Trying to find the perfect way to save money for your child's college fund? You're not alone. For many parents, it can be quite a challenge. But, after talking with your child, reviewing all your options, and making a plan, the whole feat of paying for college is not as intimidating as it seems:
1. Establish a Savings Goal with Your Child
Parents don't always pay for all of a child's college expenses; in fact, many parents help their children learn the life lesson of "getting what they work for" when contributing to their college savings fund. Parents might agree to pay progressive percentages of a child's college expenses, depending on their grade point average in high school and college. This way, the student has "skin in the game," hopefully leading them to perform better in school and possibly win financial aid and scholarships opportunities.
2. Apply for Financial Aid and Scholarships
Start searching far and wide for financial aid and scholarship opportunities years before your child is ready for college. By keeping track of these opportunities (and the previous students who won them), you can start to build a portfolio with opportunities that your child can apply for and already know the things he or she might need to do to win them. When junior and senior year roll around, keep your portfolio handy to make sure your young student doesn't miss a single financial aid or scholarship deadline. Believe it or not, financial aid and scholarship opportunities can be so impactful that students sometimes take a year off after high school to recharge as well as work on meaningful projects--making them an even more attractive applicant for such opportunities.
3. Consider a Gap Year or Community College
If your child has been working a job, excelling academically, and/or pushing themselves athletically for the last several years, they might be burnt-out. A break between high school and college can be great for your student (and your wallet). In the meantime, you can encourage your child to take up a part-time job as well as keep applying for scholarships/financial aid opportunities. Another way to make college more affordable is by attending community college and saving upwards of $30,000 when compared to the cost of attending a private 4-year college. (Not to mention the major savings your student will make on their GPA). You might even be able to pay for most of community college through effective college savings plans.
4. Take Advantage of College Savings Plans
A major benefit to college savings plans is that their investment gains and withdrawals are tax-free. There are more than 30 states offering 529 plans, which allow you to make high contributions relative to Roth IRAs for eligible education expenses. You can also consider a Coverdell Education Savings Account. The Coverdell registers educational savings as your asset (not your kid's), having less of an impact on your child's financial aid chances. It also can be used for a broader variety of educational expenses, including those occurring before college, unlike 529 plans. Make sure to find the perfect savings plan for you.
5. Take Advantage of College Credits
If you want your student to have the quality of a 4-year education but simply can't pay the cost of a 4-year university, AP, IB, CLEP, and community college courses might be ideal for you. By taking these courses, students can save thousands of dollars in tuition and graduate 1 to 2 years ahead of time using college credits.