Parents want to do whatever they can to help their children succeed in life. One way parents can help their children start out on the right foot is paying or helping their children pay for college or some sort of secondary education (trade schools). This, however, can be a very daunting task. College is not even close to cheap and only getting more expensive, so how do parents pay for their children’s schooling without breaking the bank?
Scholarships:
Obviously one way for college to be more affordable is if it costs less. Scholarships do just that, someone else paying a portion of your child’s tuition. Even if your child is not a sports star there are still plenty of scholarships up for grabs, and hundreds each year from around the country go unclaimed or only have one or two applicants. When it comes to scholarships, it is a numbers game. The majority of scholarships that have between 0-3 applicants each year are for $250-$750 a semester.
Often people are not applying for them because they think it is not worth their time; however, most of these scholarships only require a short essay about a specific topic or about yourself explaining why you should get it. If your child applies for dozens of these smaller scholarships the likelihood of getting granted a few hundred or thousand dollars for your child’s school expenses is very high.
Plan Ahead:
The easiest way to not break the bank is to pay a small amount over time. Most people have at least 18 years of a heads up before they have to pay for their children’s schooling. It is not close to as much of a financial hit if you start putting a little money away each check, month, or quarter. If you budget it in it will quickly add up and you’ll never feel the financial hit.
A 529 fund is perfect for this scenario, it is usually categorized as a college saving plan or prepaid tuition. A 529 fund works very similar to a Roth 401k or Roth IRA, in that you make after-tax contribution into the fund which is invested in mutual funds or like investments. When it is time for your child to go to college they can access all the money you contributed and the gains tax free. The 529, however, can only be used for school tuition, fees, books, equipment, and in some cases room and board.
Cheaper Option:
If the numbers are just not adding up, it may be time to talk your child and tell them they need to pick a school closer to home. Choosing a college in the same state you live in offers a cheaper tuition. Community colleges also are going to offer the same two years of credits as a university at a much less lower price tag. Picking a college close to home can also lower the room and board expenses. College can be a large financial burden, but the more you prepare the more manageable it becomes.
Thanks!!!
Many of us feel that this is one of our “duties” and a privilege– if we are able to afford it. There should be a frank discussion about finances and what the child and parent is able to do.