This article on savings during retirement is original content written by Manchester, CT Financial Advisor Thomas Scanlon, CFP®, CPA
My daughter attended the University of New Hampshire. Here are 3 ways she contributed to her college education.
1) Stafford Loans
She has taken out Stafford Loans. She was able to borrow $5,500 her freshmen year and $6,500 her sophomore year. She will be able to borrow $7,500 her junior and senior years. When she graduates she will have $27,000 of student loans. The Stafford Loan is subsidized by the federal government. She does not pay any interest while she is in school. The interest rate on these loans for 2015 for undergraduates is 4.66%. She will have a six month “grace period” after graduating before she needs to start repaying the loan.
2) She Pays For Her Books
The second way she contributes is by paying for her books. Her first semester freshman year was quite an experience. We went to the bookstore with her. Her books for this semester came to $800. Ouch. I thought she was going to cry. Come to think of it, I thought I was going to cry! Her second semester her books cost $69. What happened? She got one book used, rented another book, shared a book with a friend and didn’t buy the other books. The education she received just from paying for her own books made writing that first tuition check worthwhile.
3) She Pays Her Own Living Expenses
We pay the tuition, room and board and fees minus the Stafford Loan. As we are Connecticut Residents we have been able to take advantage of the Connecticut Higher Education Trust (“CHET”). She pays for her books and out of pocket expenses. She works a lot in the summer babysitting and being a hostess at a restaurant. This gives her the money she needs to go out periodically with her roommates and friends.
Why do we have her contribute to her college education? It’s simple. Everything has a lot more meaning when you have some skin in the game.