In recent years, Americans have become increasingly cost-conscious, cutting back and looking for more options to save where they can. In alignment with inflation and the rest of the economy, the cost of attending college has continuously risen in the past few years. In  the 2022-23 academic year alone, families reported spending $28,026 on college, an 11% increase from $25,313 in 2021-22 according to new data in “How America Pays For College 2023,” the annual study from Sallie Mae® and Ipsos.

Other report highlights include:

• Scholarships and grants were used by 76% of families and covered 29% of costs.
• 41% of families reported borrowing for college, covering 19% of costs.
• 4 in 10 families did not use scholarships to cover college costs, most often citing a lack of awareness and low likelihood of winning for not applying.
• In fact, 45% of families believe scholarships are only available for students with exceptional grades or abilities.

With rising costs and student loan payments resuming in October 2023, United Bank is sharing updated college saving tips with scholarships, 529 savings, and student loan options for you and your family.

Individual colleges offer various scholarships for students who attend their schools. Beyond those, there are thousands of scholarships available nationwide, specific to academic performance, athletics, and extracurricular activities. Scholarships have also become increasingly available for underrepresented groups. 

There are several new trends in college scholarships that parents and students should be aware of, including:

• The rise of merit-based scholarships: Merit-based scholarships are awarded based on academic achievement, extracurricular activities, and other factors. These scholarships are becoming increasingly popular as colleges look for ways to attract top students.
• The growth of online scholarships: Online scholarships are becoming more common as they make it easier for students to apply for scholarships from all over the world. There are several websites that list online scholarships, such as Scholarships.com and Fastweb.com.
• The increasing availability of scholarships for underrepresented groups: There are a number of scholarships available for students from underrepresented groups, such as women, minorities, and first-generation college students. These scholarships can help students from these groups afford college.
• The use of artificial intelligence (AI) in scholarship selection: Some colleges are using AI to help select scholarship recipients. AI can be used to assess academic achievement, extracurricular activities, and other factors to identify students who are most likely to succeed in college.

All together, these scholarships award billions of dollars for college expenses annually, easing the financial burden and reducing the debt amount of debt students need to take on. This is essentially “free money” offered to students that, unlike loans, don’t have to be paid back. To connect more students and families to scholarships, Scholly—the top scholarship search app—is now free through Sallie Mae. To date, students have won more than $100 million in scholarships through Scholly.

Two additional resources for tracking down scholarships and their eligibility requirements are the College Board’s Scholarship Search (brought to you by the nonprofit behind the SAT standardized test for college admissions) and Sallie Mae’s Scholarship Search tool¹.

Lastly, don’t forget to check with local civic organizations that may offer scholarships. Examples in your community include the Rotary, Kiwanis, Lions, and American Legion Clubs.

Deciding how to invest college tuition money depends on your family’s timeline. If you’re sending a child to college this year, counting on fast, significant investment growth is unrealistic. 

However, if you have a longer period of time, investing could be worthy of consideration. Investing is never a bad choice, and you can always use the money long after the graduation caps are tossed. 

United Brokerage Services, Inc. offers a variety of investment options ranging from managed asset plans and 401(k) accounts to mutual funds and municipal bonds. Working with a United Bank Financial Advisor who understands your needs can get you on the best path toward achieving your college financing goals.

Student loans offer college students access to the money they need to pursue their degrees, typically with substantially lower interest rates than those available for typical consumer loans. Often, the payback requirements for these types of loans are deferred until after the student has completed school. 

Student loans are intended to bridge the gap between scholarships, financial aid, and the amount of tuition you can pay out of pocket.

In the U.S., there are two primary types of student loans — U.S. government-sponsored federal loans and private student loans, which are offered by private-sector financial institutions. Because they typically offer much lower interest rates and defer interest charges and payment requirements, federal loans are generally a much more appealing option for students than private loans. A great place to start your search for federal student loans is the studentaid.gov website administered by the U.S. Department of Education.

Roughly 64% of students graduate with student loan debt, indicating how simply necessary loans are for many people. Before taking on any student loan, make sure you’re clear on when your payments are due, what the minimum payment is, when you can refinance to get a lower interest rate, and the interest rate you’re working with. It’s important to note that the Federal Reserve could potentially raise interest rates again in 2023, depending on inflation. If they do make this change, interest rates on student loans will also increase, leading borrowers to pay more interest on their loans.

Additional student loan changes in 2023:

• Student loan payments resume in October 2023. The pause on student loan payments that began in March 2020 will end on September 30, 2023. Borrowers will then be required to resume making payments on their loans.
• A new income-driven repayment plan is available. The new plan, called the Saving on a Valuable Education (SAVE) Plan, features a lower monthly payment than the former REPAYE plan. Borrowers will also be able to qualify for loan forgiveness under the new plan after 10 years of payments, instead of 20-25 years under the former plan.
• Borrowers can buy back certain past deferment and forbearance periods. Borrowers who have had their loans in deferment or forbearance in the past are now able to buy back those periods so that they count towards loan forgiveness. This will make it easier for borrowers to qualify for loan forgiveness.
• The Public Service Loan Forgiveness (PSLF) program has been expanded. The PSLF program has expanded to include more types of public service jobs and to forgive more debt. Borrowers who work full-time in qualifying public service jobs for 10 years are eligible to have their remaining loan balance forgiven.

These are just a few of the changes in college loans in 2023 that borrowers should be aware of and plan accordingly for. Not sure where to start? United Bank has advisors available to help you evaluate your situation and guide you to the best choice for your financial situation.