Money Relationship » College Saving

Volunteer to Help Pay Student Loans

Adam — Tue, 16 Jun 2009 13:30:07 +0000

If you are like me, you paid a pretty penny for your college education. I however, decided to finance most of my education in the form of student loans (private and federal). It amounts to a great sum and I wonder how I am going to pay it off every day. Looking back, I know I would have been able to pay for college with cash and yet didn’t.

Do you find yourself searching for topics such as this every day? By subscribing to this site, you can get FREE updates in your inbox daily. Why not give it a try? You can unsubscribe at any time and it’s FREE. You can subscribe via RSS or you can subscribe via email.

I know it’s going to take a lot of hard work and dedication to pay of the majority of the loans but I am always looking for other avenues. Volunteering is one of those avenues. As you will see, there are plenty of ways to get your college education paid for by volunteering. As a bonus, you are doing good things to help around your community and the world. Here are some resources for paying off your student loans while volunteering:

AmeriCorps

Each year, AmeriCorps offers 75,000 opportunities for adults of all ages and backgrounds to serve through a network of partnerships with local and national nonprofit groups. You can volunteer in various areas such as education, business, housing, disaster relief, health, technology and more. You serve for 12 months and receive a living stipend up to $7,400. At the end of your service, you receive a $4,725 education award to be used toward your federal student loans or your tuition if you are currently in college. AmeriCorps is also the group that offers the VISTA program.

Personally, I looked around the site and found a few good positions that I would be interested in. There were several positions in financial education, foreclosures, and housing. Check it out because there is something there waiting for you!

Peace Corps

Peace Corps volunteers serve in 74 countries in Africa, Asia, the Caribbean, Central and South America, Europe, and the Middle East. Collaborating with local community members, Volunteers work in areas like education, youth outreach and community development, the environment, and information technology. The Peace Corps provides volunteers with a living allowance while they are serving. It enables them to live in a manner that is similar to where they are stationed. After completion of the program, the Peace Corps provides volunteers with a $6,000 payment to help with the transition back to a normal life.

While serving in the Peace Corps, volunteers are able to defer their federal student loans until they are finished with the program. If you have a Perkins loan, you will be eligible for a cancellation of 15% for each year you spend in the program. If you spend more than 2 years, you can have 20% of your loan cancelled in years 3 and 4. In all, you can have up to 70% of your Perkins loan cancelled.

Teach for America

Teach for America is an American non-profit that enlists America’s future leaders to help end education inequality. The program will place you in a low-income school in various locations around the country where you will teach students (you do not need an education degree). The great thing about the program is that you receive all of the same benefits as other professional teachers in the school district. In other words, you receive the same salary and health benefits as beginning teachers.

During your two years as a teacher, you can receive forbearance (they still pay the interest) of your student loans. Plus, at the end of each year you will receive a $4,725 education award that can be used to pay off federal student debt.

Military

The military offers many great education benefits while you are in the service or after you leave. With the active duty and verterans GI Bill, you can receive up to $1,075 per month for education and training. If you are in the reserves, you can receive a reduced benefit of up to $297 per month.

Charity for Debt

Charity for Debt offers a unique program in which you can volunteer your time with various non-profits in return for the payment of parts of your student loans. The program is still in the pilot stage and is currently only being offered in Dallas, Oklahoma City, and Washington DC. Basically, you volunteer your time at various sponsored non-profits and you receive anywhere from $15 to $20 per hour (tax-free) that is then used to pay your student loans.

Personally, I have signed up for this progam since I live in the DC metro area. I will keep you informed on how the process goes and if it even takes off.

Does anyone else know of any other ways to volunteer your time and have you student loans paid?

Volunteer to Help Pay Student Loans

Basics of Prepaid College Tuition 529 Savings Plans

Adam — Tue, 17 Feb 2009 21:00:34 +0000

Have you noticed an upward trend in college costs over the past few years? I am guessing that you have. College costs have been increasing every year at an average of 6% per year. That means that a public university that costs $10,000 today will cost approximately $29,368 in 18 years. That’s for only ONE YEAR! Are you afraid you will not be able to save that much? What if I told you that you can lock in current college prices. Would you be able to sleep more easily at night? That is the idea behind a prepaid college tuition plan.

What is a 529 Prepaid Tuition Plan?

Prepaid tuition plans are college savings plans that allow you to lock in current college costs. In other words, if you purchase a full years worth of tuition at a state school today, that plan will pay a full years worth of tuition 10, 20, or 30 years down the road. It is guaranteed to increase at the rate of college inflation.

Prepaid Unit Plans

Prepaid unit plans allow you to purchase units that represent a certain percentage of college tuition. For example, you may be able to purchase 1 unit in the plan that represents 1% of college tuition for a year. Everyone pays the same amount for a unit and the price increases each year. You can then use these units to cover part or all of the costs of attending college.

Contract Plans

Contract plans sell, you guessed it, contracts. These allow parents to purchase a set amount of years of tuition at a certain price. Basically, the younger the child, the less expensive the contract price.

