09/17/2020

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SoFi Blog

Tips and news—
for your financial moves.

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8 Ways to Save for Retirement While Paying College Tuition

Feeling like you’re stretched thin by college tuition costs? You’re not alone. The annual cost of a four-year public college education for residents is $20,770 .

That’s just one year. Ouch. Many parents are trying to balance daily expenses, retirement savings, and college costs at the same time and it can be a struggle. Some may even be prioritizing college payments over retirement contributions, a practice most financial advisors advise against.

While students can take out loans to fund their education, a parent might only have a retirement account to fall back on. Parents can be so worried about paying college costs that they may even be tempted to pull from their 401(k) for their child’s college, which can lead to unfortunate tax situations.

There are better ways to find the best retirement strategy for 50-year-old parents while still pulling together cash for college. In fact, here are eight ways to uncover hidden money.

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SoFi Member Spotlight: How One Member Tackled Debt Elimination and Had Fun Doing It

In 2015, SoFi member Anthony Hartzog’s loans were in default. In 2017, he paid off $51,000 of $113,000 in debt. And this year, he and his wife Jhanilka Hartzog have already paid off $42,000 in debt with plans to wipe out the last $20,000 of their personal debt by end of year.

College graduates today are sharing a $1.5 trillion loan burden —the second highest debt amount in the nation after home mortgages. And this debt has the potential to lead to things like default, credit card debt, and potentially underemployment if grads can’t immediately find a job in their degree field.

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Best College Fit: Three Categories to Consider

In general, high school students are encouraged to apply to colleges during the summer before their senior year. This creates a doable timeline, one that allows them to choose the best college fit for their needs. People who are going back to school after time in the workforce generally follow the same guidelines—applying to school about 10 to 15 months prior to their targeted start date.

But how many colleges does it make sense to apply to? The Princeton Review recommends: two target schools, two reach schools, and two safety schools. Selecting a thoughtful balance of schools generally leads to less stress throughout the application process, especially when compared to students who apply to dozens of universities, expecting responses from all.

By carefully curating a list of schools, students are generally left with options within their financial reach and a little less anxiety. Although no one application strategy applies to every single student, hopefully this list is a good starting point.

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5 Common Student Loan Mistakes to Avoid This School Year

It’s that time of year again: back to school time. And while students are anxious to walk through their school halls, check off their back to school lists, and make sure they have plenty of friends in every class, graduates may be struggling to pay off their debt.

Unfortunately, student loan debt is at an all-time high and continues to rise. The average student loan debt for 2017 graduates was $39,400 amounting to $1.48 trillion in total student loan debt. This exceeds the amount of credit card debt in the United States by $694 billion.

In the summer of 2016, we surveyed around 1,000 young professionals for The Impact of Student Loan Benefits, a white paper outlining the effect of student loan debt on employee recruitment. We found over 60% of respondents reported that student loan debt is one of the top two financial concerns in their lives. While student loans are clearly a stressor for millennials, there’s a way to prevent them from causing students so much anxiety.

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