyone within our society, so we don’t want anyone to feel overwhelmed at the prospect of affording a college education. That’s why we are giving students and parents the exact steps they need to take in order to start saving for college TODAY and get the most bang for all those bucks in their college savings accounts!
College is tough enough as it is without having to worry about making your next tuition payment, so let’s make the whole process a whole lot easier.
How Students Should Save for College
Many students feel like they don’t have enough time or resources in order to make a significant contribution to their college fund, but this is far from the truth. The reality is that there are a number of ways that students can help maximize their college savings even if they have limited time and resources!
Open a High Yield Savings Account
The first and probably easiest way to maximize your college savings is to transfer your savings from a traditional savings account into a high-yield savings account. A HYSA is like a traditional savings account that lets you earn waaaay more interest on your contributions – up to 18x more in some cases!
Putting your college savings in a HYSA allows you to earn as much interest as possible on your money so that it grows faster with literally no extra time or effort. Even while you’re sleeping (pssst…for all the college students out there, PLEASE get some damn sleep), your HYSA will be putting in work to earn you extra money and maximize your savings.
So whether you are contributing the money you make at your summer job or the birthday money you get from grandma each year, putting your college savings in a HYSA will help you get the most bang for your buck — literally!
Check out our recommended HYSA, Sofi!
Just a note: if you are under the age of 18, you may need a parent or guardian’s help to get started with your very own HYSA.
Apply for Scholarships and Grants
Did you know that you can earn thousands in scholarships and grants without writing a single essay, having a crazy high GPA, being in sports, or spending countless hours filling out applications?
That’s right – there are thousands of scholarship and grant opportunities available to students with a wide range of GPA’s, majors, locations, and experiences – many of which only require an online application! These scholarships and grants can help you earn thousands of dollars to put towards your college education and can make a significant dent in your tuition!
For example, the Free Application for Federal Student Aid (FAFSA) takes about an hour to complete and offers low-income students the opportunity to earn an average of $4,500 in Pell Grants that don’t need to be repaid…ever! Easy peasy, right?
But a report from the National College Attainment Network found that roughly 1.7 million high school grads didn’t file the FAFSA in 2021, leaving an estimated $3.7 BILLION behind in available grants! That’s literally passing up on free money! Couldn’t be us, and it sure won’t be you!
Not sure where to find more scholarship and grant opportunities? Here are some of our favorites (many of which don’t require essays!):
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Studentaid.gov: This website hosts the FAFSA which grants low income students an average of $4,500 in yearly grants that do not need to be repaid.
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Cappex.com: Offering more than $11 billion worth of scholarships, this website pairs you with personalized scholarships based on your location, major, ethnicity, and more.
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Scholarships.com: This database has over 3.7 million scholarships valued at roughly $19 billion in financial aid. In addition to scholarships, this site also provides information about student loans and college applications.
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Careeronestop.org: Sponsored by the U.S. Department of Labor, this site can pair you with scholarships as well as career options, trainings, and jobs.
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Fastweb.com: This database contains 1.5 million scholarships worth more than $3.4 billion. Fastweb can also connect you with one of nearly 10,000 part-time jobs, as well as internships.
Have a Summer Job or Side Hustle
There are two things almost every college student has in common:
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They have A LOT on their plate
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They could definitely use some extra money
Fortunately, there are plenty of ways to make a little side cash while still balancing your classes, homework, extracurriculars, and social activities!
In fact, Her First $100K’s™ founder, Tori Dunlap, was able to graduate totally debt-free thanks largely to her summer jobs and side hustles during the school year! Every summer she taught piano lessons to two students and also worked as a cashier at a local hardware store, and during the school year she worked three on-campus jobs (yearbook staff, campus tour guide, and playing piano at mass every Sunday).
Tori says, “It’s all about being creative and finding opportunities that work with your schedule, don’t make you burn out, and then being intentional with the money that you earn. It’s a huge privilege to go to college, and it’s also a privilege to be able to work while you are in school.”
Looking for a good side hustle for a college student? Here are some of the HFK Community’s personal recommendations:
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Work as a Teacher’s Assistant: These roles are convenient because they are located directly on your college campus, and some universities even offer a 401(k) for these positions!
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Tutor for AP Classes or the ACT exam: If you took AP Classes in high school or got an impressive score on the ACT exam, you could work as a tutor to high school students in your area. Requiring only a few hours a week and usually available on a flexible schedule, many AP/ACT tutors can charge anywhere from $45-$75 an hour based on location.
