Think the teen you’re shopping for has everything they could ever want? You may want to think again. Don’t head to the mall to search out a gift that will probably end up in a landfill, head to the bank instead. Teens are asking for money, not to blow on the latest games and gadgets but to pay for college. Who wouldn’t want to get behind that?
In a recent survey sent out to more than 500 Fastweb high school and college students, results showed that over 54% of students really just wanted money for college this holiday.
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“Every year more teenagers are worried about paying for college, and there are many ways their friends and relatives can help,” said Mark Kantrowitz, financial aid guru. “For the holidays, friends and family can contribute to the student’s 529 college savings plan and help them search for scholarships. Every dollar saved or won is a dollar less the student will need to borrow to pay for their education.”
Not convinced cash makes a good gift? Here’s something to think about; according to Kantrowitz every dollar spent using student loan money will cost the student about two dollars by the time they’ve paid off the loan. So your $100 cash donation (money the student would have otherwise had to borrow) may really end up being $200 they won’t have to pay back. “Every dollar saved in a college savings plan is a dollar less you will need to borrow, ultimately saving two dollars in student loan payments,” said Kantrowitz.
Something else to think about, interest. And we’re not talking about what your teen is into. If your student was able to save $200 a month for ten years at 6.8% interest, they would accumulate about $34,400. If that student took out a loan for $34,400 they would pay $396 a month for ten years at 6.8% interest. The difference between the two is that a student earns interest when they save, but they pay interest when they borrow.
An investment in your student’s education savings this holiday is an investment in their future, their quality of life and the future of their children and family. When you’re standing in line at the checkout ask yourself what’s more worth it, the sweater, the Wii game, or the future and education of the student.