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With 45 million student loan borrowers working to repay more than $1 trillion in student loan debt, many are looking for ways to help reduce their total bill. One simple way that could potentially help is signing up for a free Upromise account.
Upromise is best known as a program geared towards helping parents save for college. Upromise has a cash back rewards portal for online shopping and a cash back rewards credit card. Users shop through the portal and receive money back on purchases, similar to Rakuten or Ebates.
While this cash can be deposited into a 529 college savings plan, it can also be sent directly to a checking or savings account, and then used to make extra payments on your student loans.
How to Earn Cash from Upromise
Signing up for Upromise is quick and is free. Here is how you can use Upromise to help earn extra money to pay back your student loans:
Shopping. Upromise lets you earn rewards from online shopping made through the shopping portal. Login to your account, click on a vendor’s offer on the portal, and then purchases will earn cash back rewards to your Upromise account. Cash back offers are typically 1% to 5%, but can be as high as 40% for specific vendors, especially during the holiday shopping season.
You might be thinking: “I have student loan debt; I can’t spend my money shopping!” First of all, way to go on being proactive. You shouldn’t spend money on things you don’t really need. Second, you can use the portal to shop for essentials when needed. For example, earn 2% cash back at Costco, 8% at Sam’s Club and cash back at various grocery stores and wireless carriers.
There’s also cash back on sites that already offer deals, such as 3% cash back on Living Social or 4% cash back on Groupon.
If it’s in your budget, there are plenty of other stores based on a variety of categories, including clothing, travel, beauty and health, sports and outdoors, shoes, computers and electronics, and more.
Even if all you do is direct your current spending through the Upromise shopping portal, you can earn cash back to help repay your student loans.
Signing up for the credit card cash back rewards. Upromise credit card holders earn 1.25% cash back on purchases made. Here’s the important thing – This is only beneficial if you are paying off the entire credit card balance every month. If you’re willing to make purchases you would be normally making anyways, such as gas and groceries, and pay off the balance in full, then you can use the cash back towards student loan payments. Otherwise, with a balance on the card, you’ll be paying interest (up to 24.99%).
You definitely don’t want to rack up more debt by using a credit card that you can’t pay in full. There are dozens of cash back credit cards available out there, so find the one that’s right for you, if you’re in the market for a new card.
Dining out. You can earn rewards by eating at select restaurants. Purchases made at participating restaurants using a linked debit or credit card will earn 2.5% cash back on your entire purchase (including tax and tip).
You can search your location to find participating restaurants near you and ones that are best for your budget. Restaurant listings include a dollar sign rating to give you an idea of the price point. For budget diners, stick to the $ (one dollar sign).
Asking family members to join in. If you’re lucky enough to have a parent or other family member who is willing to help, ask them to join as well.
Bottom Line
Upromise isn’t the only solution for student loan debt. But since it is free to join, it could possibly help you pay a little extra towards your student loans.
Learn more about Upromise and sign up today.
At Savingforcollege.com, our goal is to help you make smart decisions about saving and paying for education. Some of the products featured in this article are from our partners, but this doesn’t influence our evaluations. Our opinions are our own.
529 plans, like other investments in the stock market, can lose money. Investing in the stock market is never really safe. But, stock market investments generally grow to a greater extent than other investments over the long term.
During an economic downturn, such as the one triggered by the coronavirus pandemic, investments in the stock market will drop significantly, but only temporarily.
For example, the S&P 500 dropped by a third from February 19, 2020 to March 23, 2020, but has since increased by 43% off of the bottom. As of July 14, 2020, the S&P 500 is just 5.9% short of a full recovery.
(For reference, the S&P 500 closed at 3,386.15 on February 19, 2020, 2,237.40 on March 23, 2020 and 3,197.52 on July 14, 2020.)
Investing in the stock market is like riding a roller coaster. It has its ups and downs, and watching it too closely can cause nausea.
See also: What to Do With College Savings in a Volatile Market
The best advice is to remain invested. Set up a direct-sold 529 plan with automatic investment and don’t pay too much attention to the ups and downs.
If you are invested in an advisor-sold 529 plan, follow their advice to stay the course. Pulling out of the stock market will just lock in losses and cause you to miss out on the economic recovery. Trying to time the market, especially during a period of increased volatility, just doesn’t work very well.
See also: Should You Dip Into Your 529 Plan in Case of Coronavirus?
If you can’t handle the stress of stock market gyrations, 529 plans offer many investments that are safer, with a lower risk of investment loss. Several 529 plans offer FDIC-insured investment options and money market accounts. All 529 plans offer age-based asset allocations, which shift to a lower-risk mix of investments as college enrollment approaches.
Consider what happens to an age-based asset allocation that starts off with 80% invested in stocks when the baby is born and gradually shifts to 20% in stocks when the baby is a high school senior.
- If the stock market were to drop by 30% when the baby is one year old, the 529 plan will experience a 24% loss. But, there will be very little money in the 529 plan, so the losses are the equivalent of just three months of contributions. You also have 16 years to recover from the losses.
- If the stock market were to drop by 30% when the baby is a high school senior, the 529 plan will experience just a 6% loss, which may be partially offset by gains in the low-risk portion of the portfolio. That’s not too bad. Although that’s the equivalent of about 1-2 years of contributions, there’s a good chance the stock market will recover before you need to use most of the money. You also have the option of borrowing to pay for college costs while you wait for the stock market to bounce back, and then using the 529 plan to pay off the student loans.
See also: How Will Coronavirus Impact Your College Savings?
Of course, if you invested all of the money in the 529 plan in an all-stock fund, all bets are off. Such a 529 plan will follow the performance of the stock market as a whole, without any attempt to manage the risk of investment loss. The stock market has at least three corrections and one bear market in any 17-year period. A stock market correction is a drop of 10% or more. A bear market is a drop of 20% or more.You may also wish to avoid 529 plan portfolios that are too heavily weighted in real estate or foreign stocks, as these can increase volatility and do not recover as quickly as domestic stocks.