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Deliver for a food delivery service: Delivering for a food delivery service like UberEats or Postmates can be a surprisingly lucrative side hustle, especially if you are able to deliver on campus during peak rush hours!
Understand Student Loans
There is a narrative out there that taking out student loans is “bad,” but the reality is that many students are not able to complete their degree without student loans. In fact, 70% of students with a bachelor’s degree have some sort of education debt by the time that they graduate.
But while student loans aren’t inherently bad, a lack of understanding of your student loans can definitely lead to financial problems down the road.
It’s a sentiment that we have heard time and time again from our community: “I don’t regret going to college, I just wish that I had a better understanding of my student loans and how they would affect my life before I took them out.”
Before you sign on the dotted line and agree to take out student loans, it is so so SO important that you have a thorough understanding of what you are agreeing to.
You should have a thorough understanding of…
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How much you are taking out in student loans each year, and roughly how much you will have accumulated in student loan debt after you graduate.
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What the terms and interest rates on your loans will be
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When you have to start repaying on the loans
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What kind of loans you are taking out (subsidized, unsubsidized, private, etc.)
By proactively equipping yourself with this information, you will not only avoid the “oh shit” moment when you receive your first student loan bill in the mail, but you will also be able to create a plan to pay off your student loan debt as efficiently and sustainably as possible.
For Parents
Every parent knows that having children is an extremely exciting experience…and it’s also expensive af.
Between paying for diapers, food, extracurricular activities, clothes, birthday parties, and everything else that goes into caring for a child, it’s easy to push “saving for our child’s higher education” to the financial back-burner.
But saving for your child’s future college education doesn’t have to be overwhelming and complicated or push you to your financial limits. Rather, it can be a sustainable part of your monthly financial plan that quietly runs in the background while accumulating in value and securing your child’s education.
Invest in a 529 Plan
This is one of the easiest and most effective ways to save for your child’s future education.
A 529 College Savings Plan works much like a Roth IRA – you make after-tax contributions and invest those contributions into mutual funds or similar investments. Your 529 Plan will grow with the value of those investment options on a tax-deferred basis and can be withdrawn tax-free if the money is used to pay for qualified higher education expenses!
Unlike a Roth IRA, though, a 529 Plan does not have an annual contribution limit, but each state has an aggregate contribution limit ranging from $235K to $550K.
These plans are available in each state, and the best part? They have a very minimal impact on a student’s financial aid eligibility, so they can continue to qualify for needs-based scholarships and grants while taking withdrawals from your 529 Plan.
By getting started early and making consistent contributions to this account, you can grow a significant nest egg to contribute to your child’s education with minimal effort and maintenance.
Invest in the Stock Market
Let’s be honest, college is expensive, and it doesn’t appear to be getting more affordable as time goes on. For many households, the prospect of being able to make tuition payments in addition to everyday expenses seems difficult, if not altogether impossible.
By investing in the stock market, you give yourself the opportunity to develop an additional source of income that can then be used to save for major expenses such as a home, retirement, or a child’s college education.
Now it’s important to keep in mind that this isn’t a “get rich quick” scheme. Here at HFK, we are all about creating a sustainable investing strategy that will help you grow your wealth over time, regardless of market trends.
And trust us, we already know what you’re thinking: “sure, that sounds great, but I don’t know the first thing about investing.”
Were we right? We thought so.
The sad reality is that while investing puts so much power and opportunity into the hands of the investor, we aren’t taught how to successfully and sustainably invest. We are told that we have to figure it out for ourselves, and suddenly investing feels a lot like gambling.
That’s why we created Stock Market School, an investing app that not only gives you the platform to invest but also equips you with the education and tools you need to successfully and confidently create an investment plan that will serve you for decades to come.
Plus, Treasury has a built-in community element that allows you to connect with like-minded investors, learn from each other, and see what other people in your community are investing in.
This is the ultimate resource for investing newbies and seasoned stock market veterans alike, and we are excited to welcome you to this new era of educated and confident female investors.
HFK Pro Tip: Their financial education doesn’t have to start at college – it can, and should, start in the home with you.
Get your kids involved in the investing process. Let them watch you navigate Stock Market School, talk about how you are choosing ethical investments, and let them see firsthand the value of long-term, sustainable investing.
