Kids college on a budget
How to pay for your kids college on a budget
If you are a parent of a middle school or high school student, you are likely beginning to wonder about enrolling them into college. The biggest question you likely have is how will you pay for their post secondary education?
The good news is that you can start right now. There are plenty of things you can do in advance of your child attending college and there are ways to get help through their college years. These are the ways to pay for your kids’ college tuition on a budget.
Did you know that some colleges and universities around the country allow you to prepay tuition? This option is great as it allows you to lock in the current rate, well in advance of your child attending the college.
Of course, this means that your child should already know where they would like to go to college, and be able to get into the school. You will want to investigate the college your child is interested in to see what they offer.
Save for College
It is no secret that the cost of college tuition is always on the rise. Your best bet is to save big and save early. As soon as you can, you should start a savings fund for your child’s post secondary education.
To offset the increase in education costs, you can opt for a special college savings plan to help you stay ahead of inflation. You can look into special educational plans, some of which provide a tax shelter for your funds until your future scholar begins college.
Some states offer college savings opportunities, such as a Section 529 Education Savings Plan. This allows you to begin investing early. A Coverdell Education Savings Account allows you to start saving in your child’s name right now. With this plan, you can keep adding to it until your child turns 18. It also provides a tax benefit. You may want to consider reaching out to your tax adviser to find a plan that best fits your needs.
The PLUS loan stands for the Parent Loan for Undergraduate Students. These loans typically are in addition to any federal unsubsidized loans that don’t cover what your student needs.
With a PLUS loan, the funds are disbursed directly through the U.S. Department of Education. You will need to fill out an application and your credit history will be taken into account for any negative activity (i.e. defaulting on any prior loans). Additionally, if you don’t meet the minimum criteria, you may need a co-signer.
If you and your child are denied a PLUS loan, they may still qualify for additional unsubsidized Direct Loan funds. For more information, visit: https://studentaid.ed.gov/sa/types/loans/plus
A HELOC or home equity line of credit might also be an option for your family. If you own your home, it is possible that you can use the equity in your home to gain college tuition funds, and you may even qualify for additional tax benefits. Contact your lender for more information.
Plan with Your Student
Paying for your student’s college should involve teamwork. Discuss your approach to your student’s tuition, and have them also take an active role with decision making and planning. They are beginning to mature into adulthood and this is the perfect opportunity for them to deal with adult responsibilities.
Some ways your student can help pay for college tuition include:
- Have them get a part-time job to help for some of the tuition costs.
- Have them apply continually for scholarships and grants.
- Encourage them to have a well-thought out plan to graduate in 4 years. The longer it takes them to graduate, the more costly education becomes.
- Continue to teach your child the importance of banking, saving and paying for things themselves.
- Lastly, be absolutely picky about any student loans you choose to take out. Be sure your student will be able to help pay them back and you understand all the terms and conditions surrounding the loan. Most importantly, do NOT take more than you need.
College is an exciting experience, but usually an expensive one. Work hard now to save up and be sure to include your student in the process. They should be able to help pay for some of their college tuition to help create good habits when it comes to money.