Money for College – Every little bit helps! July 7, 2008

I recently signed up for a program called Upromise, which allows me to earn money toward paying off my student loan by giving me a percentage back or “reward points” for online purchases, dining out, grocery shopping, etc. Once a quarter, if I have accrued a minimum of $25 in rewards, Upromise transfers that as an extra payment to SallieMae, my student loan company. It’s kind of a neat program — it’s basically the same as getting world points on your credit card, except you only use those points toward education. Upromise can be applied towards student loans through SallieMae, and it can also be put towards a 529 college savings plan. So, if you don’t have student loans, you can use the program to save money for your own or your children’s college education.

You don’t earn a lot through the program, but I’m of the philosophy, “every little bit helps.” If Upromise wants to give me 3% back on an online purchase I was planning to make anyway, I’m not going to complain. Most people probably only earn $25-$50 a year, but in my mind, that’s $25 that doesn’t come out of my own pocket, and $25 less in student loan debt that is accruing interest on a daily basis.

As far as using it to supplement a 529 plan goes, a lot of people would think, “$25 is not going to be worth anything by the time my child goes to college.” That’s probably true, but that $25 earns interest, and again, it’s $25 less in student loans or out of your pocket.

My parents didn’t have the money to pay for college for my sisters and me, but my mom always found as many little ways to help out as possible. Our family would throw our spare change in a jar, and every time that jar got full, my mom put it in our college funds. She also did mail-in rebates and every rebate earned went in the college fund. As kids, we were required to put half of all money we got as a gift, and half of all money we earned (babysitting, pet sitting, lawn mowing, etc.) in the bank for college. When we had accrued a sizeable amount of money ($1000 or so) my mom would buy a savings bond or a certificate of deposit in our names to boost the interest rate.

Ultimately, though I worked every summer babysitting, and got my first “real” part-time job at 15, this only paid for 1 semester’s tuition. Believe it or not, it did, however, make a big difference in how much I had to borrow for college. During my last term of college, I hit the limit for federal subsidized loan money. If I had had to pay for one more term of college, I would have had to take out unsubsidized loans and accrue interest much earlier. As it was, since I had paid for that first term out of my savings, I managed to avoid unsubsidized loans completely as an undergrad. I know that a lot of families won’t be eligible for subsidized loans when sending their kids to college, but the point of my story is, you’d be amazed how a little savings can make a big difference.