Advantages of Prepaid Tuition Plans

Allow parents to lock in current tuition rates
Very simple to understand and no personal investing required
Plans involve no risk of principal and are typically back by state or local government
Anyone can contribute to the plan for the benefit of the beneficiary
If the beneficiary dies or does not attend college, the funds can be transferred to another

Disadvantages of Prepaid Tuition Plans

Have a negative impact on need-based financial aid just like regular 529 plans
Cannot earn higher returns if the market has a great year
Typically, can only be used for tuition and not for room and board, books, supplies, etc.
They do not guaranteed acceptance into college
You are limited to the schools that are listed in the plan

Is a prepaid tuition plan right for you? It all depends on the things that were mentioned above. Look carefully at the advantages and disadvantages and make your choice based on those criteria.

You may also want to consider using the plan in conjunction with a standard 529 plan. The standard plan will allow you to invest the savings more aggressively while the prepaid plan may help you hedge against higher increases in tuition rates. One day we are going to have to start paying back all of the government debt we have and education funding may have to be cut. What will happen then? Large increases in tuition, you can be sure of that! I also recommend using the site www.savingforcollege.com. The site offers evaluations of each states plans and has some great college funding calculators.

Has anyone had any experience with prepaid tuition plans? I know they are fairly rare but someone may have an experience they may want to share.

Basics of Prepaid College Tuition 529 Savings Plans

10 Reasons Not to Pay for Your Kids College

Adam — Sun, 24 Aug 2008 23:15:37 +0000

I have decided to look at a different approach to college planning. Most financial planners and personal finance books tell you to save for your kids college. I have assembled a few reasons that might make you think twice about helping them out. Feel free to comment at the end about your thoughts on the list or why you would want to pay for their college. Maybe the pros will outweigh these cons.

1. They Are More Likely to Go to Class

Being fully invested in their own college career will make them more likely to attend class. I know that it worked for me. I knew that if I didn’t attend class on any given day, I was flushing quite a few dollars down the drain. I also knew quite a few people that did not attend class because they were there on mommy and daddy’s dime.

2. They Are Investing in Their Future Career

Teach your kid to think of it as a long term investment. If they pay for their own college, their destiny is in their hands.

3. Help Them Learn to Be Frugal

I’m talking from experience here! If your kid has a hand in paying for all of their expenses, they are more likely to learn how to save money at various places. Ramen noodles come to my mind! Yum!

4. They Are More Likely to Finish Faster

When I first started graduate school, I planned out my entire class schedule before my first semester. My main goal was to finish as soon as humanly possible. I knew that if I stayed only one extra semester, there would be all kinds of addition costs like housing, food, travel, books, tuition, etc. I will be glad to graduate in December and start my career.

5. Parents Can Invest in Their Own Retirement for More Gains

This is a no brainer. If you are not saving for your kids college, you can use that money for other things. It could be home improvement, vacations, or adding to your retirement accounts. By placing the extra money in your retirement account, you can save less per month and have more when you retire. Just take a look at what the power of compound interest can do.

6.They Will Learn the Value of Money

Have you kids ever asked for something? If you have kids, the answer to that question is yes. What happened when you told them that they couldn’t have it? They cried bloody murder because they really had no idea what the value of money was. They figured that they could have whatever the wanted. Having them be responsible for their own costs will make them appreciate the value of money more.

7. It May Encourage Them to Do Better in High School

If your child knows that they will have to pay for college themselves, they may be more inclined to succeed in high school. This in turn may help them get scholarships to reduce the amount of tuition that they will have to pay.

8. Because College May Not Be for Them

This is true for many young adults. I have known several people that dropped out of college early in their career for something else. College just was not for them. Whether it was the classes or some other thing, they found a true passion somewhere other than college.

9. You will Pay No Fees if They Do Not Go to College

If you saved money in a 529 plan and they dropped out or received scholarships, etc, you would have to pay a 10% fee just to get the money out. That could be a huge chunk of change if you have been saving for awhile. You will also be taxed at your income tax rate for any of the gains.

10. They May Be Less Susceptible to Drugs and Alcohol

I have seen many people who have struggled in college because of drugs and alcohol. I do not really know the statistics about the relationship between alcoholism and who pays the tuition, but I imagine there is some (even if slight) correlation between the two. If the student is more focused on their curriculum, they may be able to stay away from these growing college trends.

Once again, I am not telling you to stop contributing to your 529 plan. I am simply just giving some reasons why it may help them get a better grasp on life if they paid for it themselves. You many want to have a combination of them paying for some themselves and you contributing some. My professor in college had a great plan for his kids. He told them that they would cover the costs for them to go to an in-state public school. If they wanted to go elsewhere, the rest would be on their dime.

If this is your first time to the site, consider subscribing HERE. You can also take a look at the contest that I am running until the end of the month.

10 Reasons Not to Pay for Your Kids College