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You should save for college because if you don't, you may not have enough money to cover tuition and other costs.
Tuition rates are continuing to increase, but loan interest rates are also increasing. This means that the total amount of debt increases each year. Interest is compounded on those loans, meaning it accrues as the loan balance grows over time. A $5,000 loan at an 8% rate will cost a total of around $10,500 in interest paid by 2029. The total cost of borrowing $100,000 is similar at around $125,000. Savings can be used to offset much of the interest on loans.
You should use a combination of a CD [Certificate of Deposit] and savings account in order to maximize your savings. A CD allows you to enjoy the benefits of interest while you save and then roll the interest over into your savings account. CDs also pay higher interest than savings accounts although there are caps on how much you can earn from this feature. Savings accounts tend to pay lower interest rates than CDs because they do not have the same benefits offered by a CD and low rates can prevent you from accumulating enough money for college costs.
Tuition rates are continuing to increase, but loan interest rates are also increasing. This means that the total amount of debt increases each year. Interest is compounded on those loans, meaning it accrues as the loan balance grows over time. A $5,000 loan at an 8% rate will cost a total of around $10,500 in interest paid by 2029. The total cost of borrowing $100,000 is similar at around $125,000. Savings can be used to offset much of the interest on loans.
You should use a combination of a CD [Certificate of Deposit] and savings account in order to maximize your savings. A CD allows you to enjoy the benefits of interest while you save and then roll the interest over into your savings account. CDs also pay higher interest than savings accounts although there are caps on how much you can earn from this feature. Savings accounts tend to pay lower interest rates than CDs because they do not have the same benefits offered by a CD and low rates can prevent you from accumulating enough money for college costs.
