All parents want the best for their children. And this usually involves them getting a college degree. Unfortunately, the continued rise of tuition and other expenses over the past years has made this dream even more difficult to finance.
Recent statistics reveal that the American family spent around $26,226 on tuition for the current school year with almost half of this cost coming straight out of the family’s income and savings. The rest is financed by loans as well as grants and other scholarships.
If you’re wondering how you can afford all this when the time comes, here are some things you can do now.
Parents First
As counterintuitive as it might sound, ‘paying’ yourself first is actually a smart thing to do. This means thinking about you and your spouse’s retirement first before saving for your children’s college education. The logic behind this advice is that there are plenty of aids and grants college students can get. The same cannot be said about retirement funds.
Besides, taking care of your retirement savings first doesn’t mean that you won’t be able to help your kids finance their education, later on.
Save As Soon As Possible
Still, parents should keep in mind that when it comes to saving for college, it’s always the earlier the better. Financial experts recommend people to use something like a 529 Savings Plan to keep your children’s college money separate from the family’s other funds.
As nerve wracking as it may get, don’t neglect to monitor the growth of the money you’ve put away as time passes. There are even online tools which would calculate an estimate of this amount for you.
File for FAFSA
FAFSA stands for Free Application for Federal Student Aid and covers both undergraduate and graduate school funding. According to statistics from Sallie Mae, a lot of American families are actually not completing their FAFSA application or not applying altogether.
This may be a huge mistake as many people tend to underestimate their eligibility to qualify for government aid. There are also many who think that the application process is simply too complicated.
Explore Loan Options
If your current and foreseeable future financial situation prevents you from funding your children’s college education yourself, there are numerous loans, both private and federal, which you can apply for. With federal loans, parents are also provided loans in the form of Parent-Plus loans which allows people to borrow as much as a student’s entire cost of attendance discounting other financial aid already received.
While private student loans may have higher interest rates, their abundance allows parents and their kids to shop around for the best one that will fit their needs. This route is usually last on people’s list when looking for ways to fund a college education.
