Parents are often the main contributors to their children’s college tuitions. Therefore saving for college while children are still young is probably one of the best things that parents can do to successfully reach that goal. That being said, the following article discusses some helpful tips for starting a college fund for kids.
How much can you contribute
First and foremost, parents should figure out how much they are willing to contribute to their children’s college funds without sacrificing their own retirement. That being said, parents should know early on what type of college experience they envision for their kids. Public or private? Out of state or local? Indeed, it is better if parents are aware of what they can and cannot afford.
Estimate the costs
Another important thing that parents can do when looking into college saving plans is to estimate how much tuition will cost by the time their kids will go to college. Once they have projected the target amount, parents should start saving, ideally on a monthly basis. This is done by dividing the total estimated costs by the number of months until their child is bound to go to college. In addition to that, parents should also keep in mind all the off-campus expenses, book costs and dorm fees, just to mention a few.
Explore financial aid
A lot of parents make the mistakes of not taking full advantage of the financial aid that is out there. Generally speaking, financial aid includes scholarships, state, private and federal funding and grants, just to mention a few. Even parents who have a good source of income can often still receive financial aid.
Consider taking a loan
Another option for parents looking into college saving plans for their children is taking loans. That being said, parents should remember to take loans in a way that does not disrupt their retirement plans.
Choose the right account
There are a variety of ways to save and invest for college. One popular option is the 529 college savings account, which is a tax-advantaged savings plan designed specifically for educational costs. Funds used from these plans for qualified expenses are typically exempt from federal income taxes under the majority of conditions.That said, the sooner that parents begin, the faster their money has the opportunity to grow.