The cost of continuing education beyond high school is rising year by year, and parents may rightly be worried about whether or not their youngsters can afford to head off to college.
You can do your bit to bring this ambition within reach, and there are a few things to try so that the cost of college isn’t an unconquerable obstacle.
How to Help Your Kids Afford College: 3 Different Options
When Should You Start Saving for College?
The first and most popular option is to set aside money in anticipation of your child one-day attending college. However, there’s a lot of debate around the best time for parents to begin college savings, which can make things confusing.
The reality is that it’s never too early to start saving for your child’s college education. Depending on when you begin, you can make a significant difference in the amount of money available to cover tuition and other expenses.
If possible, parents should aim to set aside funds from birth, or even before conception, through investments such as 529 plans or UGMA/UTMAs accounts. Starting at an earlier age gives more time for contributions to grow with compound interest, reducing the likelihood that parents will have to take out loans later on down the line.
Additionally, tax benefits are associated with certain types of savings vehicles that may help lower costs overall. However, it is still possible (albeit sometimes more difficult) if one starts planning late in their child’s life. Just be sure not to miss any opportunities along the way.
Scholarships and Grants: What Every Parent Should Know
Another way to help your child pay for college is through scholarships and grants. Scholarships are typically awarded based on academic or athletic merit, while grants are most often need-based.
Applying early can increase the chances of success. Many schools have deadlines as early as November of the year prior to when students plan to attend college. This means you really shouldn’t leave it to the last minute.
In addition, there are various other sources beyond what colleges offer, such as private institutions, religious organizations, companies, foundations and more, that provide both scholarship money and grant funds for various reasons. There are also federal grants to take advantage of. As such, doing research ahead of time will give you an idea about which opportunities might be best suited for your child’s needs so that they can use every resource available.
Loans for College Financing: An Overview of Your Options
For those needing additional money to cover college costs, taking out a loan may be necessary. Generally speaking, student loans can come from the federal government or private lenders like banks and credit unions.
Federal loans tend to have more favorable terms than those offered by private organizations, with perks like lower interest rates, no origination fees and income-based repayment plans on offer. However, keep in mind that there are other types of financing available too, including PLUS Loans (for parents), home equity lines of credit (for homeowners), and personal loans from family members or friends.
It’s important to weigh all options carefully before choosing which one is best for you financially and so that your child will not be saddled with excessive debt upon graduation.
Whatever age your children might be, and whatever the future holds for them, there is no harm in getting prepared to help pay for their college education sooner rather than later. Even if they don’t end up using the nest egg you built up for this specific purpose, you can use the money for something else to improve their prospects.