College Loans and Savings

College Loans and Savings

Core Facts

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September is College Savings Month. It coincides with the beginning of the new school year, so graduates and freshman alike will have their hands full with new studies and a new way of life. But it would be wise to take a moment and consider the many ramifications of how one is paying for higher education. 

According to a survey by Sallie Mae, families are under increasing pressure to take out loans to finance college, spending 16% more last year than the previous year — the biggest increase in five years. Here’s what the college financing company found:

– Parent out-of-pocket spending was the number one source used, surpassing scholarships and grants (30%) for the first time since 2010.

– Among families who did borrow, the student signed for nearly three-fourths of the amount borrowed.

– Working students are now the norm, with 74% working at some point during the year to help cover costs.

Saving for college seems like the best alternative, but there are some misconceptions about the process: 

Not enough disposable income

It is true that many Americans don’t have much left after paying rent/mortgage, taxes, insurance, and saving for retirement. But disposable income is also a matter of spending less. Look at what you’re spending, and tick off a few items that could save you some money. As an example, the average person spends about $20 a week on coffee, which is about $1000 a year! By making your own coffee at home, you could be saving a fair amount. 

We don’t qualify for financial aid

Well, that’s not entirely true. There are two different forms of aid--merit and financial aid. The former is not based on financial need. There are tens of thousands of these scholarships and grants available. See FinAid.Org for a list of them.

As for financial aid, there are many factors taken into consideration. You can always fill out the FAFSA form, and send it to the colleges of your choice. It costs you nothing.

We could use our retirement money or home equity loan

You could. But it’s not something that is recommended. Here’s why. It’s hard to replace your nest egg once it’s gone, and adding debt to your household will only increase the financial burden on you. 

The bottom line is this - you don’t need to take a loan out to pay for college. If you can’t afford the tuition, there are always other options--scholarships, financial aid, or community and commuter colleges. 



Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities. 

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. 

Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable-- we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances. Member FINRA & SIPC


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Founded in 1976, David Lerner Associates is a privately-held broker/dealer with headquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL; Teaneck and Princeton, NJ; and White Plains, NY. For more information contact David Lerner Associates Call 516-921-4200 Visit our website:

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Jake Mendlinger
Account Manager
516.829.8374 X 232

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