Like many parents, you want your children to go to college, but you don’t want them to end up having to pay back loans for decades.
For this reason, many parents start thinking about how to fund college for their kids while they are still very young, even as infants.
The good news is that there are a lot of different options, and you can even spread the expense across several of them, including the ones listed below.
First, it’s one of the important life skills every college attendee should have to be able to understand what exactly the cost of attending any particular college will be, and that’s not as straightforward as just looking at the annual tuition.
There are a number of other elements to consider. While a private school might look more expensive than a state school, if your child is a good student, the private school might actually offer more robust scholarships and other options.
It’s also important to consider the cost of living. Your child will need to pay for room and board as well, and it is significantly cheaper to live in a small college town in the Midwest or Southeast than in a place like New York City.
Your Financial Situation
It’s also important to assess your own financial situation. Putting your child through college can be a tough juggling act because this may also be the time when you are trying to step up your retirement contributions.
It’s generally not a good idea to use your retirement savings to pay for your child’s education. A better option is to set up a savings fund. A 529 plan offers certain tax benefits if used for education.
You may also want to consider low-rate private parent student loans if you are concerned about your child being saddled with student loans. This can allow you to take out loans instead of them to pay for their education.
Your Child’s Financial Situation
As long as your child is considered a dependent for financial aid purposes, your financial situation and theirs will be intertwined to some extent since your income will be factored into the decision of how much aid to offer, but it is also worthwhile to keep the two separate in your planning.
Even if you are supplying your child with all or most of their money to cover rent, spending, and other costs in addition to tuition, you can sit down and help them create a budget so that they don’t exceed what you have set aside for them.
You can also help them look for and apply for scholarships and grants.
Other Ways to Reduce Costs
If there is a community college in your town, your child might be able to take some classes there while still in high school for college credit.
Some also opt to go to a community college for their first two years and then transfer since the costs tend to be lower.
Your child may also be eligible for a work-study program or may be able to simply work part-time while in school.
They might even be able to get a job or a paid internship in their field of interest, which can help with landing a career-type job.