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Saving Early Avoids the Burden of College Loans and Credit Card Debt?

By Matt Listro

Mortgage and Lending with National Credit Fixers - Matt Listro

July 25, 2011 10:04 AM

According to the College Board, the average cost of tuition and fees at a four-year public college has increased by nearly 51 percent in the past decade, a number that is expected only to grow throughout our lifetime and our children’s lifetimes. Since college graduates earn an average of $1 million more than high school graduates during their careers according to the U.S. census bureau, some experts exclaim that saving today could greatly pay off later.

By doing so, families can reduce reliance on loans and credit cards, and earn interest to help children save for and attend college. Theoretically, students will then come out of school with less debt, and possibly even better credit scores.

According to FinAid.Org, overall U.S. student loan debt in June reached more than $850 billion, a number that now surpasses the country’s total credit card debt for the first time ever. Although student loans may not directly affect young adult’s credit score traditionally, the debts owed can have a domino effect. As some struggle to pay off student loan debt, they may be forced to rack up credit card debt just to make ends meet, a vicious cycle that is ultimately damaging to credit score.

A recent report by Ingrid Jacques of the Jackson Citizen Patriot advises families that saving even just a few dollars a week can pay off big later, helping future college students to stop the cycle of debt in its tracks. With families struggling today, however, just to keep food on the table, a roof over their heads, and to pay off their own current debts, early saving for children’s college funds can be tough. Experts advise that families assess their own current financial health before doing so. Kevin Snow, a financial adviser with CP Federal Credit Union advises that families address their own credit card debt and other debt before putting money away for college.

Since current credit card debt and loan debt can hurt a parent’s credit score, it only makes sense that those same parents are mindful since their credit score may determine the interest rate of any student loans taken out in the future. Paying college remains a tricky situation for many families today. While planning for college, to pay down debt, or to repair credit, it is always important to consult with experts who know best, including those that deal with credit repair.