How to Save and Pay for College - Parent Edition
It's Not Too Late!
Financing higher education brings its fair share of challenges. In order to save enough money, parents and students may face a number of obstacles.
Although the escalating costs of college may seem overwhelming, planning for this expense ahead of time can help ease one’s financial burden. Here are a few ways to save and manage educational expenses.
Saving from Day One
The most effective way of building up a budget for a college fund is an attempt to start saving from the time the child is born. Of course, this is only possible if the parents or guardians start by budgeting in their children’s early years and managing their finances accordingly.
A great way to begin saving for your child at an early age, is by setting them up with a savings account. The Mini Citizen’s Club is a savings account designed for your newborn to Age 1. Let us help them grow their college fund so that you can focus on watching them grow throughout the years.
It is never too late to begin putting money away for your child or grandchild. For ages 1-13, the Junior Citizens Club is a great option to not only put money away, but also to encourage healthy saving and spending habits.
Opening a savings account early on in your child’s life ensures that you have a safe and secure location to store your financial contributions over the years. Why wait until the graduation party to contribute to your child’s future education? Consider making financial deposits into your child’s saving accounts as gifts during the holidays, birthdays, or to reward top tier grades.
To estimate the total cost of college, first consider whether one is going to attend a community college, state college or a private institution. Shortlisting a few colleges can give insights into the approximate amount needed. Also, there are online tools available to help estimate costs.
Another option is the utilization of equity as the value of real estate tends to rise with time. A home equity loan is a loan for a fixed amount of money that is secured by the home that you own. This type of loan is paid off over time with equal monthly payments just like the way you pay your mortgage. Because there is collateral on a home equity loan, the interest rates tend to be lower than traditional Federal PLUS, private, and parent college loans.
Parents or students with homes can use this factor and turn it into an advantageous option. It may be better to acquire a home equity loan to fund a child’s college expenditures rather than letting him or her deal with student loans because home equity loans come with certain benefits such as tax exemptions.
If you feel a home equity loan may be the right option for you, applying is easy.
Deciding wisely how to spend money is a very important component when it comes to saving for your child’s future. Here are a few areas where we recommend you take a look at first:
- Reach for generic branded grocery and household items rather than name brand products.
- Eat in. Let your friends and family in on your plans to cut back on eating out and social costs. Instead take turns hosting in home dinner parties and social events. Skip expensive nights out at the bar and channel your inner mixologists by crafting cocktails at home.
- Cancel unnecessary streaming subscriptions. If you don’t wish to eliminate your tv or streaming subscription packages all together, consider sizing down to alternative cheaper packages that may include less channels or longer commercial times. Commercial breaks are great for snack refills anyways.
Cutting daily costs will look differently for everyone. Take a look at your frequent spending habits to determine where you can cut costs.
Grants, Scholarships and Financial Aid
Exploring scholarships and other modes of financial aid is also a useful option to make it possible to attend college. There are a vast number of categories that scholarships fall under. The majority of scholarships are geared towards specific groups of people. If you can think of it, chances are there is a scholarship for it. For example, there are scholarships for children of military families, scholarships for women pursuing STEM degrees, scholarships for students participating in sports, chess, musical instruments, etc..
You can find scholarships by reaching out to the financial aid office at your child’s college of choice, through your child’s high school college readiness programs, extracurricular programs, local financial institutions, and of course the world wide web.
Help your student find a work-study job. Work study is a federally (sometimes state) funded student aid program that helps students earn money for college while working part time jobs on or off campus. According to the U.S. Department of Education, an estimated 3,400 universities and colleges have work study programs. (This is an important factor to consider when your child is applying and ultimately accepting college offers). Keep in mind that you will want to select ‘yes’ for work study when filling out your child’s FAFSA.
Many colleges have online portals that make it easy for your college student to find and apply to available work study positions. According to the official Federal Student Aid website, “The Federal Work-Study Program emphasizes employment in civic education and work related to your course of study whenever possible.” This means that work study will not only give your child access to financial support, but it can also assist them in gaining relevant work experience is their field of choice.
You can take steps to ensure that your or your child’s college costs are manageable by planning in advance. A Global Credit Union representative is available to discuss savings strategies and budgeting to help in whatever stage you find yourself. Contact us today to kickstart saving for child’s future.