How to finance your college gap year


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Are you considering a gap year? For decades, members of Generation X graduating high school followed conventional wisdom — and our parents’ advice: “Go straight to college after high school; don’t take a break because you won’t want to go back to school if you do.”

Meanwhile, young adults in Europe and Australia routinely take a year between high school graduation and their freshman year of college to travel the world and experience life.

As American Millennials and Generation Z now embrace the gap year concept, many new graduates are wondering, “How can I pay for my gap year?”

Fortunately, from credit cards to fellowships, you have multiple avenues to explore to cover your living and travel costs during your gap year. The ways to pay for a gap year vary as widely as the costs themselves.

Pros and cons of gap years

In 2015, a study by the Gap Year Association showed that only 3% of American students took a gap year. A mere two years later, 35% of students reported they were considering a gap year.

But is a gap year a good idea?

First, put away that notion that you won’t go back after taking a break. Ninety percent of students return to academic life after a gap year, according to authors Karl Haigler and Rae Nelson.

What’s more, they perform 0.1 to 0.4 better in classes based on a 4.0 grade point average (GPA) scale.

You could easily spend $25,000 to $50,000 or more on college tuition for a year. Why not spend that money, or less, on experiences that will enhance your life and prepare you to buckle down in college with a more mature attitude after living on your own for a year?

‘Can a gap year be beneficial to my professional development?’

If you’re wondering if a gap year could be beneficial to your professional development, that answer is a resounding… maybe.

If you take the year to volunteer or work and try out different skills and discover your talents, it will look good on your resume when you apply for jobs during or after college. Also, you’ll get an idea of whether you’ll enjoy your chosen field.

But if you enter gap year without a plan, you aren’t likely to get as much from it. To get the most of your gap year, look for networking opportunities and the chance to learn a variety of skills.

Different gap years may have different benefits. Students who take a year off between college and grad school or before entering law school or med school are likely to pursue jobs or volunteer endeavors in their field, giving them an advantage in the classroom and in the workforce once they earn their advanced degree.

While taking a gap year could ramp up your earning potential once you finish school, the question remains: “How do I pay for my gap year?”

How much does a gap year cost?

Before you can figure out how to pay for your gap year, you’ll need a good idea of your expenses. Before embarking on your gap year, answer these questions:

Where will I live during my gap year?

While airfare to travel internationally may cost more, the cost-of-living may be lower in certain parts of the world.

For instance, Spain has a lower cost of living than some other Western European countries, but to get the most bang for your buck, consider destinations in Eastern Europe or South America.

Australia is more expensive than much of the world, but the favorable exchange rate can help Americans living abroad save money.

Hostels, Airbnbs and even campsites can help make living more affordable.

Volunteer programs that pay for room and board might be a good way to reduce your living expenses and have a unique, beneficial gap year experience.

Will I work during my gap year?

If you have money saved, you can embark on a work-free adventure, focusing on expanding your studies with real-world experiences. But you might want to make working part of your gap year.

You can embrace the gig economy as an Uber driver or pet sitter or seek out a paid internship or apprenticeship in your chosen field to bolster your college applications and resume.

Remember, you’ll need a work visa if you plan to work outside the U.S.

What experiences do I hope to have?

If your gap year includes sightseeing, tourism and luxury experiences on foreign beaches, you’ll need a lot more money saved than if you plan to take a year off to work or even volunteer.

If you’re on a budget, consider where you can cut costs by planning free or low-cost adventures. A backpacking trip can be a cost-effective way to see the world without spending a lot of money.

How long will my gap year last?

Remember, a gap “year,” in spite of its name, can last for just a few months if that’s all you can afford. You can find tremendous benefits in volunteering abroad for six to 12 weeks before beginning a spring or winter session at school.

Bottom line: Cost of your gap year

As with any living expenses, the cost of a gap year can vary wildly. You can apply for a gap year program and pay a flat rate of anywhere from $10,000 to $40,000 and up for an accredited program that might even offer college credits.

On the other hand, you can live frugally, work to earn the money you need and embrace a creative gap year of your own design that fits your budget.

When you budget for your gap year, don’t forget the cost of your passport, vaccinations, transportation and a small emergency fund should you get sick or have an emergency expense crop up.

Paying for your gap year

In addition to working during your gap year to cover your living expenses, there are other ways to pay for a gap year.

Financial aid

If your gap year program offers college credit, you may be able to use funds from your Free Application for Federal Student Aid (FAFSA), including Pell grants, subsidized college loans or your 529 tax-deferred college savings account.

If you are taking a gap year after completing your undergraduate degree, perhaps before starting a Masters program or entering med school or law school, you may qualify for a gap year fellowship.

Consider the following sources for gap year fellowship programs and work opportunities:

  • Tufts Career Center offers fellowships and post-graduate internship programs
  • lists socially responsible jobs and volunteer opportunities with non-profit organizations
  • online resource for scholarships and financial aid information

Personal loans

If you have good credit (perhaps you managed credit cards responsibly as an undergraduate student) or a co-signer for a loan, you can consider a personal loan to pay for your gap year.

Benefits of a personal loan include low interest rates and monthly payments that don’t change, making it easier to budget. Personal loans range from $5,000 up to $100,000 or more for up to five years, with interest rates from 6 to 36%, depending on the terms, the amount you borrow and your credit history.

Keep in mind, you’ll need to begin making loan payments the month after the loan closes, so you’ll need to account for those payments as part of your gap year budget.

Check out the Bankrate Personal Loan Calculator to see how much you can comfortably borrow.

How to use credit cards for your gap year

If you would like more flexible and convenient, access to money, along with the benefits of credit card rewards for your travel during your gap year, look into 0% introductory APR credit cards to pay for your gap year.

A credit card like Capital One® Quicksilver® Cash Rewards Credit Card, offering 0% APR for 15 months (15.49% -25.49% variable thereafter), 1.5% cash back on every purchase and no foreign transaction fees, is a great credit card to help pay for a gap year spent in the U.S. or overseas. You can even kickstart your adventure with $150  cash bonus after you spend $500 in purchases within three months from account opening.

Another good card for travel is the Wells Fargo Propel American Express® card, with a 0% intro APR on purchases for 12 months (13.99% – 25.99% variable thereafter) and excellent travel rewards. The Propel card offers 3X points for dining out and ordering in, 3X points for gas stations, rideshares and transit, and 3X points for travel such as flights, hotels, homestays and car rentals. You’ll also get 1X points on all other purchases and 20,000 bonus points as a welcome offer when you spend $1,000 in purchases in the first three months. That’s worth $200 in cash redemption value to spend as you wish.

There are no foreign transaction fees, plus a host of benefits including travel insurance and fraud protection.

With no annual fee, the only drawback to this card is that American Express may not be as widely accepted in as many countries as Mastercard or Visa, so you may want to carry this card along with a 0% intro APR Visa or Mastercard.

Of course, if you decide to pay for your gap year with credit cards, make sure to make your monthly payments on time. Also, budget your money so you can pay off the balance before your introductory APR expires.

Learn fiscal responsibility during your gap year

Taking a year off from your studies is a great way to learn what it’s like to live on your own without the safety net of a college campus behind you. You can gauge the job market in your chosen field, give back to the worldwide community through volunteer work and get a taste of real life outside of academia.

Living and traveling on your own will help you to learn how to budget your money and make financial trade-offs (stay in or eat out? Uber or bus?).

If you use credit cards or loans to help pay for your gap year, you’ll need a form of income to make your monthly payments, so that’s something to consider when you plan your adventure. One thing that will become abundantly clear when you take a year off from your studies to pursue your passions is that freedom is anything but free.