With the rising costs of higher education, it’s essential to explore various loan types and funding options. Are student loans worth it, or are they too expensive?

At Bank of the Rockies, we help clients find not just any solution for paying for college but the best and most innovative ways to do so.

The Student Loan Landscape

Student loans, available as both federally-backed and private loans, are the standard option. The benefits of federal loans are that they tend to have lower interest rates, easier accessibility for those without a proven credit history, and the ability to defer payments if needed.

However, they also create significant debt restricting financial well-being right out of school. On the other hand, private loans have much higher interest rates.

Alternative Financing Options

How else can you pay for student loans? Innovative options could provide alternatives with some enhanced features.

Home Equity Line of Credit (HELOC)

A HELOC allows you to tap into the available equity on your home for a low-cost loan you can use for anything. These loans are very flexible, and they make sense for parents with significant equity, thanks to rising home prices. Use them to pay for your child’s education, work to pay down that balance at your own pace, and borrow from it again as needed.

HELOCs do put the debt burden on the homeowner. It does increase the debt secured by your home.

Early Savings Strategies

The sooner parents and children begin saving for college, the better. Tax-advantaged options and traditional savings are all solid tools to pay for college. The key here is that interest compounds over time, building the bank of available funds, especially over the long term. Consider options such as these.

  • 529 College Savings Plans: Available at the state level, these plans allow anyone to set money aside for the college expenses of the student.
  • Regular savings accounts: Don’t overlook the value of opening and contributing to a traditional savings account.
  • High-interest savings accounts: For those able to tuck away a good portion of funds, high-interest rate savings accounts grow in value sooner.

Note that high-interest savings accounts may have a minimum balance requirement. However, if you’re saving for college, that may be easy to meet.

Combining Strategies for Optimal Financing

You don’t have to stick with just one of these, but instead, consider using several.

  • Set up a 529 plan to help with early college savings benefits (start as soon as they are born) and ask the family to control them.
  • Utilize high-interest savings accounts over the long term to build value. Look into the benefits of a Certificate of Deposit, too.
  • Use loans later for whatever is left over.

By implementing a combination of these strategies, you can create a comprehensive and flexible approach to college financing that maximizes savings and minimizes debt.

Bank of the Rockies’ Support for Students

We are here to help. Our tailored programs and services are designed to empower young students with the knowledge and tools they need for a secure financial future.

Get Smart About Credit Program

The Get Smart About Credit program, in partnership with the American Banking Association, helps young people build good financial habits.  It engages teens and young adults year-round, teaching them about personal finance, credit, and banking careers. Participating banks across the country join this initiative to inspire the next generation to make sound financial decisions.  Learn to build good financial habits and pay for college.

Big Sky Student Checking Account

Tap into our Big Sky student checking accounts with no minimum balance requirements, online bill pay, and a $25 minimum opening balance. It’s easy to use and teaches financial security.

Find  the Support You Need

Alternative financing options for college are out there, and we  want to help you find the best choice. Contact Bank of the Rockies and let us help you make an informed decision.