Preparing for the Cost of College

It’s never too early (or too late) to invest in your child’s future! Whether you have just had a baby or you have a child in high school, there are always things you can do to prepare for the cost of college. Learn about the different savings plans, check into scholarships, and create a plan that is right for you and your family!

Preparing for the Cost of College from Starts At Eight

“Depending on the number of children you have, paying for college is the most expensive event outside of paying for retirement,” says Fred Amrein, ChFC® and principal of Amrein Financial in Wynnewood, Pa. However, experts say, the total price of paying for college can be decreased by making smart decisions.” 

Preparing for the Cost of College

There are things that both you as parents and your child can do to better prepare for the cost of college. Given the rising cost of a college education, the sooner you get started, the better off you will be!

Student Role

1. Earn college credit in high school – I think this option is often overlooked. When I was in high school I also attended classes at our local college, earning college credit all throughout my senior year in high school. Another way to frugally earn college credit in high school is with CLEP Exams. My high school aged daughter took things like Psychology and US History for high school and then went on to do a little extra studying to take a CLEP Exam in each to earn her college credit.

2. Choose an affordable school – When you compare costs of different schools, look at the big picture, go beyond just the cost of tuition. Be sure to take into account the cost of living. Don’t discount the options of attending a community college first. You can get your general education classes for a fraction of the cost for doing so at a larger university.

3. Work full-time during the summer – While you are off from school work during the summer, take advantage of the extra time and earn some extra cash!

4. Work during the school year – I have heard it said that if going to college full time, you shouldn’t work more than 15 hours per week. This is something that could easily be done on one evening or two plus Saturday or Sunday. While you have to be cautious not to let your work suffer, you might just find that not having idle time forces you to be more organized and to stay on task, thus increasing your productivity.

 

5. College Scholarships – College scholarships can be the difference between being able to attend college or not; they are above the grants, above the jobs, and above the student loans. Finding them might seem like a daunting task, but they can pay out in multitudes in the end.

6. Live frugally in college – There are many things you can do to lower your cost of living while attending college. Things such as forgoing a car, buying your own groceries instead of using a meal plan, and keeping unnecessary purchases to a minimum (such as new clothing, gadgets, etc.). Keeping your spending low will increase the amount you can put towards paying for your college education.

Parent Role

1. Student support/guidance – The number one thing you can do as a parent is guide your child through the process. Talk about the things they can do themselves such as the items listed above, but don’t just talk and walk away. Help your student to be successful at carrying out a college savings plan.

2. 529 College Savings Account – The other important thing you as a parent can do is save money yourself to help pay for your child’s college tuition. While I believe that kids need to take responsibility for their lives, I also believe in lending a helping hand!

There are two types of 529 plans: prepaid tuition and college savings plans. Between the two, there are more than 100 individual options to choose from, which can vary in terms of requirements and eligibility.  In addition, 529 plans are either direct- or broker-sold, depending on whether the account owner wants to invest on his or her own or with the help of a financial adviser.

  • You can check out Saving for College to get a list of 529 plans and to help you determine what is right for you.
  • Future Advisor is an investment advisory firm that uses software to actively monitor and manage your accounts from a household-wide, long-term perspective. They pride themselves on being a full service college savings management plan….and FutureAdvisor will customize a savings plan that is right for you and your family. Completely FREE. Forever.

529 plans are also unique in the flexibility they allow account holders. The owner (who does not have to be a parent) remains in control of the account when the beneficiary becomes an adult, and can transfer it to another beneficiary.

Therefore, if a college savings account turns out to be redundant for one child (given scholarships and merit aid awarded, for instance, or if the original beneficiary decides to forego college) the account can be moved to a younger child or a parent who is going back to school.

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