If you find yourself a few short years away from having to pay for your child’s college education and you have yet to start saving, you need to redefine your college selection criteria, save enough to pay the early college bills, and begin a savings plan for the later college years. Unfortunately, your late start means you have likely missed most of the opportunities to grow the money.
First, consider schools that provide a good value and keep your options open. Your child might opt to attend a nearby community college for two years and live at home to save money on room and board. Later, your child can transfer to a four-year college. Also consider a less expensive state university or second-tier private college that may offer better programs than expensive, elite colleges. If the opportunity is available, your child may consider a cooperative education, where semesters of academic work alternate with semesters of paid work
Second, learn all you can about financial aid. You may want to do a dry run through the federal government’s financial aid application to verify if your child can qualify for financial aid, and, if so, for how much. Another great resource should be your college of choice’s financial aid office. An appointment is free, and the counselors there will know their school’s financial aid statistics. Generally, you can learn the percentage of students who receive financial aid and what percentage of the financial need is met. Financial aid counselors can also guide you in the direction of grants, loans and merit scholarships.
Third, you should inquire about scholarship money your student may be eligible for. You can consult your local librarian, high school guidance counselor or the Internet. However, it is important to note that scholarships generally make only a small dent in the overall cost of a college education. It is very important that a quest for a scholarship be made in addition to, not in place of, seeking federal and college-sponsored financial aid.
Fourth, examine any current financial resources or savings that you can access for the early college bills. Consider savings accounts, cash value life insurance and current income. You should avoid tapping into your retirement accounts because while you can borrow money for college, you cannot borrow money for your retirement. You may need to look into a personal loan, a home equity loan, or the federally sponsored PLUS loan, which is tailored especially to parents. Your student should consider working part-time to help with expenses.
Finally, you should begin saving a portion of your current income for bills that will come due when your child is a junior or senior in college. Because you will need the money in four or five years, you should avoid high-risk investments. Instead, choose a low-risk, stable investment, such as, a CD or government bond that is timed to mature when you need it, or a money market mutual fund.
For more information regarding college savings, contact Henssler Financial at 770-429-9166 or [email protected].