If you found yourself at a crucial point in your life where you are suddenly realizing that your kids are going to be in college soon, you are probably feeling a little panicked. Even if they are just starting kindergarten, anxiety often starts to accumulate. This is also about the same time that you start looking for life insurance quotes online and begin to stress that you haven’t started a retirement fund either. These are all things that will continue to eat away at you until you address them and finally have peace of mind knowing that you are ready for the future. Keep in mind that it is never too early to start planning for the education of your children.
In this post:
1. College Savings Account
One of the easiest ways to prepare for the high cost of college is to put a little money away every week. It does not have to be a lot of money; every little bit that you can save will help. Keep in mind that the average cost of tuition is around $17,000 per year, so you are going to need every penny that you can get, especially if you have more than one child you need to pay for.
Many states do offer a Section 529 Education Savings Plan that you may want to check out. This plan allows you to open a Coverdell Education Savings Account that lets you invest in your child’s name until they turn 18-years-old. It also provides some important tax benefits as well.
2. Pre-Paid Tuition
This opportunity gives you the chance to lock in a tuition rate and invest money now, so it is here for you to use when your children are ready to attend. Some of these plans are managed at a state level, and there are also some that provide tax benefits that your tax advisor will be able to explore for you.
3. Student Loans
Qualifying for student loans is a lot easier than some parents think, especially if you fall under a certain income bracket. You will need to determine what your Expected Family Contribution is first. The lower this number is the more loans and grants your child will be eligible for.
Your child will likely qualify for some federal funds, but your personal financial situation will dictate whether these are subsidized or unsubsidized loans. Quite often, these funds will not come close to being enough to cover tuition and other expenses, so you will want to apply for a Parent Loan for Undergraduate Students (PLUS). The U.S. Department of Education is responsible for dispersing these funds. If for some reason you do not qualify for one of these loans, there is still a good chance that your child will qualify for unsubsidized Stafford loans.
4. Scholarships
Why pay for an education if your child can get it for free. There is a multitude of scholarships given out every year, but it will take a little work on your child’s part to apply for them. Fortunately, there are many scholarships that they can begin applying for during their junior year. Their guidance counselor will be able to point them in the right direction of where to find these and when they can start applying.
5. Life Insurance
If you are having a new baby and you are already stressing about college, you are ahead of the game! This gives you the opportunity to start searching for life insurance quotes online for your little one. You are probably wondering what life insurance has to do with paying for college, right? Well, what you may not know is that there are some policies that will allow you to take out loans for their college tuition without any tax penalties.