Scholarships and grants have always been a nice way to pay off school fees. Unfortunately, life doesn’t always offer these things after school. There are other methods of earning money from the government and banks in order to afford school, pay off debts, and/or simply pick up a little extra money.
You can take steps in order to provide this for yourself right now. Here are three suggestions as to how you can use your resources to make more money.
1. Certificate of Deposit
After you’ve received your FAFSA back in the mail, you can see that a lot of the time, the government offers you two types of loans; subsidized and unsubsidized. Subsidized loans require you to pay a certain amount monthly as you go to school. If not, your debt will collect interest, making you pay back more money than you first took out, which will increase the longer you are not capable of paying what is required of you. Unsubsidized loans, by comparison, do not gain interest while you are in school. It is not expected of you to pay back anything until you are graduated, so rather than paying interest with your unsubsidized loans, there’s a way to earn.
A Certificate of Deposit, or CD, is a timed deposit that can be used to do just that. Think of it like a savings account, but rather than making constant deposits and withdraws, the money goes untouched for a set period of time. The purpose for this is to collect greater interest offered by banks on large amounts of money.
Placing your unsubsidized loans in a CD to gain interest, all while you continue to go about your studies until you graduate, could help you pay for your schooling as long as you are disciplined enough not to touch it for four years. Afterwards, you can use the money you’ve collected from interest to save, spend, or pay other loans.
Say you receive your FAFSA, which offers $10,000 in unsubsidized loans. If you were to place this money into your own CD for around four years, it’s estimated you could make an extra $2,000 more per year, or $8,000 in a total of four years to help pay for school, loans and other investments
That’s not to say that it’s too late to make an investment if you aren’t a freshman. You can still easily make money off of loans from a mere two or three years instead, earning yourself a decent amount of extra money. Of course, this will all depend on the amount of money and the rate at which it will collect interest, as rates are always fluctuating.
In order to open a CD, talk to your trusted banking system. Be sure to know what interest rates will be for the amount of money you’ve deposited, and what sort of timeline you’d like to set up beforehand. For other tips and information, go to this guide investing in a Certificate of Deposit.
2. Retirement Programs
Perhaps you feel a little young to start thinking about retirement. However, your proactive behavior could earn you hundreds of thousands of dollars! Another banking strategy can prove useful in turning smaller amounts of money into larger amounts using interest rates. With only a few thousand dollars, you could invest in your future finances.
Set up an IRA, or an Individual Retirement Account. The sooner you do this, the more money you could potentially make over the time span of four to five decades. You will need to make multiple deposits over the course of a few years. In order to open up an IRA, you’ll need to decide which type would suite your needs the best. Many people decide to set up a traditional IRA, which you can start easily at this link.
You may want to use this as a saving strategy; you can put away a certain amount of money for every paycheck you receive. Unlike a CD, an IRA is far more flexible with deposits and withdraws, so this money does not need to be earned all at once. By the end of forty to fifty years, you could be making at least $160,000 depending on interest rates!
John Green talks about this with an in-depth example of saving using summer jobs to your advantage in the video below.
3. Earned Tax Credit
Working might seem like the obvious answer as to how we might make money, but fortunately, if you meet the right criteria, you could qualify for extra, free money. The important aspect of receiving this money is to simply know of it and apply for Earned Income Tax Credit (EITC) when filing your taxes.
This benefit is exclusive to independents with a low to moderate income, below $39,000- $53,300 with children, or below $14,800 without children. This income must be acquired by documented work or employment. However, if you’re a college student working minimal hours during the school year, or if you only work during the summer, you can still be eligible.
For those without children, you can earn a few hundred dollars extra, depending on the rate, which as of 2015 stood at 7.65%. If you were making around $8,000 a year at this rate, the government would owe you $503. Income, the current rate, and the number of children will heavily influence how much you might earn.
If you qualify, it’s important to file a tax return with the IRS. If you’d like to learn how to do so, check out this link to the IRS website that lists the required documents and what steps to take.
Though these steps may seem a bit out of your way, the results are worth it, since you have the opportunity to earn hundreds (if not thousands) of dollars while at school or right after school. It’s important to be purposeful in how you use your money and how you file your income!