4 MIN. READ

The cost of a college education today is comparable to buying a new car every year or, in some parts of the country, almost as much as purchasing a home. While higher education is invaluable for many careers and ensures a higher income over a lifetime, affording college is one of the most significant financial challenges parents and students face.

It’s important to remember that credit unions can play a vital role in providing financial solutions to pay for college, from savings plans to the student loans Florida families need.
 

How Credit Unions Empower College Dreams in Florida

Higher education costs have long outpaced inflation. Nationally, the cost for in-state residents to attend a four-year public college and live on campus averages about $27,146 for one year. In Florida, the average is $29,605. To attend and reside at a private, nonprofit university, students currently spend an average of $58,628 per year.

Scholarships are a desirable way to fund an education, but the odds of winning a full ride at the desired school are slim, even for stellar athletes and scholars. A mere 0.2% of students receive scholarships topping $25,000. Most receive scholarships for less than $2,500.

As a result, most families need help to finance college. That’s where credit unions come in. They enable young people to realize their college dreams with accounts designed to help them save during childhood. As non-profit organizations that return their “profits” to members via lower interest rates, they generally offer more favorable student loan terms and repayment options to fill in the funding gaps.

COLLEGE SAVINGS OPTIONS

There are three main ways Floridians can plan and save for higher education costs:

Coverdell Education Savings Accounts

A Coverdell account helps you save and pay for educational expenses from Kindergarten to grad school. There are no minimum deposits and funds grow tax-free. However, contributions are limited to $2,000 per year per child and are only allowed until the child turns 18. Modified adjusted gross income (MAGI) limits apply.

529 Plans

The 529 plan was initially created to help build savings with tax-free withdrawals for college costs. They were expanded to help pay for education for all grades and apprenticeship programs. Most states offer 529 plans, but you can choose one from any state or investment firm. 

There are no annual 529 plan contribution limits, but they are subject to gift tax rules. Each 529 plan allows you to select how to invest the funds, with choices based on the child’s age and risk tolerance. The earnings are tax-free if used for eligible education expenses.

Florida’s Prepaid Tuition Plan

Besides a 529, Florida is one of 9 states that still offers a prepaid tuition plan for residents. Participants can pay upfront to attend a participating university to avoid future tuition hikes or apply the value accrued toward costs at another school.
 

STUDENT LOAN OPTIONS

Even with savings and potential scholarships, you may still face a funding gap on your journey toward a college degree. Nowadays, student loans are commonplace. An estimated 54% of graduates finish college with student loan debt. The funding source greatly affects the student loans Florida collegegoers get and the interest rates involved.

Federal Student Loans

Federal student loans are the best option for many students. Payments aren’t due until after you leave school. Interest rates are usually fixed and lower than loans from other sources. There’s no credit check. Repayment plans can be based on your post-school income. Finally, the government may forgive balances, as they have done for many in recent years. A downside is that the federal student loan amounts  ($5,500 to $12,500 a year) are inadequate for many colleges. After four years, the average federal student loan debt per borrower is only $38,000 ($38,774 in Florida), which won’t pay for a year at many schools.

Private Student Loans

Private loans from credit unions, banks, and other financial institutions are an invaluable option that makes college a reality for many students who still cannot afford school after totaling their federal student loans, savings, grants, scholarships, and other options. For example, Power Financial Credit Union grants student loans of up to $100,000.

Credit union student loans can save borrowers money over the long run. Unlike banks, credit unions return profits to members with lower loan interest rates and reduced fees. Even a small difference in interest rates adds up over ten or more years. Credit unions also offer friendlier repayment plans than other financial institutions.

To take out a student loan at a credit union, the parent or student must be a member. Some credit unions determine membership based on occupation, employer, or residence. Power Financial Credit Union serves those who live or work in South Florida and their family members.

Once you finish college, you may also look to a credit union to refinance your student loans. This can make your loan payments more manageable and create savings if you can secure a lower interest rate.
 

FINANCING COLLEGE IN FLORIDA

Whether you are a parent planning for your toddler's future or a teen taking steps toward your college career, there is a lot to learn about paying for higher education. College courses may be vital to certain career paths, but financing them should help move you towards your goal—not burden you for decades. So, you need to make smart financial moves and choose a financial institution that will help you along the way.

At Power Financial Credit Union, we want to make it easier for you to save for higher education, take advantage of our competitive student loans, and even enable your scholar to handle their finances while in school. For nearly 75 years, Power Financial Credit Union has empowered our members with great banking solutions and superior customer service. We have helped countless students and their families achieve college dreams.

Contact us to find out more about our college financing options.