As soon as your child is born, you can start saving up for his/her college education.
With tuition fees increasing in leaps and bounds, it’s better to have figured our your college financial plan so that it won’t be another expense that you need to stress about when that child heads off to college.
Aside from the cash that you’ve saved yourself, here are the top 3 sources that can help you get your kids through college:
- Part time job
- Student loan
It’s been said that more than $2.9 Billion (that’s a “B”) dollars in scholarship money goes unclaimed in the US every single year. It used to be an exercise in futility tracking down scholarships that a student might be eligible for, but that’s not an issue anymore.
As a parent, you don’t want to wait in those long lines for financial aid, or let your child work himself to death just to have money for tuition and other expenses.
With websites and apps like Fastweb and Scholly, finding financial aid in the form of scholarships for your child’s college education is no longer an issue. These two applications connect students and families with the best scholarship matches, because student success starts with being able to afford college.
Here are some other ways that you can get a jump start on shaving off those hard-earned bucks for your child’s college education:
Saving it. The earlier, the better.
Start investing your money as soon as your child is born. Put the savings or investments under your name.
Later on, decide whether you want to transfer the account to your child’s name by the time he or she turns 15. This way, you will have minimal taxes, if at all.
You also need to be careful when transferring account names. Some states require a total turnover of funds once your child turns 18 or 21. This is also ineffective if, in the future, you apply for financial aid.
Also remember that tuition fees 10 or 15 years from now may double or even triple the current rates. Speak with a financial adviser about the implications of this plan.
Establish a trust fund for your child.
This is a smart plan for a child’s parents or relatives to invest in.
A trust fund is similar to a time-deposit where the money will be given to your child after a certain number of years, or when he/she reaches a certain age.
At the designated time, the fund can be received in one lump sum or through an installment basis.
When building a trust fund, check out details like the interest rates, taxes and withdrawal restrictions and penalties (if any).
All in all, you need to approximate the costs of tuition fees, dorm room, meals, books, and other expenses that may come up.
By the time there are only two or three years left to go before you send your son or daughter off to college, “lock” an ample amount of the funds by investing them in low-risk bonds to ensure that you will get to have enough for them to start their college education.
Again, these are only suggestions. This is not financial advice. You should speak with a financial adviser to get more details on the implications of these plans.
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